Measuring Uncertainty in Earned Value

Abstract

The Department of Defense is transforming its logistics and business systems to become agile, global-in-reach, and readily adaptable to evolving threats''all with significantly reduced Total Ownership Costs. However, the scope and complexity of these systems pose significant technical and programmatic challenges, successful management of which requires accurate engineering, planning, and cost estimation data. Because these programs and systems are information intensive, the costs of data acquisition are governed by the efficiency of communication, coordination and control activities. Likewise, they govern the capability of tools such as Earned Value Management (EVM). Unfortunately, much of the information essential to formulating accurate Planned Value (PV) estimates is not available until after a program is well underway. The key to information/data accuracy lies in the rate and extent to which uncertainty surrounding estimates is eliminated.