Auditing EVM Systems and Data

Our research has identified a number of best practices that are the basis of effective earned value management and should result in reliable and high-quality earned value management data that can be used for making informed decisions. These best practices have been collapsed into three high level characteristics of a reliable earned value management system:

Comprehensive: a comprehensive EVM system is in place. If the EVM data are to be used to manage a program, the contractors’ (and subcontractors’) EVM system should be certified to ensure that it complies with the agency’s implementation of the 32 guidelines. In addition to a certified system, an Integrated Baseline Review (IBR) must be conducted to ensure that the performance measurement baseline accurately captures all of the work to be accomplished. In order to develop the performance measurement baseline, an integrated network schedule should be developed and maintained. This schedule should reflect the program’s work breakdown structure, clearly show the logical sequencing of activities, and identify the resources necessary to complete the activities in order to develop the time-phased budget baseline. Lastly, there should be a rigorous EVM system surveillance program in place. Effective surveillance ensures that the contractor is following its own corporate processes and procedures and confirms that the contractor’s processes and procedures continue to satisfy the guidelines.

Accurate: the data resulting from the EVM system are reliable. To ensure the contractor reported data are reliable, it is important to make sure the data are reasonable and do not contain anomalies that would make them invalid. If errors are not detected, then the data will be inaccurate, potentially leading to bad decision making. In addition, the contractor reported data should be consistent between the different formats. Reliable EVM data are necessary to generate meaningful EACs. Managers should rely on EVM data to generate EACs at least monthly. EACs are derived from the cost of work completed along with an estimate of what it will cost to complete all unaccomplished work.

Informative: the program management team is using earned value data for decision-making purposes. For EVM data to be useful they must be reviewed regularly. Cost and schedule deviations from the baseline plan give management at all levels information about where corrective actions are needed to bring the program back on track or to update completion dates and EACs. Management should focus on corrective actions and identify ways to manage cost, schedule and technical scope to meet program objectives. Management also needs to ensure that the performance measurement baseline is updated accordingly as changes occur. It is imperative that changes be incorporated into the EVM system as soon as possible to maintain the validity of the performance measurement baseline.

During a program EVM review, auditors should examine the best practices related to each characteristic in order to determine the quality of the overall characteristic. The following shows the characteristics and associated best practices.

Table 30: EVM Best Practices

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Characteristic	Best Practice
Comprehensive	The program has a certified EVM system An IBR verified that the baseline budget and schedule captured the entire scope of work, risks were understood, and available and planned resources were adequate The schedule reflects the work breakdown structure, the logical sequencing of activities, and the necessary resources EVM system surveillance is being performed
Accurate	EVM system data do not contain anomalies EVM system data are consistent among various reporting formats Estimates-at-complete are realistic
Informative	EVM system data are reviewed on a regular basis Management uses EVM system data to develop corrective action plans The performance measurement baseline is updated to reflect changes

Source: GAO. | GAO-20-195G