Earned Value Management System (EVMS)

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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Maximizing the Value from Integrated Baseline Review (IBR) Investments 

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A previous blog, How Integrated Baseline Reviews (IBRs) Contribute to Project Success, provided an overview of the purpose and scope of IBRs as well as the benefits of conducting an IBR. This blog adds to the discussion on the benefits of conducting an IBR. It reflects observations gathered from our earned value consultants while assisting clients to prepare for IBR events. 

As a reminder, IBRs provide the opportunity to verify the:

  • Contractor and the customer have a common understanding of the scope of work, technical requirements, and accomplishment criteria. 
  • Contractor has established an executable performance measurement baseline (PMB) for the entire contractual scope of work that accurately reflects how they plan to accomplish the work within the contractual period of performance, negotiated contract cost, and funding profile. 
  • Required resources have been identified and assigned to the project to accomplish the project’s objectives. For example, the staffing plan accurately reflects the sequence of work as well as resource availability and demand.  
  • Technical, schedule, and cost risks/opportunities have been identified, assessed, and captured in a risk/opportunity register. Risk mitigation actions have been incorporated into the PMB to reduce known threats to an acceptable level. This is often the most valuable component of the IBR to ensure all parties have an understanding of the risks/opportunities, assumptions, and risk mitigation or opportunity capture plans. 

Factors that Contribute to a Successful IBR

Treating an IBR as just a contractual requirement limits its value to all parties. IBRs are essential to the successful execution of any project. IBRs require a focused mindset to clearly define as well as assess the measurable benefits gained for the time and effort invested in the IBR. From our observations, contractors that defined what they expected to gain from an IBR, whether the IBR was contractually required or not, made a measurable difference in the outcomes from the IBR. The effectiveness of an IBR is contingent upon management’s commitment to excellence in implementing their EVMS and their desire to ensure they have reliable and useful data for management visibility and control. And that begins with establishing an executable PMB. 

The following list of factors often influence the perceived value of an IBR and hence the approach a contractor takes to planning and conducting their IBRs. 

  • Recognizing the relative importance of the review.
  • Defining the value or measurable benefits they expect to gain from conducting the review.
  • Well defined risk/opportunity management process. 
  • Timely and sufficient review planning and preparation.
  • Joint or collaborative planning and preparation.
  • Well defined objectives as well as entrance and exit criteria. 
  • Tailoring the IBR approach to best accomplish the review objectives.
  • Communication and expectation management.

These factors were ultimately indicative of whether the IBRs were considered value-added (retrospective assessment by the participants) based on the level of understanding, investment in or attention to, or the degree of success in implementing these factors. Based on H&A earned value consultant’s observations, the single factor that tends to drive the IBR approach is clearly defining the value the contractor expects to gain beyond what is mandatory or contractually required. 

IBR Investment Value

The term “IBR investment value” is purposefully used here. The intent is to invite you to re-assess how IBRs are viewed apart from simply meeting government agency IBR requirements. “IBR investment value” is used to mean a qualitative assessment that encapsulates the value-add or measurable benefits teams often have difficulty defining as well as to help provide the impetus and guiding direction for conducting an IBR. It has both intrinsic and extrinsic properties. 

The intrinsic value of the IBR investment resides in those specific elements of information (as identified by the customer in the form of questions or concerns) that are either exchanged, clarified, or refined through the course of discussions between the customer and performing contractor teams. This intrinsic value can be measured by how well the exchanged information supports:

  • A complete, clear and mutual understanding of the work to be accomplished.
  • The resources needed to get the work done.
  • The detailed plan to perform the work.
  • What resources are available to support the plan.
  • What’s missing or unknown that is needed to complete the work correctly and on time.
  • What risks, issues, concerns, or opportunities are associated with contractor’s concept that need to be fully considered to make the plan work. 

