If you want or need to apply Earned Value Management (EVM), you will very often be confronted with the EIA-748 standard with the the 32 EVMS Criteria. This standard has been around since 1998, but has a long history. In April 2018, ISO published its own EMV standard, ISO 21508, for the first time. In this article you will learn how EIA-748 was created and what it comprises.
The DoD Defined the Requirements for an Earned Value Management System
Until 1997, the DoD defined the requirements for an Earned Value Management System (EVMS). Whoever wanted to receive a major DoD contract from the private industry had to use an EVMS that met these requirements. The requirements were defined as 35 criteria (thirty-five Cost/Schedule Control Systems Criteria (C/SCSC)).
In 1995, a committee of the National Defense Industrial Association (NDIA) started work on revising the 35 criteria. The result was an “industry version” called “Earned Value Management Systems (EVMS) Criteria”, published in 1998 as ANSI Standard ANSI/EIA-748 and approved by the Electronic Industries Alliance (EIA), an ANSI partner. This standard was then adopted by the DoD.
In March 2013, the ANSI/EIA-748-B EVMS standard was replaced by the EIA-748-C standard. Only small additions and clarifications were made. The 32 criteria, on the other hand, have not been significantly changed. In January 2019, the Society of Automotive Engineers (SAE) / Electronics Industry Alliance (EIA) published the EIA-748-D, which also only received clarifications and small additions, but did not change the 32 criteria. This article by Humphreys Associates gives a good overview of the changes incorporated in the EIA-748-D.
The Standard EIA-748
Projects from the US government above a certain size, require the application of Earned Value Management from contractor. This is required either by Directive FAR 52.234-4 or for DoD contracts by DFARS 252.234-7002.
The Standard EIA-748 (Standard for Earned Value Management Systems) covers all requirements for an Earned Value Management System. The problem, however, is that the 32 EVMS criteria contained therein were deliberately kept very general. Thus the companies which then apply the standard have the flexibility to introduce and apply the management system according to their management style and corporate environment. In addition to the 32 EVMS criteria, the standard contains an overview of the most important EVM terms as well as process descriptions for WBS creation, budget planning, workflow and resource planning, determination of earned value, performance measurement, etc.
The 32 EVMS criteria are divided into the following five groups:
- Organization (of the project): 5 Criteria
- Planning, Scheduling, & Budgeting: 10 Criteria
- Accounting Considerations: 6 Criteria
- Analysis and Management Reports: 6 Criteria
- Revisions and Data Maintenance: 5 Criteria
Here you can see a complete overview of the 32 criteria. Eleven of the 32 criteria marked with a red circle are needed for the success of any project in any domain. If you aren’t doing these eleven in some way, the probability of success for your program is low.
In the first section you find 5 guidelines that describe how to organize the work. Important is here that the contractor must establish a Work Breakdown Structure (WBS) down to a level that describes the tasks that will be performed as well as their relationship to product deliverables. Another important part is the Organization Breakdown Structure (OBS) that identifies who is responsible for the work effort defined in the WBS. At this level the WBS (what) and OBS (who) intersect that defines a Control Account. This is a key management control point. The Control Account Manager (CAM) is the responsible person for the work effort (scope, schedule, and budget). This lays the base for ensuring the contractor’s planning, scheduling, budgeting, work authorization, and cost accumulation processes are fully integrated.
Planning, Scheduling, and Budgeting
In the second section you find 10 guidelines that describe the basic requirements for planning, scheduling, and establishing the time phased budgets for the tasks. Here the Integrated Master Schedule (IMS) is an important element which is the project’s road map to meet contract objectives. The program schedule must be resource loaded to determine the budget for the work scheduled. The result should be a resource loaded schedule which is the basis for the monthly budget, or Planned Value (PV), for each task and therefore also for the project. The resulted time phased budget represents the Performance Measurement Baseline (PMB) as a key element in EVM. The summary of the budget for each task, control account, or the entire project represents the Budget at Completion (BAC). The project managers should set aside a portion of the total project value as a Management Reserve (MR) because each project starts with some level of risk. The sum of the Management Reserve and the BAC equals the total project budgeted value. This is also defined as the Contract Budget Base (CBB).
