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The basic principles and rules for earned value management are discussed in the Guidelines section of the ANSI standard. EVMS Process Discussion This process discussion provides further information on the application of the above guidelines, and takes you though each phase of the project in simple step-by-step instructions.
The major portion of the scope definition is done during the proposal and contract negotiation phase. The statement of work is used as a basis for the schedule and budget development. WBS The Work Breakdown Structure WBS is used to divide the statement of work into definable product elements and related services into appropriate elements for cost account and work authorization.
Program Organization You should organize your project to optimize the management of your business. This includes matrix organizations, functional organizations, etc. Work assignments and responsibilities are clear if a project is well organized. Control Accounts The control account is the control point from which earned value analysis is performed. In other words, what work is being performed by what organization.
The control account is where project costs, schedule, and work scope requirements are integrated, planned, and managed. Resource planning, budgeting, and performance measurement are accomplished within the control account. A control account manager CAM is assigned to the control account in order to manage project cost and performance at this level. Exhibit 2 Program Schedule Schedule planning and control are necessary prerequisites for basic project management and effective cost control.
The project schedule is comprised of a master schedule that is created during the original scope definition phase. Supporting schedules, detailed plans, and contractor schedules are subsequently developed and statused as the project is under way. While critical path analysis used by project management software packages like Microsoft Project, Open Plan, or P3, is typically the preferred method for schedule development, it is not necessary for earned value management.
Budgeting Resource assignments are assigned to the activities in the schedule. Labor and burden rates are applied to the resource assignments to develop a cost or budget for the project. The ANSI standard discusses how to define the budgeting elements, rates, management reserve, work authorization, planning accounts and much more. A work package is simply a task—a point where work is planned, progress is measured, and earned value is calculated. In order to calculate earned value, work packages are defined and an earned value technique is assigned to each work package.
The ANSI standard gives a full definition of each of the earned value techniques and how items such as level of effort and apportioned effort should be handled. The performance measurement baseline is comprised of all time-phased cost account and planning package budget and any undistributed budget.
It represents the current program plans and will change as the program plans are refined and revised. Performance Measurement Earned value is direct measurement of the quantity of work completed and does not reflect the quality or technical content. It is used to determine the health of your project. Earned value analysis allows you to compare the budgeted value of completed work verses the actual costs. Schedule Performance The time-phased budget is the schedule for expenditure of the resources needed to accomplish the project scope.
The budget for a period is compared to the earned value for the same period to determine the schedule performance or schedule variance. It represents the value of the work that is ahead or behind schedule. Cost Performance The cost variance is determined by comparing the actual cost with the earned value for a particular period. The cost variance is the difference between the work accomplished and the costs incurred. Rate analysis may be performed to isolate rate variances versus hourly variances.
In other words, is it costing more because it took longer than planned, or is it because the labor rate is higher? The results of the analysis should be used to generate an estimate at complete EAC. Management by exception is an efficient way to manage a contract. It allows you to direct energy to portions of the project that are experiencing difficulties.
Using earned value you can identify problem areas early and take steps to resolve the situation or modify your forecast to reflect the outcome more accurately. Estimates at Completion Periodic assessment of the remaining requirements of a project is an important part of project management.
However, if the remaining effort is continually assessed as the work is being performed, you will always maintain an accurate EAC. Your company, however, may elect to conduct periodic quarterly EAC reassessments. Revisions and Data Maintenance Change control is an important aspect of baseline management. It is equally important that unauthorized changes are not introduced. Proper earned value analysis cannot be performed without a valid baseline. Authorized changes and correcting data errors should be incorporated into the performance measurement baseline as soon as possible.
However, it is best to enter all changes as adjustments in future periods because it is difficult to perform earned value analysis if the history is constantly changing. System Documentation Once your company has established a method for proper earned value analysis, you should document your policies and procedures. Then the process can be implemented and applied effectively throughout your company.
A company is authorized to use material found in the ANSI standard, in whole or in part including the guidance, definitions and discussions in their system documentation. This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited.
For permission to reproduce this material, please contact PMI or any listed author.
Ansi Eia-748-B Pdf
The 32 EVMS Guidelines incorporate best business practices for project management systems that have proven to provide strong benefits for project planning and control. The system provides a sound basis for problem identification, corrective actions, and project management replanning. The process discussions in the document provide further information on the application of the guidelines. The Guidelines are expressed in fundamental terms, providing flexibility for an individual organization to optimize its system, and thereby be fully accountable for its effectiveness and usage. The EIA revision D does not change any of the implementation , reporting, surveillance, or enforcement aspects of the Earned Value Management System requirements but does provide clarification in several areas. This revision also includes new material about Budget Element Hierarchy, specifically defines Rate and Usage variance formulas, emphasizes risk and opportunity assessments and management, and includes references to the National Defense Industrial Association NDIA guides related to Earned Value Management Systems.
ANSI standard on EVMS