The extrinsic value of the IBR Investment rests wholly in the quality of the exchanges (discussions), and the resulting actions generated from the discussions. This extrinsic IBR value addresses how appropriate, rich and comprehensive the information exchanges were, and answers to questions, such as:

  • Were the discussions responsive to a list of customer information requirements and concerns? 
  • Were the right discussions held? At the right level of detail?
  • Were the right people involved in each discussion? 
  • Did the discussions provide sufficient context? Were they comprehensive? Complete?
  • Did the discussions address associated risks, issues, opportunities or other concerns? Relationships to other discussions/elements?
  • Were all the customer’s questions or concerns answered to their satisfaction?
  • Were the discussions documented to support decisions? Alternatives? Changes? Studies?

The exchanges of essential information (intrinsic value) and the quality of those exchanges (extrinsic value) when combined directly translate to the investment value achieved from the IBR. It characterizes how well the information exchanged provides both teams with the necessary details to successfully define, schedule, budget, and manage the contracted effort relative to the investment into the IBR process. A realistic, risk adjusted PMB helps to prevent schedule delays and cost overruns during project execution that often impact a contractor’s profit margins and tarnishes their credibility with their customers. 

What are the characteristics of a value added IBR approach?  

A successful approach H&A earned value consultants have observed contractors implement is a structured process corporate management actively participates in to ensure they gain the most value from all IBR events. 

This is often an outgrowth from corporate initiatives to retain top project management talent and establishing an EVMS self-governance process. It is part of a corporate culture that is committed to excellence in project management and sustaining a best in class EVMS – becoming efficiently expert at EVM. 

What are some common characteristics of their IBR approach?

  • A chartered authority or corporate team responsible for assisting project personnel with IBR events in addition to EVMS implementation, self governance, and customer surveillance events. A good practice we have seen implemented is to establish rotating members on the IBR teams from different projects as a means to pollinate best practices across projects. It also provides an opportunity to mentor top talent on track to move up to higher management positions.  
  • A standard repeatable process with defined measurable outcomes that can be tailored to the unique project requirements or objectives. This includes maintaining a set of materials for the internal IBR team to effectively plan and execute an IBR as well as to close out any action items. Examples include training materials to prepare project personnel, process description with team member roles and responsibility assignments, data call list, role based interview question forms with assessment criteria, data quality assessment materials and tools, list of data traces to be performed, schedule risk assessment tools, risk/opportunity evaluation criteria, defined assessment criteria (technical, schedule, cost, resources), in-briefing and out-briefing templates, and template to capture action items to track to closure. The corporate team is often responsible for actively maintaining the content for the IBR teams and conducting training. 
  • They place an emphasis on two components that directly impact the quality of the schedule and cost data.  This includes:
    • Well-documented data driven basis of estimates (BOEs) that can be substantiated using historical or bench-marked data with the goal of reducing expert judgement cost estimates to the lowest level possible as a risk reduction strategy.  
    • The quality of the risk/opportunity management plan and the content in the risk/opportunity register. This content directly affects the ability of all parties to gain a better understanding of the risks/opportunities and best options to mitigate a risk or capture an opportunity. A well constructed schedule is required to be able to perform schedule risk assessments (SRAs). SRAs help to identify where duration risk exists in the schedule and to determine a level of confidence in meeting major project milestones as well as the project completion date.  
  • They perform internal IBRs as a standard practice on all projects regardless of contractual requirements. This is particularly important when subcontractors are performing a substantial percentage of the work effort. The corporate team often assists Project Managers with conducting a joint IBR with major subcontractors.  

Need help establishing a corporate IBR process?

H&A earned value consultants often help clients to establish a corporate EVM council or center of excellence with defined responsibilities to ensure project personnel effectively implement their EVMS, integrate risk/opportunity management into the EVMS, as well as define and implement a standard repeatable process for IBRs and self-governance. Clients often need assistance establishing a repeatable process for conducting schedule risk assessments, an essential component of the IBR process. A defined process that clearly articulates the expected measurable outcomes from conducting IBRs is one way to ensure all parties gain the most value from the event with the end objective of ensuring a realistic and executable PMB has been established.  

Call us today to get started.  

