Report identifies benefits, limitations of EVM

Earned value management is of “increasing salience” in government project management practices but it also has its limitations, according to a new report.

Writing in “Earned Value Management as an Oversight Tool for Major Capital Investments,” Clinton Bass, an analyst of government organization and management at the Congressional Research Service’s Government and Finance Division, concluded that metrics generated by EVM are of growing value to Congress as lawmakers weigh decisions about authorization and funding of capital projects.

EVM is used to assess the planned cost, schedule and functionality of capital projects against the actual cost, schedule and functionality of what was delivered. In 2005, the Office of Management and Budget mandated that agencies use the technique for new major information technology projects, encompassing the Bush administration’s emphasis on program performance and outcomes in the President’s Management Agenda.

A potential benefit of EVM “from an oversight perspective is to provide a picture of the status of a major capital investment as a ‘snapshot’ in time,” Bass wrote in the report. As a result, EVM can generate metrics that that let managers take corrective action if a project goes off track.

“The story that EVM tells can be a significant one,” Bass said. “Once the basic jargon and concepts are understood, EVM provides a visually simple picture on a periodic basis of whether or not a project is on track with plans. For oversight purposes, EVM can thereby ‘flag’ outliers and signal the potential need to ask further questions.”

However, EVM doesn’t necessarily tell the whole story, he added. Without further evaluation of a project, “EVM metrics might tell only a partial story,” he wrote. “For example, even when EVM metrics are accurately captured and portrayed, the metrics typically will not reveal why a project might be experiencing schedule or cost variances.”

In addition, Bass wrote, EVM data may not accurately represent the cost and schedule that are most likely necessary for a project to achieve a particular functionality.

Bass said the report will be updated periodically.

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