Earned Value Management
It Is Not Optional Any More!
Charles Talley, PMP
PM, Enterprise Communications Initiative
January 23, 2008
Agenda
U. S. Department of Labor
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
Introduction
History of EVM in the Government
Recent Developments
Effects of EVM on the Project Acquisition and Management
Process
Winning Projects Under the New EVM Rules
Managing Successful Projects using EVM
How the Government will use your EVM Reports
Questions
2
Why This Presentation
U. S. Department of Labor
Government Computer News, 07/05/06
Acquisition councils finalize EVM rule By Rob Thormeyer
Federal acquisition officials finalized a rule, effective today, that
details how agencies should implement an earned-value
management system for managing major acquisitions.
the Civilian Agency Acquisition and the Defense Acquisition
Regulations councils said the rule was not altered significantly
from its April 2005 draft...
“Small businesses may avoid all EVMS costs by
choosing not to participate in EVMS solicitations, or may offset
such costs to implement a compliant EVM system through cost
reimbursement on resulting government contracts,” the rule
said.
3
Why EVM?
U. S. Department of Labor
70% of projects are: over budget or behind schedule
52% of all projects finish at 189% of their initial budget
Source: The Standish Group
4
Developments That Moved the
Government Toward EVM
U. S. Department of Labor
• 1950’s: The Department of Defense recognizes that its
increasingly complex weapon systems development
contracts demand more sophisticated management
techniques than were generally used in industry.
• 1960’s: DoD mandates a uniform DoD procedure for
compliance by industry called Cost/Schedule Control
Systems Criteria (C/SCSC) which evolves into EVM.
• 1970’s and 1980’s: DoD continues to push an EVM standard
as the way to track and report progress on weapons systems
contracts.
5
Recent Developments
U. S. Department of Labor
• 1990’s: Several pieces of legislation and guidance make EVM
the standard for all agencies to measure and manage project
performance, including:
–
–
–
–
Government Performance Results Act (1993)
Federal Acquisition Streamlining Act (1994)
Clinger-Cohen Act (1996)
ANSI/EIA Std 748 (1998)
• 2000’s: OMB continues to establish requirements for
adequate performance measurement and reporting,
including:
– OMB Circular A-11, Part 7, Section 300
– OMB Memorandum M-04-24 (Expanded E-Gov)
– OMB Memorandum M-05-23 (Improving IT Project Planning and
Execution)
– FAR EVM Clause Implemented
6
U. S. Department of Labor
The Clinger-Cohen Act: Federal IT
Projects Are Managed to Specific
Standards
First and foremost, laws governing federal IT Capital Planning
requiring:
• IT baseline assessment analysis
• Monitoring and evaluation methods and techniques
• Techniques for defining and selecting effective performance
measures
• Examples of and criteria for performance evaluation
• Project time/cost/performance management
• Creation of the OCIO
Learn More:
https://acc.dau.mil/CommunityBrowser.aspx?id=22170
http://www.dod.mil/cio-nii/cio/cca-comp.shtml
http://www.dod.mil/cio-nii/cio/dodit/competencies.htm
PS: Your firewall may require you to select “Continue to this website (not
recommended)”. It is OK;, these are all government websites.
7
President’s Management Agenda
(PMA)
U. S. Department of Labor
The President's Management
Agenda, announced in the
summer of 2001, is an
aggressive strategy for
improving the management of
the Federal government. It
focuses on five areas of
management weakness
across the government where
improvements and the most
progress can be made.
Source: www.whitehouse.gov/omb
8
OMB Circular A-11/Exhibit 300
U. S. Department of Labor
“Agencies must use a
performance-based acquisition
management system, based on
the ANSI/EIA Standard 748, to
obtain timely information
regarding the progress of
capital investments. The system
must also measure progress
towards milestones in an
independently verifiable basis,
in terms of cost, capability of the
investment to meet specified
requirements, timeliness, and
quality.”
Source: www.whitehouse.gov/omb
9
OMB Memo M-04-24
U. S. Department of Labor
“…to achieve a “green” level
of performance for this
initiative, your agency’s
actual performance cannot
vary from its cost, schedule
and performance goals by
more than 10 percent. To
achieve a “yellow” level of
performance, your agency’s
cost, schedule and
performance overruns and
shortfalls for all major
information technology (IT)
projects must average less
Source: www.whitehouse.gov/omb and
than 30 percent.”
