Earned Value Management (EVM), which is the subject of this report, is a management technique that provides metrics to help inform assessments of whether a capital investment is "on track" from three perspectives: planned cost, time schedule, and functionality (the latter concept often referred to as "performance," "technical performance," "capability," "scope of work," or "planned value"). EVM may be of increasing salience in executive branch practices and, implicitly or explicitly, in presentations to Congress. This report provides an overview of EVM terminology and concepts by using a hypothetical example and illustrating a few potential oversight issues. To place EVM in context, however, it is necessary to discuss first the risks associated with major capital investments, how capital investments are often evaluated and monitored throughout their life cycles, and how EVM appears to be increasingly adopted by executive branch agencies. After providing the hypothetical EVM example and some related caveats, the report concludes with potential oversight questions for Congress regarding EVM. Monitoring and Evaluating Capital Investments

In tracking the planned versus actual progress regarding the planned cost, schedule, and functionality of a major capital asset, EVM attempts to address several significant monitoring and evaluation issues. In addition, other evaluation methods (see Figure 1 ) are typically used to assess other significant and, sometimes, more fundamental questions, including (1) whether a project is worth undertaking (or continuing); and (2) after the investment process is completed, what impact an investment might be having on achievement of an agency's mission or the success of a public policy, compared to what would have happened without the investment.
This report focuses on a technique—earned value management (EVM)—for overseeing the cost, schedule, and performance of major capital investments during the investment process (e.g., information technology systems, structures, weapons systems). EVM provides metrics to help inform assessments of whether capital investments are "on track" from three perspectives: the investment's planned cost, time schedule, and functionality. Variance from a project's planned cost, schedule, and functionality might occur due to the inherent complexity and uncertainty of a project, poor planning or implementation, or, sometimes, simply bad luck. Although EVM attempts to address several significant monitoring and evaluation issues, other evaluation techniques are typically necessary in order to understand why variance from the planned cost, schedule, or functionality might be occurring. In addition, other evaluation methods are typically more useful in assessing other significant questions, such as whether a project is worth undertaking (or continuing) and, after the investment process is completed, whether an investment might be having an impact on achievement of an agency's mission or the success of a public policy, compared with what would have happened without the investment.
EVM may be of increasing salience in executive branch practices and, implicitly or explicitly, in presentations to Congress. This report begins by putting EVM within a broader context of risk management and how capital investments are often evaluated and monitored throughout their life cycles. Next, the report provides an overview of EVM terminology and concepts by using an example and illustrating a few potential oversight issues and caveats. The report concludes with some potential oversight questions for Congress. The report will be updated periodically.