Earned Value Management (EVM) is a complicated system for measuring baseline plans, actual costs, and technical progress on large, complex defense contracts. It evolved from the late 1950s fixation on scientific management, and in that time it was called PERT-Cost. Ernest Fitzgerald remarked in his 1972 book, The High Priests of Waste, that a monthly PERT report would weigh more than 100 pounds in paper!
Today, EVMS data is submitted electronically, but would certainly be no less bulky if printed on paper. It is hard to get around if you are selling to DoD at scale. A contractor’s EVM System must be certified by DCMA (or cognizant federal agency) once the contractor has $100M or more of cost-type or incentive-type contracts (Class Deviaton 2015-O0017). Any contract effort of $20M or more of cost-type or incentive-type contracts require it (DFARS 234.201 and DFARS 252.243-7001/7002).
Just another reason commercial companies will only accept Firm-Fixed Price contracts. Here is a good excerpt from Fitzgerald’s book on how it was actually used back in the 1960s:
On one of my trips to ASD [Aeronautical Systems Division of Air Force Systems Command], I looked up the people who received the PERT-Cost reports to see what they did with the monthly mountain of paper. They said they picked off some of the PERT-Cost figures for other reports and occasionally prepared summarized data in response to special requests. Mostly, though, the reports were just filed away. The oldest citizen could not recall an instance of the reports being used as a basis for corrective action.
I asked one of the PERT-Cost experts what he thought the purpose of the exercise was. He stared blankly at me for a moment, then said, “Why, to justify overruns, of course.” The Back-up Principle was being applied to performance measurement.
This is the same conclusion Harvey Sapolsky reached in his classic study on the Fleet Ballistic Missile which invented PERT-cost. No one used it anywhere in government. No one used it at the contractors. It was simply to convince everything they were top managers and opened the funding floodgates.
Excellent article. EVMS is the biggest waste of money and time in DoD contracting, and that’s saying something. The time and effort associated on both sides are immense. In my experience, the results, even when pursued diligently, are questionable, as both the baseline and actual data reporting can be easily manipulated by the contractor.
As someone who spent years analyzing EVMS data, I sympathize. Basically, all you can do is look at every single monthly IMS, stack them together, see where they are playing games, then roll that back up into the EVM WBS data. Even then, all you can say is: you said X, but you did Y, so if you still need to do X, you will slip by this, and given your burn rate, the cost will be that.
https://www.nasa.gov/sites/default/files/atoms/files/22_trust_but_verify_lofgren_nasa_2017_tagged.pdf
Eric / all —
Ahem. This is a subject about which i know a thing or two. For reasons too obscure to relate, the late Ash Carter — while serving as DoD “Acquisition Czar” — dropped the EVMS system into my lap in August of 2010 with direction to “fix it.” The central change we made was to dramatically streamline the number of EV reporting elements from 400 to 500 to a target of 60, although typically running a few dozen more. The goal was to focus on the elements that are needed for government management decisions and oversight, only and we achieved that goal.
Yes it is all electronic now and we do collect data on schedules and software which we did not previously. But the principles are the same. There is a long standing government-industry working group — that meets at least twice annually — that addresses EV policy issues to assure that the system is cost-effective and working efficiently for both public and private sector decision makers.
EVMS reform was one of the more gratifying achievements of my career . . . which was spent most as a coroner of failed DoD projects . . . but that is another story.
— gary bliss