Revitalizing Earned Value Management Systems (EVMS)

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Revitalizing Earned Value Management Systems (EVMS)

Quick Summary

  • Regulatory changes and updated standards are creating an opportunity to revitalize EVM Systems. The FAR overhaul, revised agency thresholds, and the EIA-748-E streamlined requirements while reinforcing the continued need for an effective EVMS.
  • Organizations have an opportunity to refocus on value-driven EVM practices. Rather than treating EVMS as a check-the-box requirement, this is an opportunity to renovate bloated processes and remove non-value-added activities to establish a flexible “living” system that supports proactive project management and credible forecasting.
  • BI and AI tools can transform EVM data into a real-time decision-making advantage. When supported by reliable, integrated data, these tools can rapidly organize information, improve visibility, identify risks early, and help project teams respond faster to changing priorities as well as technical, schedule, and cost challenges.

With the recent changes in the government regulatory requirements, the publication of the EIA-748-E Standard for EVMS, and evolving Business Intelligence (BI) and AI tools, the components for revitalizing Earned Value Management Systems (EVMS) are falling into place. This is an opportunity to refocus on the original purpose of an EVMS and effective use of real-time EVM data to quickly address problems before they become critical.

As highlighted in a previous blog, “Earned Value Management (EVM): How Much is Enough?”, being merely “compliant” with the EIA-748 Guidelines should not be the goal. That strategy fails to take advantage of the benefits of an EVMS; it is also short-sighted. Too often an EVMS is perceived as a contractual check-the-box exercise or focused on detailed score keeping.

The goal should be about being efficiently expert at EVM; a commitment to become “best-in-class” as expert practitioners of EVM. Following this strategy, an organization’s EVMS is actively maintained and used to ensure it provides relevant, useful information needed to manage projects for success. EVM is a powerful project management methodology that integrates scope, schedule, and cost management to provide a clear picture of project performance, the forecast completion date, and estimate at completion. BI and AI tools are enhancing the ability to rapidly organize and analyze real-time EVM data for proactive management and clear transparent communication with the customer. This also aligns with the need for speed in delivering capabilities to the customer when trade offs between requirements, schedule, and cost must be made.

Trimming Contractual and Guideline Requirements

The regulatory environment has been evolving; government entities are either simplifying or changing the requirements for an EVMS. As a reminder, the Capital Programming Guide Supplement to the Office of Management and Budget (OMB) Circular A-11 Planning, Budgeting, and Acquisition of Capital Assets establishes the government major acquisition requirements for an EVMS. This Guide states contractors must use an EVMS that meets the EIA-748 guideline requirements to monitor contract performance. All agency EVMS regulations point to the A-11.

A summary of recent changes follows.

Revolutionary Federal Acquisition Regulation (FAR) Overhaul that began in May 2025 focused on removing most non-statutory rules and rewriting requirements in plain language. Subpart 34.2 – Earned Value Management System was trimmed to the basic EVMS and Integrated Baseline Review (IBR) requirements. The Pre-Award IBR and Notice of EVMS Post-Award IBR clauses were removed; it now just states an IBR is required. Subpart 52.234-4 – Contract Clause for EVMS text was streamlined. Key takeaways: Reaffirmed the value of an EVMS and IBRs. What is unchanged: An EVMS is required for major acquisitions for development contracts, requirements flow down to subcontractors, and IBRs are required.

Defense Federal Acquisition Regulation Supplement (DFARS) Class Deviations (2026-O0011 February 2026), in response to the FAR Overhaul. Subpart 234.2 Earned Value Management System, 234.201 Policy raised the contract value threshold from ≥ $20M to ≥ $50M for EVMS reporting and incorporated the 2015 Class Deviation Memo increasing the contract value threshold for compliance reviews to ≥ $100M. There are also new related Class Deviation Clauses: 252.234-7001 is now 252.234-7998 Notice of EVMS; 252.234-7002 is now 252.234-7999 EVMS.

NASA FAR Supplement 1834.201 Policy Class Deviation (June 2025) as well as their solicitation clause (1852.234-1) and contract clause (1852.234-2) align with the DoD contract value threshold changes and revised clauses.

National Nuclear Security Administration (NNSA). Although NNSA is part of the DOE, as of September 2025 they are the Cognizant Federal Agency (CFA) for NNSA projects. They purposely simplified their compliance and surveillance process to be able to rapidly respond to threats. Contractors self-assess their EVMS. NNSA uses an EIA-748 Guideline checklist, reviews data artifacts, and conducts interviews for evidence of compliance. Certification reviews are required when the Total Project Cost is > $300M and are subject to surveillance reviews.

EIA-748-E Standard for EVMS approved and published in February 2026. This long overdue update reduced the number of guidelines to 27 and reflects current business system capabilities. The previous set of 32 guidelines were revised or merged, two were added, and four were deleted to improve clarity.

With the publication of the EIA-748-E, industry guides as well as government agency compliance and surveillance review materials have been or are in the process of being updated. The NDIA IPMD Intent Guide for EIA-748-E will be available on the NDIA IPMD web site once it completes the membership review and approval process. The DoD Earned Value Management System Interpretation Guide (EVMSIG) is also being updated to reflect the EIA-748-E. Once the EVMSIG is published the DCMA EVMS Group will be updating their Business Practices, appendices, and EVMS Compliance Metrics (DECM). DCMA has already trimmed their DECMs to a set of 60 standard, 10 conditional, and 72 low priority tests.

