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NASA EVM Tutorial

Earned Value Management (EVM) is a program management technique that integrates technical performance requirements, resource planning, with schedules, while taking risk into consideration. The major objectives of applying earned value to a contract are to encourage contractors to use effective internal technical, cost and schedule management control systems, and to permit the customer to rely on timely data produced by those systems for better management insight. This data is in turn used for determining product-oriented contract status, and projecting future performance based on trends to date. In addition, EVM allows better and more effective management decision making to minimize adverse impacts to the project.

Earned value provides an objective measurement of how much work has been accomplished on a project. Using the earned value process, the management team can readily compare how much work has actually been completed against the amount of work planned to be accomplished. All work is planned, budgeted, and scheduled in time-phased "planned value" increments constituting a Performance Measurement Baseline (PMB).

Let's look at a simplified example:

The baseline plan shown in the above graph illustrates a task with a total budget amount of $240k, which is planned for accomplishment over 24-month time frame. The "time-now" line shows that $100k of the project resources was planned to be completed at this point in the project. Another way to look at this is that the project was planned to be 41.6% complete ($100k / $240k) at this point in time.

As work is performed, it is "earned" on the same basis as it was planned, in dollars or other quantifiable units such as labor hours. Comparing earned value with the planned value measures the dollar value of work accomplished versus the dollar value of work planned. Any difference is called a schedule variance.

Earned Value - Planned Costs = Schedule Variance (SV)

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Editor: Tommy Watts
NASA Official: Jerald Kerby
Last Updated: June 21, 2006
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