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Strategy for Implementing an Earned Value Management System (EVMS) on a New Project

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H&A is often called in to help our clients resolve a myriad of issues with the design or implementation of their EVMS on a project. This is typically during the project’s execution phase when they belatedly realize the project work organization and planning approach was not adequately defined. Project personnel often lack sufficient direction during the project definition and start-up phase. The root cause was the lack of an integrated program/project plan produced immediately following contract award that would have provided the necessary guidance to the project team on how to implement the EVMS using the project control tools of choice to fit the unique requirements of the project.

The advantage of working with a wide range of clients for over four decades is that H&A has the benefit of observing strategies that companies with a commitment to excellence in project management have implemented. The goal of these companies is to ensure project teams have the necessary guidance they need immediately following contract award or authorization to proceed.

Common Components

One of the best strategies H&A earned value consultants have observed at client sites included establishing a core support team whose charter was to ensure the efficient implementation of standard integrated project management practices and tools on all projects. This began with the decision to bid on a contract and flowed through the processes of producing the proposal, initiating the start up activities immediately following contract award, transitioning to the execution phase, supporting the execution phase business rhythm, and conducting self-surveillance. This core team eliminated the functional, process, resource, and data silos that typically exist between new business development, bid and proposal, and project execution. They provided the single focus on the underlying project management approach to ensure project success and a happy customer as well as to meet target profit goals. They also ensured the EVMS was actively maintained to reflect advances in processes, managing data, and software tools. 

There are a few common attributes to this approach. For example, these companies:

  1. Have a proven and established standard, repeatable processes in place. Project personnel are continuously trained on these processes and standard practices using a standard set of schedule, cost, analysis, and risk tools. This may also include standard Agile tools.
  2. Have established a cross-functional core team whose roles and responsibilities are focused on providing targeted support to proposal and project teams when needed. The composition of the core team reflected the products or services unique to the client. The core team members included subject matter experts (SMEs) from systems engineering, technical disciplines, risk management, finance, contracts, scheduling, cost estimating, EVMS, material management, manufacturing, and Agile. They provide the consistency in approach for the entire project life cycle as well as across projects. 
  3. Have templates and other assets available for project teams. This saves time and helps to establish a common framework for organizing and planning project work effort. This included schedule and cost software tool configuration templates to ensure new projects are set up properly in the tools for integrating data and producing data deliverables. Common utilities or automated interfaces were in place to extract data from business systems such as accounting or the M/ERP system for use in the EVMS.
  4. Established a “hand-off” process between the proposal team and the project team after contract award with the objective of establishing the performance measurement baseline (PMB) as quickly as possible. The project team could start with the source data and other content from the proposal submission and modify the source content as needed to reflect the negotiated contract. This typically included the WBS, technical and management approach, functional organization requirements (staffing plan), integrated master plan (IMP), integrated master schedule (IMS), cost basis of estimates, risks and assumptions, as well as subcontractor and material requirements. This significantly reduces the time required to produce the PMB and increases the quality of the schedule and cost data.
  5. Conducted internal and external kick-off meetings with the government customer to ensure everyone on the project team had a clear understanding of the scope of work, deliverables/components, major milestones, major assumptions, required resources, roles and responsibilities of the organizations involved, identified risks, timing and sequence of activities, time frame to complete the work effort, and target budget. Many contracts include the requirement for a post-award conference for just this exact purpose.

Time and Cost Benefits

The time and cost benefits of this approach aligns with H&A observations. The following images illustrate the results from informal surveys H&A earned value consultants have routinely conducted over the years. A “big bang” or accelerated approach to implementing an EVMS is better way to go – get it done and move on. The objective is to get the PMB in place as soon as possible and quickly settle into the execution phase. It may take more personnel up front; however, the time frame is shortened. Figure 1 illustrates where there is a short burst of dedicated personnel for three months to get the project team off and running. The support team then moves on to the next project.