OPM PMA Scorecard
10
Executive Branch Management Scorecard
U. S. Department of Labor
Executive Branch Management Scorecard
Current Status as of September 30, 2003
Human
Competitive
Financial
Capital
Sourcing
Perf.
E-Gov
Progress in Implementing the President's
Management Agenda
Budget/Perf.
Human
Competitive
Financial
Integration
Capital
Sourcing
Perf.
E-Gov
Budget/Perf.
Integration
AGRICULTURE
COMMERCE
DEFENSE
EDUCATION
ENERGY
EPA
HHS
HOMELAND
HUD
INTERIOR
JUSTICE
LABOR
STATE
DOT
TREASURY
VA
AID
CORPS
GSA
NASA
NSF
OMB
OPM
SBA
SMITHSONIAN
SSA
11
OMB Memo M-05-23
U. S. Department of Labor
Full implementation of EVMS for IT
projects includes five key components:
1. Comprehensive agency policies;
2. EVMS requirements in contracts
or agency in-house project
charters;
3. Compliance reviews of agency
and contractor EVM Systems;
4. Periodic system surveillance
reviews to ensure the EVMS
continues to meet the guidelines in
ANSI/EIA-STD-748; and
5. Integrated Baseline Reviews to
finalize the cost, schedule and
performance goals.
Source: www.whitehouse.gov/omb
12
The FAR Mandates for EVM
U. S. Department of Labor
Federal Acquisition Regulations
Federal Register / Vol. 71, No. 128 / Wednesday, July 5, 2006 / Rules and Regulations
“This final rule amends the Federal Acquisition Regulation to implement
Earned Value Management System (EVMS) policy in accordance with
OMB Circular A–11, Part 7 and the supplement to Part 7, the Capital
Planning Guide.
The FAR will require the use of an EVM System that complies with the
guidelines of ANSI/EIA Standard - 748, in major acquisitions for
development, and in other acquisitions in accordance with agency
procedures.
An agency shall conduct an Integrated Baseline
Review (IBR) when EVMS is required.”
13
The FAR Rule
U. S. Department of Labor
SUMMARY: The Civilian
Agency Acquisition Council
and the Defense Acquisition
regulations Council (Councils)
amended the Federal
Acquisition Regulation (FAR)
to implement earned value
management system (EVMS)
policy. FAR coverage is
essential to help standardize
the use of EVMS across the
Government. The proposed
rule specifically impacts
contracting officers, program
managers, and contractors
with earned value
management systems.
14
What the FAR Says About EVM
U. S. Department of Labor
7.105 Contents of written acquisition plans.
Discuss, as appropriate, what management system will be used by the Government to monitor the
contractor’s effort.
In addition, discuss how the offeror’s/contractor’s EVMS will be verified for compliance with the
American National Standards Institute/Electronics Industries Alliance (ANSI/EIA) Standard-748, Earned
Value Management Systems.
34.201 Policy.
An Earned Value Management System (EVMS) is required for major acquisitions for
development, in accordance with OMB Circular A-11. The Government may also require an
EVMS for other acquisitions, in accordance with agency procedures.
34.202 Integrated Baseline Reviews.
(a) When an EVMS is required, the Government will conduct an Integrated Baseline Review
(IBR).
(b) The purpose of the IBR is to verify the technical content and the realism of the related
performance budgets, resources, and schedules. It should provide a mutual understanding
of the inherent risks in offerors’/ contractors’ performance plans and the underlying
management control systems, and it should formulate a plan to handle these risks.
15
32 Guidelines/Criteria of
the ANSI/ISO 748-A
U. S. Department of Labor
Provides basic guidelines for companies to use in establishing and applying an
integrated Earned Value Management System (EVMS). These guidelines are
expressed in fundamental terms and provide flexibility for each company to
optimize its system and be fully accountable for the effectiveness of its usage.