The budgets of a project should be logged to be capable to control the baseline. There are cases where contracted tasks may be temporarily held in held in the pending status, not yet authorized to a manager. When a project manager has to assign tasks and budgets to the CAMs, in this case authorized, not yet negotiated additional work, the task and its budget can be held in undistributed budget (UB).
An essential part of the planning and budgeting process is to define how the Earned Value will be measured. This begins with classifying the work tasks in the following three types: Discrete, Apportioned Effort, or Level of Effort (LOE). Then the CAM chooses an Earned Value technique such as 50/50, 0/100, milestones, or percent complete. Important is here, that work only start with a formal work authorization. With this disciplined approach you clearly define work, schedule, and budget before work commences and you can begin to accrue actual costs.
In this section you’ll find 6 guidelines for capturing Actual Costs (AC) accrued for project work effort. You have to capture Actual Costs consistent with the way work is planned and budgeted. This section underlines the need to take the needed time to schedule an important project resource, material, and to accrue performance data correctly. It also stipulates a practice to accrue the costs for material in the same month as the Earned Value was earned to avoid a misleading cost variance. This is also known as “booking lag.”
Analysis and Management Reports
This section with 6 guidelines is important, because it requires your attention to cost and schedule variances, documenting cause, impact, and correction action, and determining a new estimate at complete (EAC), if necessary. The variance calculations during the EVM analysis are typically done at the control account level. This gives you the ability to summarize the data up through the WBS and/or the OBS.
With this approach, the Control Account Manager can now drill down from the control account level into the detail data analysis to identify the root cause of a variance, determine the impact of the variance on future work effort, and identify correction actions. The EVM data analysis indices help managers consider their past performance and their future performance to complete the work. This within the approved EAC and estimated completion date.
Revisions and Data Maintenance
In the last section you’ll find 5 baseline control guidelines that emphasizes disciplined and timely integration of customer directed changes, including stop work orders (SWO). You should consider these rules also for internal replanning and project analysis. It’s obvious, a lack of baseline control can doom your project. Therefore, establishing and maintaining a schedule and budget baseline is elementary to be able to assess work accomplished for each reporting period. The guidelines described in this section is a must for proactive, meaningful earned value management, especially when the baseline often changes.
The NDIA Intend Guide
The NDIA Integrated Program Management Division (IPMD) is the author and responsible for the EIA-748. Like ANSI or ISO standards, this standard must be purchased for good money from the Society of Automotive Engineers (SAE) International.
As a good supplement to the EIA-748, NDIA has created the free “Intent Guide”. This “Intent Guide” provides an additional insight into each of the 32 EVMS criteria and describes in detail what the Intent and Management Value of each of these criteria is. The very helpful guide can be downloaded as PDF here (Version EIA-748-D, August 2018).
If you as a contractor are “forced” to apply the EIA-748, but also if you want to go deeper into the subject, then you should get the standard and the “Intent Guide”. The documents also give good ideas for introducing EVM in your company.
You will find more helpful resources in the “Additonal References” of the Intent Guide:
– NDIA IPMD EVMS Intent Guide
– NDIA IPMD IBR Guide
– NDIA IPMD Surveillance Guide
– NDIA IPMD EVMS Acceptance Guide
– NDIA IPMD EVMS Application Guide
– NDIA IPMD Planning and Scheduling Excellence Guide (PASEG)
– NDIA IPMD Industry Practice Guide for Agile on Earned Value Management Programs (New)
– NDIA IPMD Master Definitions List for IPMD Guides (New)
– NDIA IPMD Earned Value Management System Guideline Scalability Guide (New)
These guides can be found at NDIA at Division Guides and Resources. I can especially recommend the “Planning and Scheduling Excellence Guide (PASEG)”.
ISO Standard for Earned Value Management
The first ISO standard for Earned Value Management was published in April 2018: ISO 21508:2018, Earned value management in project and programme management. The ISO standard describes 11 process steps for the introduction of EVM and supplements ISO 21500 and ISO 21503.
PMI –The Standard for Earned Value Management
After the second edition of “The Standard for Earned Value Management” was published in 2011, ANSI together with PMI (Project Management Institute) published in 2019 an updated Version.
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