Figure 1: Accelerated EVMS Implementation

Figure 1: Accelerated EVMS Implementation

As Figure 2 illustrates, it often takes twice as long with a slow ramp-up. In this example, six people are supporting the project for the foreseeable future instead of enabling the project team to function on their own. The project team is continually in a catch-up mode because they haven’t committed to a standard process. It takes longer to get the PMB in place. Data quality is often compromised when the team lacks clear direction on how to proceed or is struggling with how to use the software tools. The support team must remain in place for an extended duration to provide direction to the team on a multitude of levels which limits their ability to help other project teams.

Figure 2: Incremental EVMS Implementation

Things to Consider

Granted it takes time and resources to establish a core team, define all the components, and execute this approach at the corporate level. This is dependent upon management’s commitment to a given level of program/project control excellence and their desire to ensure they have reliable and useful data on all projects for management visibility and control regardless of EVM reporting or EVMS contractual requirements. Usually an internal return on investment (ROI) analysis provided the fact-based information needed to determine it was more cost effective to establish common repeatable processes and standard tools with a cross-discipline core support team. It was a much better alternative than ad-hoc project control implementations or unrealistic schedule/cost baselines that resulted in ugly surprises in the forecasted completion date and estimated cost at completion or contractual penalties that ate into the company’s profit margins.

How do you get started?

You may or may not be in a position to establish a cross-functional project management core support team. An option is to incorporate some of the elements these core support teams use to improve your company’s project management practices. Target areas that can help the project teams to be more efficient or to implement repeatable processes and eliminate ad-hoc approaches where possible. Examples include:

  • Establishing a set of templates for new projects that reflect the requirements identified in your EVM System Description. This could include common artifacts such as a WBS Dictionary, forms such as a work authorization document or baseline change request, or outputs such as a variance analysis report. Include these templates and examples on how to use them in your scheduling and EVM training courses.
  • Establishing a standard new project configuration template in the schedule and cost software tools of choice that provides a common coding structure foundation with options to incorporate project specific requirements. There could be one or more templates depending upon the work scope or type of contract. The objective is to ensure the tools are properly configured to enable schedule and cost integration and there is a standard base framework for organizing and coding the data. An established base framework also makes it easier to perform cross-project or portfolio analysis using business intelligence tools and generative AI tools. 
  • Conducting a project kick-off meeting with the customer immediately following contract award to ensure the project team has a common understanding of the contact scope of work, requirements, and objectives. This helps to establish open communications with the customer from the beginning to clarify assumptions and expectations, confirm roles and responsibilities, and identify likely risks as well as risk mitigation strategies.

H&A earned value consultants routinely assist clients to define successful strategies and tactics for designing and implementing a best in class EVMS in a variety of business environments regardless of the client’s point of departure. One of the best opportunities for establishing a best in class EVMS occurs with clients who are new to EVM and are beginning to sort out what they need to do. Other clients often need to do a refresh of their EVMS and how they train their project personnel to improve the effectiveness of their system. As noted in a recent blog “Earned Value Management (EVM): How Much is Enough? ”, maintaining the status quo is a myth – an EVMS requires constant improvement in areas critical to success.

We can help you determine the right strategy for your situation. Call us today at (714) 685-1730 to get started.

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Improving Integrated Master Schedule (IMS) Task Duration Estimates

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Improving Integrated Master Schedule (IMS) Task Duration Estimates

One of the top reasons projects fail is because of poor task duration estimating for an integrated master schedule (IMS). Without accurate and consistent estimates, project outcomes can become unpredictable, leading to missed deadlines, budget overruns, and overall project failure. A realistic schedule is required to place the necessary resources in the correct timeframe to adequately budget the work as well as to produce credible estimates to complete and to forecast completion dates. While missed deadlines and budget overruns are detrimental for any project, there can be additional business ramifications when producing schedules in an Earned Value Management System (EVMS) contractual environment.

While there are effective methods available to improve task duration estimates, they are often underutilized. A common reason for this oversight is the lack of time allocated to developing the project schedule and determining task durations.

During the proposal phase, initial durations are typically estimated at a more summary level than the detailed execution phase. The proposed work is often defined at a level one to two steps higher than where the actual tasks will be performed. After project initiation, the team’s initial effort is to break the work down into more manageable tasks. This decomposition is crucial for achieving more accurate estimates. It’s no surprise, then, that the initial breakdown efforts often result in duration estimates that don’t align with the proposed durations.