Impact of BI and AI Enabled Tools and Apps

BI and AI tools speed up the process to pull data from different sources for defined use cases and to organize it for analysis. The time lag to view current data can be eliminated with the right business system interfaces and tools. These tools can quickly produce a variety of dashboards or data views with the ability to drill down into the data as well as to sort and filter as needed for root cause analysis. AI agents designed for specific use cases can also speed up the process to organize and present data for real-time decision making. These dashboards and views can be tailored for specific users such as project managers, control account managers (CAMs), functional managers, schedulers, finance, material or subcontract management, and others.

Taking advantage of BI and AI does require a defined enterprise strategy to successfully leverage these powerful tools. Data is the backbone of any AI model – data is needed to “teach” AI how to spot patterns and make predictions. This includes the vast volume of an organization’s transaction records, analytics, and proprietary information across multiple systems.

The problem? Organizations often lack a consistent, verified version of data (the single source of truth) – there is uncertainty about what data should be used to analyze and “feed” their AI models. Internal proprietary data must not be exposed to the outside world. The single source of truth must exist in a governed and curated environment; it must be organized and integrated with a defined data model to be able to analyze real-time streams of data while avoiding multiple versions of the truth.

The challenge is that many organizations are still doing their enterprise planning, including estimating, budgeting and many other functions, in spreadsheets. It is not accessible to others or captured in a common database. Employees end up debating discrepancies between spreadsheets rather than analyzing the data in question.

Once the system that contains the official single source of truth has been determined and how data is organized and integrated, there are a variety of commercial off the shelf (COTS) tools available for the next step. Employees (the power users) familiar with BI and AI tools can quickly turn ideas into apps in a matter of hours or days that help them and their team to get things done. They can quickly build business environment specific dashboards, analyze real-time data pulled from various data sets, and produce outputs designed for different users or use cases.

Putting All the Pieces Together

What are the three primary takeaways?

The requirement to provide a fact-based assessment of project progress and forecast isn’t going away. The FAR overhaul didn’t do away with EVMS or the related fundamental requirements. It does, however, require organizations to be efficiently expert at EVM. A “living” EVMS (i.e., actively maintained and used) that can be scaled/tailored to management needs for each project is essential.

Changes to the requirements provides an opportunity to update “bloated” processes and procedures or that haven’t been updated to reflect new tools. Since the EVMS will need to be reviewed anyway to verify it supports the revised guidelines as well as updated agency requirements, there may be non-value added content or steps that can be eliminated.

BI and AI tools are useful for organizing real-time data into actionable information. Organizations taking advantage of these tools can rapidly respond to realized or emerging risks and changing scope or priorities in response to evolving threats. This creates a competitive advantage.

Returning to a Focus on Proactive Management

This is an opportunity to return to the original objective of an EVMS: timely and relevant information for proactive decision making to ensure project success and a happy customer. The effectiveness of an EVMS should be measured by the technical, schedule, and cost performance metrics. Product acceptance and in-process controls are examples of technical performance metrics. Schedule status and forecast, cumulative to date cost performance index (CPI), estimate at completion (EAC), and the to complete performance index (TCPI) are examples of schedule and cost performance metrics.

Too often the perceived approach to a “compliant” EVMS is to drive the data to an excessive level of detail along with restrictive rules and guidance that result in a system that is cumbersome and painful to use. It reinforces the perception that EVMS is too costly – something the customer doesn’t want to pay for because they don’t see the value.

The alternative? An organization that is efficiently expert at EVM where the customer has directly experienced the value of using real-time performance data to successfully manage their program. Non-value activities have been eliminated. An actively maintained and used EVMS is also resilient; project teams can quickly respond to evolving priorities and threats. Taking advantage of the power and agility of BI and AI tools/apps can help project teams to focus on what matters with real-time data and analytics.

Taking Advantage of the Opportunity to Revitalize EVM

Changing the view that EVMS is burdensome, costly, and of no value will take time. It depends upon organizations choosing to become efficiently expert at EVM.

Recent changes in requirements and the guidelines will require organizations to review the state of their EVM Systems. It creates an opportunity to eliminate non-value added activities. At the same time, powerful BI/AI tools enable real-time data analysis so project teams can be more proactive as well as renovate EVMS functions. The effectiveness of the EVMS is apparent because it provides real-time visibility into project performance with a credible forecast completion date and estimate at completion.

There is no need for excessive oversight by government customers that drives up the cost of managing projects when the customer has confidence the organization’s EVMS provides the visibility they need – and that earned value based project management is a valuable tool.

Next Steps

Consider having an independent third party complete a thorough assessment of your EVMS process areas and documentation to identify where content can be trimmed and clarified or where non-value added steps can be removed – particularly if you are starting to integrate BI and/or AI tools into your EVMS and other business systems. Call us today to get started.

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Schedule Risk Assessment Fundamentals

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Schedule Risk Assessment Fundamentals

Quick Summary

  • Schedule Risk Assessments (SRAs) use Monte Carlo simulations to model schedule uncertainty, providing probability-based insights into meeting project completion dates and risk drivers.
  • SRAs enhance decision-making by quantifying outcomes (e.g., likelihood of meeting objectives), supporting risk prioritization, scenario analysis, and proactive schedule management for complex projects.
  • Effectiveness depends on quality inputs: well-constructed network schedules and well-defined risks.

Why perform a schedule risk assessment (SRA)? 

