EIA-748

Planning Ahead for the EIA-748 Standard for EVMS Revision E

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EIA-748 Revision E is here! Streamlined, clarified, and ready for action. Planning Ahead IA-748 Standard for EVMS Revision E

For anyone following the process to update the SAE EIA-748 Standard for EVMS Revision D to Revision E, the NDIA Integrated Program Management Division (IPMD) EIA-748 Committee is getting closer to the finish line. As the author and steward of the EIA-748 Standard for EVMS, the IPMD is responsible for working with the SAE International standards organization to maintain the EIA-748 following SAE’s protocols.

At the March 2025 IPMD meeting, the EIA-748 Committee briefed membership on the coming Revision E publication. A summary of the scope of the Revision E changes follows.

  • Section 1, Scope of EVMS. General refresh of the Revision D content.
  • Section 2, EVMS Guidelines. There are now 27 guidelines that were agreed upon and adjudicated with the joint government and industry team. This also included a general refresh of content in Section 2.6 Common Terminology.
  • Section 3, EVMS Process Discussion. Mostly unchanged from Revision D with minor updates. The NDIA IPMD EIA-748 Intent Guide provides additional context to the guidelines in Section 2.
  • Sections 4, System Documentation and Section 5, System Evaluation. General refresh of the Revision D content.

Following the current schedule, any comments for Revision E will be adjudicated by May 31, 2025 and finalized for publication. Revision E will then be available on the SAE web site for purchase. The next step for the NDIA IPMD EIA-748 Committee is to update and publish the IPMD EIA-748 Intent Guide for the Revision E set of 27 guidelines. This guide will be available for download from the NDIA IPMD Guides and Resources page once completed and approved by IPMD membership.

What’s the same and what’s different in the set of guidelines?

The guidelines are organized into the same five process categories with an update to the name of one category to improve clarity. As part of the guideline updates, the order of some of the guidelines changed to more accurately follow the typical project life cycle process, others were merged. Four guidelines were deleted. Two were added resulting in final set of 27 guidelines. In some instances, the guideline text was modified to improve clarity. A summary of these changes along with an impact assessment by category follows.

NOTE: The final order and/or text of the guidelines are subject to change as a result of the SAE comment and adjudication process. Refer to the published EIA-748-E for the official set of guidelines and text. The NDIA IPMD March presentation is available for download at the end of this blog. This presentation includes the full text for the revised set of guidelines.
Guideline Map Process Category: Organization
748 D 748 E Guideline
D 1 E 1 2.1a Decompose Scope Using a Work Breakdown Structure
D 2 E 2 2.1b Identify Organizational Responsibilities for the Work
D 5 E 3 2.1c Integrate WBS/OBS to Create Control Accounts
D 3 E 4 2.1d Integrate Management Processes Using the WBS and OBS

D Guideline 4, Identify Overhead Management was deleted.

Assessment: No impact as E Guidelines 1 to 4 reflect the same requirements as D Guidelines 1, 2, 3, and 5.

Guideline Map Process Category: Planning, Scheduling and Budgeting
748 D 748 E Guideline Description
D 6 E 5 2.2a Schedule the Authorized Work
D 7 E 6 2.2b Identify Indicators to Measure Progress
D 8 E 7 2.2c Establish and Maintain a Time Phased Budget Baseline
D 9 E 8 2.2d Authorize Scope, Schedule and Budget by Cost Elements
D 10 E 9 2.2e Plan Scope, Schedule and Budget into WP/PPs
D 10, 12 E 10 2.2f Establish Work Package Performance Measurement Criteria
D 13 E 11 2.2g Develop/Apply Indirect Rates to Determine Indirect Budgets
D 14 E 12 2.2h Identify any Undistributed Budget and Management Reserve
D 11, 15 E 13 2.2i Reconcile to Target Cost Goals

D Guidelines 10 (Determine Discrete Work) and 12 (LOE) were merged/modified and became E Guideline 10. D Guidelines 11 (Sum Detail Budgets to Control Accounts) and 15 (Reconcile to Target Cost) were merged/modified and became E Guideline 13. The text for E Guidelines 9 and 11 were modified.