Parkinson’s Law tells us that work expands to fill the time available. If task durations are excessively long, costs will inevitably rise. To counter this, it’s important to require estimators to provide both the estimated effort and the duration needed to accomplish the task. This approach helps to gain a better understanding of the scope of the task and to avoid unrealistic estimates. If you see a task that requires 10,000 hours with a duration of 2 weeks, then you immediately would suspect something is wrong with the estimates.

Techniques for Developing More Accurate Task Duration Estimates

What are your options? H&A earned value consultants and senior master schedulers often employ the following techniques to help a client produce a more realistic IMS.

  1. Establish a Probability Goal. It is essential to set clear expectations for the estimating team. Without guidance, teams may default to estimates with a 50/50 probability of success, which is a recipe for failure. Instead, directing the team to aim for estimates within a 75% to 80% probability range can lead to better outcomes.
  2. Break Down Tasks. Decompose tasks into smaller, more manageable components. The further out the task’s horizon, the greater the variability in estimates. For example, asking someone to estimate the drive time from Washington, DC, to Boston without specifying the vehicle, route, limitations, or conditions introduces unnecessary uncertainty.
  3. Use Professional Judgment. Engage someone with experience in the specific type of work required for the task. A seasoned expert will provide more accurate duration estimates based on their knowledge and experience. Often, we ask the potential task manager to do the estimate, but that person may not be the one with the most related experience or knowledge about the work.
  4. Leverage Historical Data. If the task or a similar one has been done before, use that historical data to inform the estimate. This approach provides a realistic benchmark for future estimates.
  5. Use generative AI. If you have access to an AI capability along with access to historical data, that could be an option to leverage the source data using specific prompts to glean relevant information. As with all AI tools, always verify the generated results to ensure it is a useful basis to substantiate the estimate.
  6. Apply Parametric Estimating. When possible, use parametric analysis to estimate the durations. For example, if it took a specific number of days to clean up a certain amount of toxic waste under similar conditions, this data can be used to estimate the duration of a new but comparable task.
  7. Engage Multiple Estimators. Gathering estimates from more than one person helps to reduce individual biases and provides a more rounded estimate.
  8. Apply the Delphi Method. This technique involves three knowledgeable individuals providing estimates or three-point estimates. The initial estimates are analyzed, and the results are shared with the estimators without attributing specific values to any individual. After discussing the findings, the estimators revise their estimates based on the collective insights, leading to a more refined and accurate duration estimate.
  9. Use Three-Point Estimates. Ask estimators to provide best-case (BC), most likely (ML), and worst-case (WC) durations, along with their reasoning. Applying a formula like the Program Evaluation and Review Technique (PERT) duration formula (1BC+4ML+1WC)/6 can yield an adjusted and realistic estimate. You can vary the best and worst case estimate for risk if you have information on that.

    To see how this simple approach can work, walk through this exercise. Ask yourself how long it takes you to drive to work most of the time. Let’s say the answer is 45 minutes. Then ask yourself how long it would take on a Sunday morning in the summer when the roads were dry (the best case). Let’s say your answer is 25 minutes. Then ask yourself how long it would take on a Monday morning in the winter during a moderate snow event (the worst case). You tell yourself 90 minutes. Now you have enough information to calculate the PERT duration.

    Best Case = 25 minutes
    Most likely = 45 minutes
    Worst Case = 90 minutes
    PERT Duration = (25 + 180 + 90)/6 = 49 minutes

    Finally, let’s say you ask yourself how likely it is that you end up on the high side instead of the low side. If your answer is it is much more likely to encounter conditions that slow you down, you would modify the formula to use one and a half times the worst case (25 + 180 + 135)/6 = 57 minutes. That longer duration shows the impact of your impromptu risk analysis and provides a duration that has a much higher probability of being achievable.