SRAs are critical in understanding the likelihood of meeting baseline or forecasted completion dates as well as identifying which risks to focus on for protecting the project schedule. 

An SRA is a Monte Carlo based simulation of the schedule using the existing logic but with different duration inputs in repeated “walk-throughs” of the schedule. In each run through of the schedule a different duration may be used for every task therefore the end date is usually different. When enough simulations are performed, a picture emerges of the distribution of potential outcomes from the shortest, to the longest, and to all those in-between. 

A simple way to think of this is to imagine driving to the grocery store on the same route a thousand times. Sometimes it may be rainy or snowy or maybe even clear and dry. There may be accidents, road work, traffic lights, or other issues. Each trip can have a different duration but overall, with enough trips, we will end up with good picture of how much time we should plan for the trip. We can even have different plans for different conditions.

Of course, you do not have the luxury of performing your project a thousand times. You get one opportunity. But an SRA can help you understand what the journey through your project can look like through simulation.

Performing SRAs and managing the project based on the results can provide project managers with powerful tools to successfully meet project objectives. SRAs are a discipline that supports critical risk and schedule decision making.

Projects are often long durations of five years or more, involve one-of-a-kind systems, facilities, or integrations, and have numerous constraints ranging from security, regulatory, to environmental. In addition, these projects have oversight from organizations such as the Government Accountability Office (GAO), Office of Management and Budget (OMB), and even Congress with expectations set to meet internal milestone commitments such as critical decisions (CDs) and initial operational capabilities (IOCs). While this is a subset of the many challenges facing these projects, they all rely on project managers and the project team meeting schedule commitments.

Purposes of the SRA

The main purposes of the SRA are twofold: 1) to understand the schedule and 2) to understand the probability of achieving the end date in the schedule. 

In a recent H&A workshop a very high-level executive in one of the large government agencies said of the SRA, “I don’t do it, but I receive the “P” numbers.” What she meant was that she receives the result in terms of the probability numbers developed in the SRA. She is informed of the probability of achieving the schedule as part of the program status review.

Understanding the SRA

In simple terms, an SRA is a structured probabilistic analysis by simulation of a project’s schedule that quantifies the likelihood of meeting critical dates. Initially the SRA focuses on the baseline and the probability of achieving the baselined dates. Once progress has been added to the schedule, the emphasis shifts to the current or working schedule and away from the baseline. The SRA uses the latest available information.

Uncertainty can exist in the schedule in terms of duration uncertainty, unplanned events, merge bias, and other such factors. The SRA tries to account for duration uncertainty by using a three-point approach to the task durations. The owners of the tasks are challenged to provide best case, most likely case, and worst-case durations for use in simulating the schedule. 

The SRA uses the project’s schedule logic as well as uncertainty assigned to activities along with the project’s risk register to produce probabilistic outcomes. A probabilistic analysis is a way of understanding outcomes when the future is uncertain. Instead of assuming there is only one single outcome for the schedule, probabilistic analysis takes variation into account based on durations, risks, and other events through simulation. This simulation is then repeated hundreds, sometimes thousands of times to produce statistical analysis that defines what the range of results could be. This statistical analysis will reveal, based on inputs to the model, a distribution of possible outcomes with confidence intervals expressed like this:

  • There is a 50% chance of finishing the project by this date, or
  • There is an 80% chance of meeting this milestone.

The SRA can be used to evaluate an entire project schedule or a subset of the schedule which may be a specific milestone, deliverable, or even a single work package. The scope of the SRA depends upon what part or whole of the schedule you would like to examine based on application needs. 

For this reason, SRAs are useful for project managers, control account managers (CAMs), schedulers, risk managers, and other key stakeholders. Stakeholders can use SRAs to meet compliance requirements, run “what-if” scenarios, or provide inputs into vendor selections and vendor performance management decisions. While the SRA is an excellent management decision tool, it should not be used to provide a static critical path review. It should never be used to create a deterministic “best-case” schedule, and it should not be dependent upon a specific software tool.

One important output of the SRA is commonly called the “Tornado Chart” because of the shape of the data provided. This analysis identifies the number of times a task acts as a driver in the outcome of the schedule. If a task is often driving the outcome, it should be considered carefully. Potential other approaches should be considered or at least a detailed review of the durations of the task should be performed.

Foundations

The SRA will only be as credible as the schedule it evaluates and the integrity of the risk information that is applied. Prior to the execution of a successful SRA, the schedule integrity should meet established quality standards. 

The DCMA EVMS Compliance Metrics (DECM) specific to schedule data provides a widely accepted benchmark for evaluating integrated master schedule (IMS) health. The NDIA Integrated Program Management Division (IPMD) Planning and Scheduling Excellence Guide (PASEG) includes a section on performing schedule health assessments with a list of often used metrics. Some project teams may customize their IMS quality metrics based on their established and approved EVMS documentation. Areas typically evaluated include logic integrity, critical path integrity, schedule realism, and data quality.

Logic integrity includes the proper use of predecessors and successors with minimal usage of leads and lags and a clear path from start to finish. Critical path integrity ensures that there is an understood set of critical and near-critical paths with logical drivers of key milestones and avoidance of excessive float. Standards for schedule realism include reasonably short activity durations and a limited use of constraints. Data quality requires valid dates, calendars and status updates. All these elements are covered in the generally accepted schedule quality metrics and most SRA tools will validate the schedule as well ensure that the schedule quality is adequate to perform a successful SRA.

