Earned Value Management is a technique that relates resource planning to schedules and to technical cost and schedule requirements and is the best tool for integrating a project's cost, schedule and technical performance. EVM provides quantitative project management, early warning of project cost problems, powerful metrics for variance analysis and reliable estimates of final costs. However, EVM data will be reliable and accurate only if the right base measures of technical performance are selected and if progress towards meeting the system requirements is objectively assessed. Many organizations have implemented EVM as the fundamental technique for managing projects, however, many organizations have not implemented a robust and systematic Cost Estimating process that provides the foundation for EVM.

A May 2004 GAO report on "Lack of Disciplined Cost-Estimating Processes Hinders Effective Program Management" examines NASA's cost estimating techniques. Current baseline development cost estimates for 27 programs reviewed varied considerably from the programs' initial baseline estimates. More than half of the programs' development cost estimates increased, and for some programs, this increase was significant-as much as 94 percent. In addition, the baseline development estimates for each of 10 programs reviewed in detail were rebaselined-some as many as four times. http://www.gao.gov/cgi-bin/getrpt?GAO-04-642

Industry best practices for cost estimating indicate that a sound program must include the following elements:

1.  Determine and validate the technical baseline

2.  Identify appropriate cost estimating methods

3.  Identify data sources and collect data

4.  Identify cost drivers

5.  Develop cost element structure and work breakdown structure

6.  Analyze data and develop cost estimate relationships

7.  Select and build the cost model

There are many resources available to assist with cost estimating including software, training, and certification programs. The Society of Cost Estimating and Analysis is an excellent place to begin. Their web site is http://www.sceaonline.net . For EVM to be successful and valuable it must begin with an accurate cost estimate.