The History of Earned Value Management

The basic idea of modern project management goes back to the great projects of the USA during the Second World War. NASA and the DoD were, and still are, the leaders of modern project management. This was also the case with Earned Value Management.

A New Management Methodology Emerges

The Earned Value method was already used by industrial engineers in American factories in the late 18th century. For years, these engineers did what most corporate managers currently omit: They used an approach to evaluate the efficiency of performance. The engineers had related actual work performed with its planned values and the actual accumulated costs. In this way, the performance of their production was measured, and the result of this approach is the true basis of Earned Value Management.

The U.S. Navy was the Pioneer

In 1917, Henry Gantt developed one of the first modern project management techniques—the bar chart (Gantt chart). In the mid-1950s, the U.S. Navy started the Polaris program, which developed submarine-based missiles. Until this time, there were no suitable project management and controlling techniques for such technologically complex programs. Therefore, in connection with this program, the “Program Evaluation Review Technique” (PERT) was developed within a few weeks. Since PERT was a great success, it was officially implemented in the U.S. Navy as a network planning technique in 1958.

PERT was further developed several times, as PERT/cost and PERT/time, but it did not survive the mid-1960s. The term PERT is still used today as a generic term for a network plan. What survived as the most important of PERT/cost was the Earned Value concept.

The DoD Further Developed EVM

The PERT/cost concept was a key element in the DoD directive DoDI 7000.2 (Performance Measurement for Selected Acquisitions) for DoD contractors in 1967. This prescribed the “Cost/Schedule Control Systems Criteria” (C/SCSC) method for contractors for whom the government had some or all risks of cost overruns. In practice it was called “C-Specs”. The criteria were first established by the Air Force in the early 1960s. The DoD defined 35 criteria which set the minimum requirements for a project management system. Despite these specifications, the C/SCSC criteria were mostly only integrated as paper and described as exaggerated “bean counting”. However, they were often not perceived as a real management tool.

Despite the impressive results in using Earned Value Management, the DoD had taken initiatives to remove exaggerated and ineffective components of the C/SCSC. In 1996, the new 32 Earned Value Management Systems (EVMS) criteria were defined in a simpler, more understandable form.

One of the primary goals of the DoD when introducing the Earned Value criteria was that all project participants should work with the same management control system. This enabled the DoD to realize accurate project monitoring throughout the project life cycle. Earned Value Management provides management at every level with an effective tool and a common language.

Important EVM Milestones:

  • 1958 – PERT and PERT/Cost (Milestone Charts and Rate-of Expenditure Curves, Dollars Spent vs Estimates of Percent)
  • 1963 – Earned Value Concept (MINUTEMAN)
  • 1964 – Cost Accomplishment Concept (TITAN III)
  • 1966 – Air Force Cost/Schedule Planning and Control Specification (C/SPCS)
  • 1967 – DOD – 35 Cost/Schedule Control Systems Criteria (C/SCSC) (DODI 7000.2) “C-Specs”
  • 1972 – DOD – Revised DODI 7000.2 and Issued the Joint Implementation Guide (JIG)
  • 1991 – DODI 5000.2 replaces DODI 7000.2
  • 1996 – DODR 5000.2-R replaces DODI 5000.2, C/SCSC revised from 35 to 32 criteria
  • 1996 – Revised JIG—Renamed Earned Value Management Implementation Guide (EVMIG)
  • 1998 – ANSI/EIA-748, “Earned Value Management Systems” (EVMS) took over the 32 Criteria DODI 5000.2
  • 2013 – EIA-748-C EVMS Standard, replaces ANSI/EIA-748 with minor additions and corrections
  • 2019 – January, EIA-748-D published by Society of Automotive Engineers (SAE) / Electronics Industry Alliance (EIA), with minor additions and corrections but didn’t change the 32 criteria.