Using Cost-Risk to Connect Cost Estimating and Earned Value Management (EVM)

NASA space vehicle acquisition cost management has come under close scrutiny in the past three years due to perceived and actual cost overruns. As a result of two reports, the 2004 GAO report entitled, "Lack of Disciplined Cost-Estimating Processes Hinders NASA\´s Ability to Effectively Manage Its Programs" and the 2004 "President\´s Commission on Implementation of United States Space Exploration Policy", NASA reengineered its cost management with an emphasis on risk and cost-risk management. The new cost management process involves the identification, assessment and quantification of risky WBS elements in the cost estimating process for reporting feedback using Earned Value Management (EVM). The project manager will be able to use the resulting performance measurement metrics from the EVM system to track high-risk element actual cost-risk behavior. Thus, through the synergy between the cost estimating and EVM processes the project manager will have the benefit of the highest quality cost information with which to manage his/her effort.