2.41 Earned Value Management (EVM) is a project performance management methodology that integrates scope, schedule and budget to establish a baseline against which performance is measured. Earned Value Management may be used as a means by which progress payments may be quantified.
2.42 Payment by Earned Value effectively implements progress payments that use the objective measure, Earned Value, to quantify progress and represents one of the payment options that may be considered by Project Managers to develop contract payment schedules.
2.43 Earned Value Payments, like progress payments, primarily address the cash flow required by the contractor to deliver the outcomes of the contract. Earned Value Payments provide for contractors to be paid progressively for work performed with the security that progress payments will be based on objective measures of performance defined as part of the Earned Value Management System (EVMS).
2.44 Although the use of EVM is commonly used for contracts valued at $20 million or more, for major capital acquisition projects the majority will utilise milestone payment options, as this is a more appropriate way of ensuring the delivery of goods and services as specified in the contract.
2.45 Where projects evolve from a developmental stage through to a production phase, the payment methodology may also transition from Earned Value, focusing more on developmental input, to milestone payments which focus on more tangible deliverables. For projects requiring a relatively high degree of developmental work it may be appropriate to make mobilisation payments (which take the form of pre-payments) to provide the contractor with funding to allow it to procure items required for it to fulfil obligations under the contract.
2.46 A total of 14 of the 22 MPR Projects are either currently using EVM as a payment or contract management method, or have previously used it as a payment or contract management tool. These projects include:
● MRH 90 Helicopters
● Air to Air Refuel
● FFG Upgrade
● Anzac ASMD 2A
● Anzac ASMD 2B
● Wedgetail
● ARH Tiger Helicopters
● HF Modernisation
● AWD Ships
● LHD Ships
● Overlander Vehicles
● Next Gen Satellite
● Collins RCS
● Collins R&S