Equally important to the SRA is the risk information. Risks should be identified and clearly characterized; their association with the schedule should be mapped. When feasible, mitigation plans should be incorporated into the schedule along with any variations they may have. The identified risks should succinctly state the event, and the cause and effect of the risk. Each risk should be characterized by its probability of occurring and the impact to the schedule if it were to occur. This characterization should be grounded in credible assumptions, usually based on the project’s rubrics for scoring likelihood and impact.

Input of risk events into the schedule provides additional realism. In terms of the simulation there will be times when the risk event happens and times when it does not with different durations as well.

Once quality schedule and risk information is validated, these inputs are imported into the probabilistic tool used by the project team. Since probabilistic analysis is based on the Monte Carlo methodology which uses statistical math, any tool that accommodates schedule and risk inputs should be sufficient. 

Frequency of SRA Application

SRAs can be expensive when time is taken to do the best case, most likely, and worst-case duration analysis by the CAMs. The cost is a limiting factor in the use of the SRA. It is most common for SRAs to be performed:

  1. At the time of baselining to understand the baseline schedule and the probability of success.
  2. When a major change is made to the project schedule.
  3. Before a major event such as the Critical Design Review (CDR) where the nature of the effort changes from design to build and the team wants to understand the probability of success for the remaining effort.

Do not accept a contract that requires performing the SRA when requested by the customer. That is too open ended of a requirement and does not allow you to estimate the cost or control the cost. A contract should specify the number of SRAs to be included so that any additional SRAs can be treated as a compensated change.

Conclusion

When grounded in a high-quality IMS and integrated with disciplined risk management, SRAs provide stakeholders with a realistic view of schedule outcomes and the risk drivers. While often thought of as a compliance requirement, the SRA provides management decision insights and is useful in understanding, as an early warning indicator, any threats to meeting schedule objectives. When properly used, the SRA is a powerful management tool that can contribute to project success.Interested in learning more? H&A master schedulers and risk subject matter experts often assist clients with establishing their SRA process and mentoring project teams to use the SRA outputs to create more realistic schedules with a higher probability of success. Call us today to get started.

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What is the Difference Between Budget and Funds?

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Quick Summary

  • A budget is a project management metric used to plan and measure performance, while funds are real dollars recorded in the accounting system and spent to perform the work.
  • Earned Value Management distinguishes planned values (e.g., BCWS, BCWP, BAC) from actual costs and estimates (e.g., ACWP, ETC, EAC) to provide insight into project performance and funding needs.
  • Contract funding profiles influence how budgets are time-phased, and regular EAC analysis is essential to forecast total funding requirements and avoid breaching funding limits. 

While working with numerous clients over the years, H&A earned value consultants frequently observe people using the term “money.” Typically, they mean “funds” when they really mean “budget.” People often confuse the terms, even though they have been used within the project management community long before the advent of earned value management practices. 

The intention of this blog is to highlight the difference between “budget” and “funds” and promote a common understanding of the terms. Using the correct term helps to eliminate confusion and improve communication between project team members, management, and the customer. 

Examples of Budget and Funds Confusion

Here are a couple of common statements H&A earned value consultants have heard many times:

  • I am requesting management reserve (MR) to fund my overrun.
  • I underran my budget, so I am going to return funds to MR.

Why are these inaccurate statements? The people making them have confused the terms or may think that “budget” and “funds” mean the same thing. 

Explaining the Difference Between Budget and Funds

The simple definition is that “budget” is a project management metric, a planned value. It cannot be used as funds (i.e., money) to buy something tangible, such as a cup of coffee. “Funds” are real dollars. The purpose for budget is to measure project performance so that as funds are expended (the actual costs) to perform the authorized work, any difference, more or less than what was planned, can alert management.

The table below summarizes the differences between the two terms.

BudgetFunds
Cannot be spentMoney – real dollars being spent or forecasted to be spent. Funding represents the customer’s ability and commitment to pay. 
A number on a piece of paper, in a spreadsheet or database – it is a project management metricActual costs recorded in the accounting system of record used for financial reporting
Budgeted Cost for Work Scheduled (BCWS)
  • Time phased budget for required resources to accomplish tasks scheduled in the integrated master schedule (IMS)
  • Forms the performance measurement baseline(PMB)
Estimate to Complete (ETC)
  • Funding required to complete the remaining work, exclusive of prime contractor fee
  • ETC plus ACWP results in the Estimate at Completion (EAC)
Budgeted Cost for Work Performed (BCWP)
  • The budget value for completed work
Actual Cost of Work Performed (ACWP)
  • The costs incurred and recorded to accomplish the work performed
Budget at Completion (BAC)
  • Budget representing all authorized scope of work (SOW)
  • Cannot change without a change to the SOW with appropriate approval
Estimate at Completion (EAC)
  • Funding number representing all the money (at the cost level – does not include fee) that will be spent
  • Can change without a commensurate change in the SOW

An Overview of Budget Terms

It is often helpful to review the basis for determining and distributing a project’s total budget used for planning and measuring project performance, as illustrated in Figure 1. Note: this is a simplified discussion to highlight the budget terms and does not include nuances such as an Over Target Baseline (OTB) situation. 

Figure 1: Budget Distribution and Terms Illustrated

The budgeting process begins with the Contract Target Price (CTP). This is the total negotiated contract value. It includes the negotiated contract cost (NCC) plus the contractor’s planned (target) profit or fee. The Contract Budget Base (CBB) is the starting point for a contractor’s internal budgeting process outlined below. 