    Now think about the same scenario but conducted by you interviewing three people who drive the same route to work. That would approximate the Delphi method.
  1. All or something less. It may not be necessary to analyze every task to the degree suggested. Even if you could do the analysis along the top several critical paths that would be an improvement. If you were to apply numerical factors to the tasks in related portions of the project that would be impactful. For example, all mechanical design tasks or all software development tasks.

What is the best approach?

You will need to analyze your project and determine which approach or approaches would yield useful information at a reasonable cost. If you apply your own thinking on how to improve your duration estimates, you will undoubtedly find a method most suitable for your situation. Depending on a project’s complexity and risk factors, you may also find it useful to take a more formal approach. Conducting a schedule risk assessment (SRA), a probabilistic assessment of a project’s outcome, can help you gain a better understanding of where the duration risk exists in the schedule.

H&A earned value consultants and scheduling subject matter experts often assist clients to establish basic guidance to help scheduling personnel to get into the habit of adequately defining tasks and using techniques to improve duration estimates. This is critical to be able to produce well-constructed and executable schedules to improve the likelihood of achieving project technical, schedule, and cost objectives.

H&A offers a range of project scheduling training workshops that can help schedulers to implement industry best practices. These workshops also cover how to take the next step to implement advanced scheduling techniques such as schedule risk assessments to ensure the schedule is realistic and achievable. H&A earned value consultants and master schedulers often provide one-on-one mentoring using the scheduling tool of choice to help scheduling personnel work through the learning curve of using advanced network scheduling techniques to produce executable schedules.  

Call us today at (714) 685-1730 to get started.

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Merging Earned Value Management System Descriptions

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Are there best practices that apply when a company with an approved/certified Earned Value Management System (EVMS) acquires another company that also has an approved/certified EVMS in place? What happens with the EVM System Descriptions as well as related processes and procedures? What about the various project control tools being used? How do you level set the project control proficiency levels of personnel using the EVMS? Schedule and cost level of detail and data architecture also come into play. For example, project performance data is often used at the corporate level for financial analysis, portfolio analysis, and external reporting and may require data to be organized in a specific manner. Is the EVMS providing reliable status, forecast completion date (FCD), and estimate at completion (EAC) information to management? 

What are your options?

H&A earned value consultants have observed different approaches and often assist companies with determining their strategy. Assuming you are the acquiring company, you could:

  1. Require the acquired company to use your EVMS. 
  2. Let them continue using their EVMS for an agreed upon timeframe or indefinitely.
  3. Take the best of both and establish a new and improved EVMS.  

Each option has its pros and cons. There are also other implications for at least the acquired company. DCMA will need to conduct an Integrated Baseline Review (IBR) and/or a compliance review if the acquired company’s EVMS assessment is no longer applicable. If you make significant modifications to your EVM System Description, DCMA will need to review the revised System Description to determine whether it still complies with the EIA-748 Standard for EVMS guideline requirements.

Things to Consider

  • What do you want to achieve?

    If the goal is to establish a common EVM System Description across the corporation, the strategy will need to reflect that. Define the business objectives that clearly articulate the benefits of using a standardized approach that can help to create and implement the plan to achieve your goal. In this example, that could narrow your path forward to either option 1 or 3 depending on the state of your EVMS.

  • What is the state of your current EVM design and System Description?

    Do you already have a best in class corporate level system in place? If yes, option 1 is a good fit. The strategy would be to create a plan to transition the acquired company to your EVMS. A single EVMS is easier to maintain and to train people on how to use it effectively. Commonality makes it easier to move personnel between projects.

    Perhaps your company is fine with different EVM Systems at a business unit level. For example, perhaps the business units have a different customer base (DoD versus DOE), and the requirements are different. In this case, it may make sense to go with option 2. We recommend being prepared to do an in-depth assessment of the acquired company’s EVMS to become familiar with it, gain an understanding of how project personnel use it, and evaluate the quality of the schedule and cost data. It is imperative that you have a good understanding of the strengths and weaknesses of the acquired company’s EVMS. You may find best in class practices that you could incorporate into your EVMS. On the other hand, you may discover issues you need to address with a corrective action plan. Some of them may be as simple as providing desktop instructions for the schedulers or control account managers (CAMs). The more difficult are actions taken to change the culture such as resistance to providing visibility into the data.