2.1 Organization of the Project
5 Criteria
2.2 Planning, Scheduling, and Budgeting
10 Criteria
2.3 Accounting Considerations
6 Criteria
2.4 Analysis and Management Reports
6 Criteria
2.5 Revision and Data Maintenance
5 Criteria
16
Role of the NDIA
U. S. Department of Labor
Serves as Subject Matter Experts to the
Federal Government for ANSI/EIA 748-A
Program Manager’s Guide to the Integrated Baseline Review
(2003)
EVM Surveillance Guide (2004)
Integrating Risk Management
with EVM (2005)
EVM Acceptance Guide
Working Release (2006)
EVM Intent Guide (2006)
EVM Application Guide
Working Release
March 2007
© Permission to copy and distribute this document is hereby granted provided that this notice is retained on all copies, that the
copies are not altered and that NDIA PMSC is credited when the material is used to form other copyrighted documents
17
The DOL EVMS Policy
U. S. Department of Labor
• Projects required to participate
–
–
–
–
Level 3 (Major) Initiatives (> $5M Total Investment)
<60% of Development, Modernization & Enhancement (DME) complete
>$1M annual expenditure in DME
Others as decided by management
•
•
•
•
Interoperable among Agencies
High Management Visibility
Infrastructure Related
Involving Financial Systems or Data
• These projects submit earned value updates to the OCIO monthly for
review
–
–
–
–
Updates come in a MS Project plan file
Quarterly updates are forwarded to OMB
If the 10% thresholds are breeched a corrective action plan is required
Documentation of changes in scope/schedule/budget
18
Why EVM?
Because You Gotta !
U. S. Department of Labor
OMB! (Circular A-11, Part 7)
"Agencies must use a
performance based acquisition
management system, based on
ANSI/EIA Standard 748, to
measure achievement of the
cost, schedule, and
performance goals."
19
EVM Statistics
U. S. Department of Labor
Once a project is 10% complete, the
overrun at completion will not be less
than the current overrun.
Once a project is 20% complete,
the CPI does not vary from its current
value by more
than 10%.
The CPI and SPI are statistically accurate indicators of
final cost results.
Source: Defense Acquisition University
20
U. S. Department of Labor
Now that I have made Bruce feel like he is carrying the same load as this poor
donkey, I will give him an opportunity to respond.
21
How are You Going to Use EVM?
U. S. Department of Labor
• Meet the requirements we have talked about?
• Manage your contractors?
• Manage your internal efforts?
• Manage the development process?
22
Meet the requirements
U. S. Department of Labor
• This is tooooooooo confusing!
• I don’t want to look at all of those
figures!
• Just get me by the audit!
• Make sure no questions are asked!
• It costs toooooo much!
23
Manage contractors
U. S. Department of Labor
• Establishes
– Expectations
– Goals
– Milestones
– Measurements
• Provides a methodology for
reviewing contractor performance
24
Manage internal efforts
U. S. Department of Labor
• Establishes
–
–
–
–
Expectations
Goals
Milestones
Measurements
• Provides a methodology for reviewing employee
performance
25
Manage the development process
U. S. Department of Labor
• Good management data
• Increased probability of success
• People know how they are being measured.
• Establishes a methodology to have all parties
playing from the same game plan.
26
How the Contractor will use EVM
U. S. Department of Labor
• Make the Government Super Stars!!!
• Manage the process
• Find problems in the execution, plans
and processes.
• Make the contractor look Good!!!
27
Providing EVM Information
U. S. Department of Labor
• Dash Board
• Periodic (Monthly) Reports
• Graphics
• Microsoft Project
• Data Bases
28
Additional Costs
U. S. Department of Labor
•
•
•
•
•
EVM Personnel
EVM Training for all managers
EVM Software
Links to Accounting
Certification
29
EVM Certification
U. S. Department of Labor
•
•
•
•
YOU WANT ME TO DO WHAT!!!!!!!
Only Agency authorized to certify is DCASMA
Must be sponsored by another agency
Must pass all 32 areas of ANSI/EIA Standard
748-98A
Takes about one year to complete
30
Short Falls
U. S. Department of Labor
Things to Look Out For!!!
• Total Reliance on the Contractor
• Development of Appropriate WBS
• Being Able to Audit
31
U. S. Department of Labor
Become a Partner with
Your Contractor!
32
Our Donkeys may not be Pretty,
but they can handle the load!
U. S. Department of Labor
33
U. S. Department of Labor
By this time we are all feeling like
this, but in reality the EVM
requirements are very doable.
34
EVM and the Exhibit 300
U. S. Department of Labor
• OMB Circular A-11, Part 7, Section 300 - a tool to
plan, budget and manage capital assets
• Known as Exhibit 300, also the OMB 300 Report
• Demonstrates to Management and OMB:
– There is a good business case for the project
– Good PM discipline is being employed
– Identify poorly performing assets (behind schedule, over
cost, lacking in capability)
35
How will OMB use the exhibit 300s
U. S. Department of Labor
300.8 How will OMB use the exhibit 300s?
1. To make both quantitative decisions about budgetary resources consistent
with the Administration’s program priorities, and qualitative assessments
about whether the agency’s programming processes are consistent with
OMB policy and guidance.