Budget ComponentDefinition
Contract Budget Base (CBB)  Represents the financial authorization of the contract and is based on the negotiated contract cost (i.e., price less fee). The CBB is always equal to the negotiated cost for definitized work and the estimated cost for all authorized unpriced work (AUW), also known as Undefinitized Contact Action (UCA). The CBB equals the sum of distributed budgets, undistributed budget, and management reserve (MR). It also equals the sum of the performance measurement baseline (PMB) and MR.
Management Reserve (MR)  Amount of contract budget set aside to handle realized risks and emerging in-scope effort. This effort is in scope to the contract, but out of the scope of distributed and undistributed budget. 
Performance Measurement Baseline (PMB) The PMB is the sum of all distributed direct and indirect budgets against which contract performance is measured. The PMB is the sum of the distributed budgets and undistributed budget. The PMB plus MR is equal to the CBB. 
Undistributed Budget (UB) Budget for authorized work scope that has not yet been identified to a specific WBS element and/or responsible organization at or below the lowest level of reporting to the customer. 
Distributed Budgets  Distributed budgets may be comprised of summary level planning package (SLPP) and control account budgets.
Summary Level Planning Package (SLPP) Budgets Budget may be set aside in SLPPs at the lowest WBS element until the future work effort can be defined in more detail. SLPPs have a high-level scope of work and are scheduled in the IMS with time-phased budgets. They are converted to one or more control accounts with subordinate work packages and planning packages as soon as possible. 
Control Account Budgets  Control accounts have a defined scope of work, scheduled start and finish dates, and time-phased budget that reflects the work decomposed to the work package or planning package level. The sum of the time-phased work package and planning package budgets equals the total control account budget. 
Work Package/Planning Package Budgets  Work packages and planning packages have a defined scope of work, scheduled start and finish date, and time-phased budget based on the parent control account. This lowest level of budget includes the element of cost detail (labor, material, subcontract, and other direct costs) and value detail (hours, units/quantities, direct costs, and indirect costs). 

Notes about Management Reserve

Remember that MR is a budget, is not a financial reserve (i.e., a source of funds). It is not time-phased and is not included in the PMB because there is no related work scope, although it is a part of the CBB. MR budget cannot be used to eliminate cost variances, cover cost overruns, or recover underruns. There is only one MR set aside for a project and the value is never negative.

MR is decreased to provide budget for realized risks or unplanned activities within the contract scope of work. It may be increased whenever the work scope is decreased along with the allocated budget (a contract modification). Customer authorized contract changes, including AUW, should be incorporated into the CBB and PMB as soon as possible; this may include MR budget set aside for added work scope. Only contract changes authorized by the customer’s designated contracting officer may change the CBB value. 

For more discussion on MR, see this blog: Management Reserve Best Practice Tips. Also see this article: The Difference Between Undistributed Budget and Management Reserve. 

Additional note. The MR budget belongs to the contractor’s program manager, not the government customer. MR is not a cost reserve (contingency) for the government customer and may neither be eliminated from contract prices by the customer during subsequent negotiations nor used to absorb the cost of contract changes. For the government customer, contingency is the cost reserve they own, typically associated with a Program Risk-Adjusted Budget (PRB). It is held outside of the project scope, schedule, and budget already provided to the contractor. Reserves held above the program permit senior government management to balance resources within portfolios and among programs. The government customer’s cost reserve could be used to modify the contract to include additional work scope (increases the contractor’s CBB) or provide the funds needed to cover a contract cost overrun. 

Budget, Estimates, and Funding Profiles

Contract funding also influences how the PMB budget is allocated and time-phased. The budget distributions are a result of the project planning process (scope of work definition, detailed schedule development, initial cost estimates), MR set aside (risk and opportunity planning), and the funding profile. This is an iterative process to develop the baseline schedule and time-phased budget plan. The budget distributed to the control accounts and any SLPPs is compared to the total PMB/UB value. As needed, adjustments to activities, sequence of work, or resource assignments are made to ensure the overall budget plan reflects the budget limit for the PMB and the contract’s funding profile. For a real-world example of this, see this blog, Understanding the ALAP Scheduling Option in Practical Terms, where a front-loaded schedule was exceeding the funding cap, and how a H&A scheduling consultant helped resolve the issue.  

Preparing an EAC every reporting cycle provides an accurate projection of cost at contract completion for internal and external management. It also represents the estimate of total funds required for the contract. The most likely EAC should be within the funding constraints for the contract. Any amounts expended in excess of the contract funding limit puts the contractor at risk. The contractor must notify the customer when their EAC analysis determines there is a potential to breach a funding constraint to address any contract funding issues as quickly as possible. 

Figure 2 illustrates a funding profile along with the range of project EACs. In this figure, the most likely EAC is within the contract funding limit.

Figure 2: Management Level EACs with Funding Profile

Reinforcing a Commitment to EVMS Excellence

A common theme of the H&A blogs and articles is helping clients to achieve and maintain a commitment to a high level of excellence in all EVMS process areas. An important part of this is continuous EVM training and project scheduling training, whether for beginners or advanced practitioners. This includes targeted training when clients identify an area where project personnel could use a refresher, more hands-on training, or mentoring. Examples include basic and advanced EVMS workshops, Completing Variance Analysis Reports, Developing an ETC and EAC, as well as short, targeted courses on topics such as Budget versus Funds. Give us a call today at (714) 685-1730 to get started.

