Earned value management (EVM) systems: Keep government projects on budget

The concept of earned value management (EVM) systems hailed from the Department of Defense in the 1950s, but it's fast becoming the "go-to" process for government agencies today.

Implementing an earned value management (EVM) system for a government agency can help identify and address project issues before they become major dilemmas.

We've all witnessed this at some point in time: A government agency has an urgent need requiring quick resolution to some glaring problem. Hastily, the agency creates a project plan and pulls together a cross-functional team to build a solution. In the rush the project is scoped quickly, but not thoroughly. Teams are assembled, work begins, and one or two things fall through the cracks; then more until the project experiences delays, gaps, confusion and, even worse, becomes out of control. The urgent need has now become an even greater problem, beyond scope, over budget and behind schedule -- with no resolution in sight.

Earned value management -- an old, new concept -- to the rescue

To detangle this mess, industry learned to avoid running over budget and scheduled time by using structured and disciplined processes for each step of each project. Earned value management (EVM) is that disciplined approach or process designed to warn agencies when a project is at risk. Simply put, EVM provides for early problem identification and allows for corrective action before issues become real problems. Though many believe it is a new concept, it was developed by the Department of Defense when costs and time went dramatically over budget, particularly when managing complex defense systems development in the 1950s. After several project management methods were tried, EVM won out because it focused on the accurate cost and schedule of projects, and resulted in enhanced overall performance.

Why are earned value management systems popular now?

After significant cost and schedule overruns on high-profile projects, interest in EVM peaked in the 1990s and adherence to its principles waned until recently. EVM became the "go to" process because it has the ability for early warning of project risk. With the capacity to track and identify issues before they become prohibitive, the popularity and importance of building this standard into a project management model became increasingly evident and popular.

Today, governments are faced with a rising number of modernization or new build-out projects. In addition, all government agencies -- federal, state and local -- are monitored by legislative or executive bodies that closely watch for fiscal waste and timely results. EVM provides the facility to reconcile scope, costs, schedule and risks of each project undertaken.

How is earned value management used differently today?

For today's complex undertakings, government and industry project managers use an EVM system to manage and monitor projects. The Project Management Institute's College of Performance Management integrated EVM as a performance measurement discipline into its curriculum. And the federal government's Office of Management and Budget (OMB) mandated the use of EVM standards to "establish and validate performance measurement baselines with clear cost, schedule and performance goals."

As there is increasing demand from government to measure performance using earned value management systems that integrate scope, schedule and cost objectives, the private sector is responding. More and more, companies are intensifying their efforts and even using third-party application service providers to assist with adding this competency. And government agencies are taking notice.

Government responsibility to the taxpayer

EVM is bigger than managing projects. It's also about the responsibility of spending taxpayer dollars wisely. This obligation falls not only on government, but includes those who partner with government agencies. Since the OMB has issued guidelines for major projects, it has the authority to approve or deny an agency's budget request based on how wisely the agency has financially managed programs in the past. However, EVM has not yet been embraced by every agency. In fact the predictions suggest only 8% of all IT projects in 2007 will be completed on time and within budget; and a mere 10% of those will be managed following EVM standards.

EVM will become increasingly critical to a program's success as every agency tackles projects that fail to meet performance measurements. The OMB's Executive Branch Management Scorecard grades each agency on success in major programs, budgets and compliance, and is closely scrutinized by Congress. Most importantly, making the grade can mean additional millions in approved (or non-approved) budget funds.

The responsibility owed to citizens with taxpayer money will eventually prove EVM a measurable discipline that should become the standard in managing government projects and programs.

What does the future hold for earned value management?

Based on OMB's mandates and looking at what will be required, companies that serve the public sector are developing ways to include EVM as part of the process and need to do so quickly. EVM is destined to be the difference between winning and not winning government contracts.

About Bill Weber and GTSI Corp: Bill Weber is the senior vice president of GTSI Programs and Services. As such, he practices what he "preaches." Since incorporating EVM standards into each project, GTSI Corp. has realized significant increases in project success, and has helped agencies stay on time, on scope and on budget. Weber's nearly 20-year career includes executive leadership positions with public and private companies focused on government, or commercially oriented. He holds a Bachelor of Arts in political science from Washington University in St. Louis, Mo. Additionally, he served as a captain in the United States Army and was awarded the Bronze Star for actions during Desert Storm.

GTSI Corp. (Nasdaq:GTSI) is the first information technology solutions provider offering a technology lifecycle management (TLM) approach to IT infrastructure solutions delivered through industry-leading professional and financial services. TLM allows government agencies to implement solutions of national and local significance quickly and cost-effectively. GTSI is headquartered in Northern Virginia, outside of Washington, D.C. Further information about the company is available at www.GTSI.com/About.

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