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Abstract
Department of Defense (DoD) Instruction 5000.02 requires an Earned Value Management System (EVMS) compliant with ANSI/EIA-748 for all DoD cost or incentive contracts valued at or greater than $20M. Earned Value Management (EVM) integrates cost, schedule, and time to draw conclusions about current project status as well as make projections for future project status. Though EVM has been widely adopted on many projects, there are clear limitations indicated in the literature which ultimately inhibit the ability of EVM to become universally accepted as a best practice across all industries. In response, researchers have developed extensions such as Earned Schedule Management (ESM), Earned Duration Management (EDM), and Customer Earned Value (CEV). This paper addresses the evolution, limitations, and new extensions of EVM.
1.EVM Introduction
Earned Value Management (EVM) is a comprehensive performance measurement system (PMS) that integrates cost and schedule parameters into a single methodology to provide joint situational awareness for project managers and customers to assess project cost, schedule, and technical performance. EVM is an increasingly popular tool that organizations are utilizing to report and control project performance in an objective manner. EVM is mostly prevalent in the defense industry as it has been mandated by the United States Government for DoD contracts valued at or greater than $20M in accordance with ANSI/EIA-748. Utilized as a PMS, EVM helps drive organizational success (Upadhaya, 2014). Without an effective PMS, an organization lacks the ability to track, monitor, or take corrective actions as necessary. Prior to EVM, traditional PMS's had two separate and independent systems with one focusing on cost and the other focusing on schedule. Lacking integration of these two systems, a project manager could not truly understand the health of the project. This glaring weakness could not identify the reason a project was over or under spending since it did not cross reference time-based data. EVM brings together cost and schedule data by integrating them into one metric. By integrating cost and schedule data together, project managers and the contracting agency can monitor project health while providing a mechanism to forecast the final cost at completion of the project as well as when the project will be completed. This easily aligns the organization at both the strategic and operational levels (McAdam, 2014) by...