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Integrating Subcontractor Data into an Integrated Master Schedule

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Generating and maintaining a project’s Integrated Master Schedule (IMS) that meets management needs as well as customer requirements is difficult under the best of circumstances. The challenge becomes even more complex when subcontractor work effort must be incorporated. Issuing a subcontract is, in effect, handing off a portion of the work scope to an outside entity that becomes responsible for performing that work and meeting all technical requirements. 

Another consideration for contractors where Earned Value Management System (EVMS) contractual requirements apply is whether the subcontractor is considered a major subcontractor because of the contract value, scope of work, or high risk factors. The EVMS requirements are flowed down to these major subcontractors; they will have the same contractual requirements and challenges as the prime contractor. Most subcontracts do not fall into this category. Many are small, short term, or firm fixed price (FFP) subcontracts. 

Regardless of the category of the subcontractor, the subcontractors and the prime contractor all need an IMS to plan and coordinate work effort as well to measure progress. Using FFP subcontracts on development projects has the potential to increase risk significantly when expectations for scheduling rigor are not clearly defined. 

A Real World Example

H&A EVM consultants supported a multi-billion dollar development project that illustrates the challenges with integrating subcontractor schedules into a prime’s IMS. The prime contractor had two major subcontractors with EVMS flow down requirements. They also had 22 FFP subcontracts without EVMS flow down requirements. 

These FFP subcontracts were also mission-critical. The prime’s first priority was to define the required schedule format and data content in the request for proposal (RFP) to the subcontractors. Standardization was essential, along with specific instructions to ensure the schedule data could easily be incorporated in the prime’s IMS. 

As the basis for a customized project specification, the team selected the Integrated Master Schedule (IMS) Data Item Description (DID) DI-MGMT-81650, an earlier DID that preceded the Integrated Program Management Report (IPMR) and Integrated Program Management Data and Analysis Report (IPMDAR) DIDs. The requirements were simplified and trimmed to selected sections in the DID for the detailed schedules. The document was assigned a specification number within the prime’s document management system so it could be used for future procurements. 

Early Schedule Submittals: A Wake-Up Call

All the subcontractors dutifully proposed and were awarded subcontracts. The FFP subcontractors were required to submit initial schedules using the scheduling tool of their choice at the end of the first month of performance. To ensure compliance, the prime contractor tied the subcontractor’s first payment milestone to the acceptance (receipt, review, and approval) of their first schedule. 

This turned out to be one of the best decisions made during project startup. 

Those first schedules quickly revealed that many of the lower tier subcontractors had no experience developing logic-driven schedules that could comply with the reduced requirements document. They were unable to generate even the most basic project schedule. It was an eye opener to realize that while the first tier companies and most of the second tier companies did know about project scheduling, some of the second tier and all of the lower tier companies lacked that expertise.

The Solution: A Prime-Led Schedule Development Workshop

The prime’s schedule team, largely comprised of H&A schedulers, quickly initiated a week long on-site workshop open to all subcontractors who wanted help building their IMS. Every one of them signed up as they recognized acceptance of their schedule was a prerequisite for payment. 

Prime contractor personnel were assigned to each subcontractor to help them build schedules that met the requirements. Most of the subcontractors were able to produce an acceptable schedule within the first three days. The other subcontractors required the full week.

The workshop approach provided two major benefits.

  1. The subcontractors gained experience in developing a logic-driven schedule that they could maintain and status. They had a better understanding of what the prime contractor expected them to provide. 

  2. The prime’s schedule team gained a better understanding of each subcontractor’s scope of work and execution strategy. They had a better picture of the entire IMS as well as interdependencies. Without this knowledge, the next step of determining the best strategy to incorporate the subcontractor’s schedule data into the prime’s IMS would have failed. 

Strategies for Incorporating Subcontractor Data into the Prime’s IMS

The NDIA Integrated Program Management Division (IPMD) Planning and Scheduling Excellence Guide (PASEG) is a useful source of information on scheduling best practices. The section on External Schedule Integration offers basic guidance on flowing down detailed scheduling requirements to subcontractors. It also provides a short list of things to consider, such as coordinating dates and change control:

“Status dates should be consistent between the prime contractor and supplier schedules. If the subcontractor’s schedule update is to a different point in time, it could potentially affect the IMS analysis results. If it is not possible to have consistent status dates between the various schedule elements then implement a strict process, with support of all parties, to manage the impacts.

Change control procedures are established and understood. The prime contractor should clearly communicate which type of schedule changes will require pre-approval before incorporation and which type will require coordination only or documentation upon submittal. The lack of a disciplined change control process can result in disconnects between the prime contractor and subcontractor’s schedule.”

Remember the prime contractor’s IMS includes a baseline and a current schedule. The complications can be significant when all the variables are considered such as calendars, mix of schedule tools and options, scheduling techniques, resource loading, and custom fields.

That still leaves the question of how to incorporate the schedule data from an external source into the prime’s IMS. The PASEG outlines three approaches.

  1. Full integration where the entire subcontract schedule is incorporated into the prime’s IMS. 

    Pros: Provides maximum visibility into the critical and driving paths as well as forecast completion dates.

    Cons: Often not feasible with a large number of subcontractors. Mix of scheduling tools complicates the process. 