2. All information necessary to complete an exhibit 300 should already exist
as part of the agency's overall Information Resources Management
activities and within project specific documentation.
3. The materials used to produce the exhibit 300 should be readily available
to OMB upon request.
4. If additional supporting information is necessary, OMB will request from
agencies the supporting evidence used to produce the exhibit 300.
36
Exhibit 300 – EVM Information
U. S. Department of Labor
Section A: Overview
10. Did the Project Manager review this Exhibit? Yes/No
11. Contact information of Project Manager? Name, Phone Number
& E-mail
(Sarbanes-Oxley for PMs)
Section C: Acquisition/Contract Strategy (All Capital Assets)
2. If earned value is not required or will not be a contract
requirement for any of the contracts or task orders above, explain
why:_________
(I ask OMB if “Because it is too hard” would be an acceptable
answer here)
37
U. S. Department of Labor
Their response was
not what I had hoped.
38
Exhibit 300 – EVM Information
U. S. Department of Labor
Section C: Cost and Schedule Performance (All Capital Assets)
1. Does the earned value management system meet the criteria in
ANSI/EIA Standard – 748? Yes / No
2. Is the CV% or SV% greater than ± 10%?
(CV%= CV/EV x 100; SV%= SV/PV x 100) Yes / No
a. If “yes,” was it the? CV, SV or Both
b. If “yes,” explain the causes of the variance:
c. If “yes,” describe the corrective actions:
3. Has the investment re-baselined during the past fiscal year? Yes / No
a. If “yes,” when was it approved by the agency head?
39
MS Project Filters that
DOL Currently Uses
U. S. Department of Labor
1.
2.
3.
4.
5.
Actual Start is past the Planned Start
Actual Finish is past the Planned Finnish
AC does not equal Actual Dollars Spent
No AC and Actual Dollars Spent > $0
100% Complete with Negative SV
6.
7.
No EV with AC
No AC with EV
8.
Negative Fixed Cost
Deal w/Tasks with cost/work
past the status date
Potential High EVM Impact Issues
Helping MS Project Help You
9.
10.
11.
12.
13.
Milestones with Actual or Baseline Cost
No WBS number
Summary Task with Costs/Resources
Tasks Not Saved to Baseline
Lowest Level Tasks
Final Integrity
Checks to Accurate
EVMS Processing
40
EVM Drivers in the Public Sector
U. S. Department of Labor
Government Accountability Office (GAO) Cost Assessment Guide
“As a result, government managers
and auditors should find in the Cost
Guide guiding principles for use as
they assess (1) the credibility of a
program’s cost estimate for budget
and decision making purposes and
(2) the program’s status using EVM.”
GAO Cost Assessment Guide has 21
Chapters and 4 cover the use of
EVM as it relates to the auditing of
government contracts.
41
U. S. Department of Labor
What it means if you are not doing EVM now!
Maybe the bullet has not hit you yet, but what about the next one?
42
Questions
U. S. Department of Labor
We have covered a lot of material and
now we would like to answer any
questions you might have.
43
List of EVM References
U. S. Department of Labor
1. Office of Management and Budget
http://www.whitehouse.gov/omb
2. Defense Acquisition University
https://acc.dau.mil/evm
3. National Defense Industrial Association (NDIA)
http://www.ndia.org/Template.cfm?Section=Procurement&Template=/ContentManagement/ContentDisplay.cfm&Cont
entID=1109
4. Defense Contract Management Agency
http://guidebook.dcma.mil/248/guidebook_tools.htm
5. Federal Acquisition Regulation at Acquisition Central
http://acquisition.gov/comp/far/index.html
6. National Aeronautics and Space Administration
http://evm.nasa.gov/
7. PMI College of Performance Management
http://www.pmi-cpm.org/pages/about/1.60.what_is_evm.html
8. Office of the Under Secretary of Defense (Acquisition, Technology & Logistics)
http://www.acq.osd.mil/pm/
9. Association for the Advancement of Cost Engineering
http://www.aacei.org/certification/EVP/welcome.shtml
44