Project Management in Government: An Introduction to Earned Value Management

1. Project Management in Government: An Introduction to Earned Value Management Young Hoon Kwak, Associate Professor The George Washington University Frank T. Anbari, Clinical Professor Drexel University July 2010

2. Overview • What Is Earned Value Management (EVM)? • Using EVM at NASA • Applying EVM in other agencies • Resources “. . . a powerful methodology that gives the executive. . . the ability to visualize a project’s status at various points during the project lifecycle. . .. .”

3. What is Earned Value Management? • EVM is a project management methodology for measuring financial and project performance. • EVM is comprised of assessment criteria in 5 categories: • Activities that define scope of work, assign responsibilities. • Activities for planning, scheduling, budgeting, and authorizing work. • Activities to accumulate the costs of work, and the materials needed • Activities to compare budgeted, performed, and actual costs, and variances • Activities to incorporate changes to scheduled, budgeted, authorized work. • EVM can also be used to forecast estimated “time to completion”

4. Components of Earned Value Management

5. Using EVM at NASA • NASA directed use of EVM in its contracts starting in 1997. • All contracts above $20M must be EVM-compliant. Contracts above $50M must be formally validated and accepted that they use EVM. • Was difficult to implement consistently. • NASA committed to training and certification. “NASA currently has a significant infrastructure of processes and requirements in place that enables robust program and project management.”

6. Critical Success Factors in Using EVM at NASA • Invested in use of EVM, via policies and procedures • Developed detailed clearinghouse for training • Dedicated team to monitor deployment, ensure funding • Single IT system for tracking and reporting • Trend analyses conducted throughout lifecycle of project • Consistent reporting structures, documentation • EVM used to make decisions, funding, and schedule modifications

7. Using EVM Across the Government • Federal government adopted use of EVM in late 1990s. • Most frequently used in engineering and construction projects • NASA is a project-driven organization that receives substantial value from using rigorous project management techniques • Other government agencies organize around projects. They could benefit from a similar senior leader dedication to use of EVM • EVM can change an organization to create a learning culture, recognize expertise, and encourage more collaboration. • Can be an important component to managing costs

8. Resources “Project Management in Government: An Introduction to Earned Value Management (EVM)” • For free copies of this report, visit the IBM Center for The Business of Government Website www.businessofgovernment.org Report Authors: Young Hoon Kwak Assoc. Professor of Project Management Dept of Decision Sciences The George Washington University Washington, DC 20052 kwak@gwu.edu, (202) 994-7115 Frank T. Anabari Clinical Professor School of Technolgy and Professional Studies Drexel University Philadelphia, PA 19104 anbari@drexel.edu (215) 895-0928 presentation prepared by John Kamensky