    Option 3 may be good path in situations where you know there are components in your EVMS that need to be streamlined or enhanced. It provides an opportunity to fix known issues with your EVM design or System Description. It could also be an opportunity to replace a mix of software tools or home-grown tools with a standard set of commercial off the shelf (COTS) schedule, cost, and analysis as well as risk tools. Integration with a standard Agile tool may also come into play. In this case, your strategy may be to create a working group from both companies to create a best in class corporate EVMS. 

  • Structure of the EVM System Description.

    There may be “layers” to it that makes it easier to accommodate unique business unit environments. For example, perhaps you have established a corporate level System Description that states what the company does to comply with the EIA-748 guidelines when an EVMS is contractually required or what is required to satisfy internal management needs for project/portfolio analysis (no external customer management system or reporting requirements). The corporate level system should define specific rules all business units are expected to follow. The business units define how they comply with the corporate requirements (their specific process). A good approach is to also allow project managers to define project directives to specify project unique requirements as long as they comply with the corporate and business unit requirements.

    In this example, option 1 is a good fit. The strategy would be to help the acquired company to establish revised EVM processes that align with the corporate requirements similar to other business units in the corporation.

Other Considerations

Your strategy and tactical plan must address identified risks and opportunities. A common challenge is resistance to change. A potential risk mitigation approach could be to bring in the acquired company’s personnel as part of a joint corporate management team with the goal to create a single best in class EVMS. It is essential to establish ownership in the new or revised process. An example from one H&A client illustrates the importance of taking ownership in the EVMS as part of a successful transition.

“We didn’t force what we had on them, nor did we give in. We have a corporate EVM System Description. When we acquired the company, we brought them in to do a revision of the System Description, as the decision was made that we will operate as one company. They are now using that System Description and are using the same EVM cost tool. We are working other initiatives to harmonize other systems. It was surprisingly not contentious. We incorporated their leads into the organization with minimal disruption. We also have corporate training, which they supported and some of their legacy folks are leading that. The company as a whole changed, rather than forcing our way on them. Not many major differences between us, but inclusion of the folks from the acquired company as well as business groups was key. Frankly, one of our legacy divisions was harder to work with than anyone from the company we acquired.” – EVMS Director, A&D Contractor

While this is an example of where things went well, your risk mitigation approach should be prepared for situations where the teams do not agree upon the documented process, tools, or training that could result in an impasse. Knowledge of the current internal environment and personnel mix can help to determine the best mitigation strategy. A strong leadership team must be in place to ensure teams are working to achieve common objectives and to amicably resolve differences with a target completion date.

The tactical plan must also include a robust training plan that covers the revised EVMS process, procedures, and any new tools. This is critical to ensure project personnel gain a good understanding of what changed, who is responsible for what, workflow, requirements such as data coding or level of data detail, and how to use the tools effectively. Role based training is often useful to ensure project control personnel, schedulers, CAMs, and others are following the documented procedures specific to their day-to-day tasks. Desktop instructions are also useful to ensure project personnel are using the software tools effectively in alignment with the documented process and procedures.

What to do if you find yourself in this situation?

It often helps to start with a gap analysis of your or the acquired company’s EVM design and System Description as well as assess how project personnel implement the system and the quality of the data. H&A earned value consultants often conduct an EVMS gap analysis to provide a fact-based and independent analysis of the EVMS, project personnel proficiency levels, and quality of the schedule and cost data. Once you are able to identify and quantify the strengths and weaknesses of the system, you are in a better position to determine your best strategy that aligns with your corporate business objectives and goals.

Over the years, H&A earned value consultants have observed first-hand what strategies and tactics for designing and implementing a best in class EVMS ensures success in a variety of business environments. We can also help you avoid common pitfalls that can derail the best laid plans – it is often the case a client didn’t realize there were hidden risks, or they had made incorrect assumptions.

We can help you determine the right strategy for your situation. Call us today at (714) 685-1730 to get started.

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