    Use Notes: This option is often reserved for major subcontractors or teaming partners. Works best when the prime and subcontractor are using a common scheduling tool or the subcontractor has direct access to the prime’s IMS scheduling tool to maintain their data. Otherwise, the prime must incorporate additional processes to import the external data into their IMS. There are other complications, as different schedule tools calculate dates differently, that will need to be handled in the integration process. 

  2. Using interface milestones. 

    Pros: Easier to implement and maintain. Yields the best results with less complex or lower risk subcontractors. 

    Cons: Provides less insight into the subcontractor’s current schedule performance. It does not easily support critical path analysis when paths run through subcontract work effort.

    Use Notes: Requires the manual update of each interface milestone to reflect the latest forecasted dates from the subcontractor’s schedule. The prime must ensure their IMS is properly coded. Contractors often use “External Inbound” and External Outbound” codes along with a subcontractor code and any other codes needed to identify who is receiving/giving to whom.

  3. Representative model. This is a middle ground approach between integrating the entire subcontractor’s schedule into the prime’s IMS and using interface milestones. Requires a summarization or representation of the subcontractor’s work to be entered into the prime’s IMS.

    Pros: Provides a summarized version of the subcontractor work effort that retains enough schedule logic for critical and driving path analysis. 

    Cons: IMS content must be carefully entered and maintained to retain the required relationships to the external schedules for accurate critical path analysis. Requires a higher level of schedule discipline and a defined process to ensure the accuracy of the data between the external schedules and the prime’s IMS. 

    Use Notes: It is often beneficial to provide the subcontractor with a copy of their schedule that includes an extra column that identifies the prime’s task ID that is the “parent” of the summarized or consolidated work. In the initial IMS submission from the subcontractor, the prime added a custom field (Prime Parent ID). That IMS file was returned to the subcontractor, and the use of the special field was agreed upon. In each subsequent submission by the subcontractor, the prime team checked for tasks with no “Prime Parent ID” and added one that would allow integration. This kept the two companies’ schedules synchronized. If changes were made by the prime team that changed the field data in the subcontractor’s IMS, the changes were coordinated. A recommended practice is to group and sort the subcontractor schedule by the prime’s IDs to ensure that it is done properly. 

What Worked for the Complex Development Project

In the situation described earlier, the schedule team determined a hybrid approach was the best solution, depending upon the subcontractor’s scope of work.

  • The full integration approach was quickly eliminated; it was impractical. There were too many schedules, and some were too complex. It would have been a logistical nightmare. 
  • Selected simple FFP subcontract work effort was incorporated using the milestone method. The schedule milestones were carefully aligned to the payment plan milestones so that one set of milestones served both purposes.
  • For the subcontracts with EVMS flow down requirements and the other subcontracts, including some FFP subcontracts, the representative model was used. The prime’s control account manager (CAM), responsible for the subcontractor’s scope of work, was required to condense the subcontract schedule into a representative model that made sense to the CAM. The most common ratio turned out to the 10:1, with 10 subcontractor tasks rolling up to 1 prime contractor IMS task, carefully maintaining the prime’s control account and work package structure. With proper coding, the subcontractor schedule could be easily reviewed and analyzed by the CAM as well as other project personnel.

Need help establishing strategies to integrate subcontractor schedule data?

Every project presents unique scheduling challenges, and the approach for integrating subcontractor data often needs to be tailored to fit the situation. H&A earned value consultants and master schedulers have seen and solved them all. With deep experience across diverse industries and project types, our experts deliver the insight and leadership needed to help contractors implement practical, results-driven solutions for integrating subcontractor data. Call us today to get started.  

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Survey of Schedule Acceleration Techniques

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Survey of Schedule Acceleration Techniques - An overview of schedule acceleration techniques discussed in the PASEG

The NDIA Integrated Program Management Division (IPMD) Planning and Scheduling Excellence Guide (PASEG) includes a list of the acceleration techniques that can be applied to reduce project schedule duration. That section of the guide provides the background for project team discussions on accelerating complex integrated master schedules (IMS) in government contracting environments. This blog is intended to increase awareness of the techniques in the guide and provide some additional insight into their application. It relies heavily on the guide’s content. 

An additional purpose of this blog is to promote the use of the NDIA IPMD nomenclature across the defense industry spectrum. In much the same way as the earned value management (EVM) acronyms of BCWS, BCWP, ACWP and others have become standard terminology, it would be beneficial to have a more standard way of discussing schedule acceleration techniques. As the PASEG is an industry guide developed and maintained in collaboration with U.S Government agencies, the PASEG promotes a common understanding of these techniques.

One caution. Modifications like the ones discussed here can introduce additional risk into the schedule and reduces flexibility. Be careful when modifying the schedule. A good practice is to first create a copy of the schedule and assess the effects of your changes before you adopt them. The trade-offs may or may not be acceptable depending upon the objective you want to achieve. If the schedule is the priority, there is likely to be an impact on the work scope or cost. There can also be unintended consequences when potential impacts are overlooked. 

Let’s review the techniques from the PASEG. 

  1. Crashing. 

The guide says “This technique allows for the acceleration of schedule by applying additional resources or more experienced resources to do the work in a shorter period of time. This method assumes that the task can be completed in a shorter amount of time with the increase in resources.”

