It has been said that Earned Value Management (EVM) came about because the Federal Government often used "Cost-plus" contractors with project organizations. Cost-plus contracting allows the contractor to recover full project development costs plus accumulate profit from these contracts. Why would requiring contractor firms to employ earned value management help the government hold the line against project cost overruns?

Earned Value Management (EVM)

The Federal Government requires contractor firms to employ earned value management because it enables it to assess the work that has been completed against an established baseline plan in terms of technical, time, and cost performance.

Armed with this information, it is in a better position to make important project decisions and help to control over-spending.

Explanation:

Earned value management (EVM) as a integrated project management methodology details the project time schedule, costs, and scope to ensure correct measurement of project performance.  Using planned and actual values, EVM enables future predictions, improving the ability of project managers to adjust according to requirements.

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