We probably have all used this method when we are shopping on the internet and we are faced with the choice between receiving the item in 5 days or accelerating that to 3 days or even the next day. We are paying more to get it faster. But what is really happening behind the scenes? Do they pick your order first? Do they pack it first? Do they ship it on faster carrier? Those are the actions you would be considering on your project when you want to accelerate something by crashing the schedule.

Using outside or contract labor is a form of this where we boost our workforce for a period when we need extra effort. A form of this is offloading some work to a subcontractor.

A more detailed example comes from the factory setting where certain orders are “expedited”. What that might mean is that the normal movement process is subverted. The normal process might be as shown in Figure 1 with a queue time while your order waits for the machine. The machine will be torn down and set up for your work when it is most efficient to do so.

Process with wait time
Figure 1: Process with wait time

When you crash this process, you might simply remove the queue time so that as soon as your order arrives the machine is torn down and set up for your job to eliminate the wait time as shown in Figure 2.

Process with wait time eliminated
Figure 2: Process with wait time eliminated

However, using this approach is likely to increase cost and has the potential to introduce other risks to the project. A real-world example comes from the semiconductor industry where the factory was running both standard products and custom products. A normal custom order time of 8 weeks was cut to 2 weeks by using this approach. The cost that was charged to the customer for the rushed custom order was about 10 times the normal cost of an order to repay the factory for lost efficiency. 

  1. Fast-tracking.

The guide tells us “This technique accelerates the plan by performing work in parallel. With this method, extra attention needs to be put on resource de-confliction to ensure resources are not over allocated.”

We have all used this technique and probably had mixed outcomes. It seems simple and attractive. It embodies a “just get it done” mentality. If there are sufficient trained and capable resources then this can work. The resources can be used on both efforts at the same time. If that is not the case, then basically we would have to revert to pushing effort out of the way for another effort. This type of modification can introduce additional risk that may need to be mitigated.

  1. Streamlining.

The guide defines this technique in this way: “This technique depends on the team’s ability to find an alternate and more efficient completion methodology for the task/s. This includes reuse, innovation, and possibly eliminating non-value-added work. With this method, the program has to weigh the level of potential risk involved with these choices. Make sure that this does not drive a “run to fail” mode on the program. Ensure that tasks are meeting the full requirements and scope.”

Here we really need to be careful. In some cases, we might be working with specifications or requirements that demand a certain approach and cannot be changed or waived. Then we need to ask the question, “If there is a better way, why didn’t we assume that in the first place?”

In some cases, we might find this approach fits in with opportunity management. Maybe there is new software or a new machine available that can speed things up and still get things done correctly. We have all been in that situation; just remember the last time you went through a Windows upgrade. Did that go smoothly for you? 

In the area of software in particular, we must be aware of the entire ecosystem of tools we use and consider that any new tool applied in a hurry can result in problems. Case in point: one large contractor shifted from 2D drawings to 3D models to speed up and improve the processes, however not all the key suppliers were able to receive and use 3D models. The supply chain broke. Mom and Pop at the M&P Shop could not understand the new work orders. 

  1. Focused Work.

The guide describes focused work like this: “This technique employs the program management team to help in reducing multitasking and to remove barriers for the personnel on the program that are working critical and near critical program tasks. This method requires the program culture to adapt and “protect the critical/driving path” and to support the people that are working those efforts. This also requires the program manager to perform daily barrier resolution.”

A discussion on multi-tasking might be fun here, but we will assume for this blog that multi-tasking pulls resources away from tasks to do other selected tasks and that is not always the best approach. The big question here is what happens to the other efforts on the project when we focus on certain tasks. This technique can work well but only if we are aware of the impact to the other work and manage that work as well. Risk can be increased by adopting this approach so be alert. If we really are just removing barriers then we can benefit from this method. If we are just pushing aside other efforts to concentrate on this one, we need to know that and handle all the work properly.

  1. Calendar Adjustment.

The guide tells us, “This technique accelerates the plan by changing the amount of working hours available each day or working days available each week. This method is possible only if the resources and task location support working the increased work periods. Attention needs to be put on resource de-confliction to ensure resources are not over allocated.”

This is possibly the most attractive technique. Who has never had to resort to overtime to get something done? It is common to work extra hours, even over some weekends to get back on schedule. To a schedule practitioner, the calendar adjustment wording refers to the calendar in the scheduling tool and how it can be changed to add time in a day or convert non-working days to working days. 

This approach is not free. Overtime costs more than regular time and added shifts bring added costs. You should be aware you need to make a trade-off to determine whether the cost can be justified.

  1. Delay or Descope.

The guide advises, “If other techniques are not a viable option and the resultant schedule delay impact is unacceptable, an option exists to propose delaying or removing the selected scope.”

Notice the use of the word “propose.” Working on a contract may not afford the opportunity to eliminate work or consciously delay work. Coordination with the customer is required. Depending upon the customer’s immediate needs, they may be willing to take a more flexible approach to which work scope items can be delivered in a given time frame when they need to deploy something quickly. 

The PASEG goes on to tells us about things to promote and things to avoid. Those discussions are informative and useful. You are encouraged to obtain a copy of the PASEG and learn more on your own. More than that, you are encouraged to use this terminology and spread the use of it so that adoption spreads. 

Interested in learning more? The H&A Three Day Project Scheduling Workshop includes content on schedule acceleration techniques as well as managing schedule risk. This is a standard public workshop. Many of our clients schedule an in-house workshop that is specific to the scheduling tools they use such as Microsoft Project or Oracle Primavera P6. Call us today to get started.

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