Assessment: Minimal impact as E Guidelines 5 to 13 reflect the same requirements as D Guidelines 6 to 15.

Guideline Map Process Category: Progress Assessment and Data Collection
748 D 748 E Guideline Description
ADD E 14 2.3a Measure Progress and Determine Earned Value
D 16, 19 E 15 2.3b Collect Actual Costs by Cost Elements
D 21 E 16 2.3c Account for Purchased Material

The title for the process category changed to more accurately reflect the guideline requirements. E Guideline 14 was added to explicitly state the requirement to measure progress and calculate earned value. D Guidelines 16 (Record Direct Costs) and 19 (Record/Allocate Indirect Costs) were merged into E Guideline 15. D Guidelines 17 and 18 on summarizing direct costs by WBS/OBS were deleted as cost management software does this automatically. D Guideline 20 on identifying unit and lot costs was deleted; this is a separate business system function.

Assessment: Minimal impact. Clarified and streamlined requirements. One potential exception is text add to E Guideline 15 that states: “Where actual costs are not available for comparison, estimated costs will be entered into the EVMS.”

Guideline Map Process Category: Analysis and Management Reports
748 D 748 E Guideline Description
D 22 E 17 2.4a Generate Schedule and Cost Variances
D 23 E 18 2.4b Identify and Evaluate Significant Variances
D 24 E 19 2.4c Evaluate Indirect Cost Variances
ADD E 20 2.4d Update Control Account Estimates at Completion
D 25 E 21 2.4e Summarize, Review, Evaluate Performance Data and Variances
D 26 E 22 2.4f Implement Management Actions in Response to EVM Data
D 27 E 23 2.4g Develop Revised Program Estimate at Completion

D Guideline 27 was split into two E guidelines to highlight the difference and purpose of the control account and program level EACs. E Guideline 20 was added to explicitly state the requirement to maintain control account level ETCs and EACs. E Guideline 23 text was modified for clarity and scope of the EAC at the program level.

Assessment: Minimal impact. Clarified requirements.

Guideline Map Process Category: Revisions and Data Maintenance
748 D 748 E Guideline Description
D 28 E 24 2.5a Incorporate Customer Directed Changes
D 29, 32 E 25 2.5b Document and Reconcile Internal Replanning Changes
D 30 E 26 2.5c Control Retroactive Changes
D 31 E 27 2.5d Over Target Budget or Over Target Schedule

This process category was significantly improved to eliminate redundancy and to clearly separate out the types of changes: 1) customer directed, 2) internal replanning (merged D Guidelines 29 and 32), or 3) OTB/OTS situation. In all instances, retroactive changes must be controlled.

Assessment: Minimal impact. Clarified requirements.

What is the impact to EVM System Descriptions?

If your EVM System Description is organized somewhat in alignment with the EIA-748 five guideline process categories or the nine process groups as illustrated in the following table, there should be minimal impact. In general, the requirements are the same.

EIA-748 Five Guideline Process Categories Nine Process Groups
Organization Organization
Planning, Scheduling and Budgeting Planning and Scheduling
Work Authorization and Budgeting
Accounting Considerations Accounting Considerations
Indirect Management
Analysis and Management Reporting Analysis and Management Reporting
Change Management Change Management
Material Management
Subcontract Management

With the publication of the EIA-748-E, use this opportunity to make EVM System Description content improvements. In particular, review content related to:

  • Use of estimated costs (Guideline 15). Verify this is addressed in your EVM System Description.
  • Managing changes. Potentially align with the types of changes identified in Revision E.
  • ETC/EAC process. Verify content is clear on purpose/requirements at the control account level versus the program level.
  • Discussion on unit/lot costs as a result of the Revision D Guideline 20 deletion. This is often dependent upon whether your business environment includes production. Your EVM System Description may include content about supporting other contractual reporting requirements for production such the Contractor Cost and Data Reporting (CCDR) DIDs.

What will require an update is mapping the EVM System Description sections to the EIA-748-E set of guidelines. Also remember to review the content in your self-surveillance or self-governance section to see what may need to be updated.

Caveats

Note that the Cognizant Federal Agencies (CFAs) such as DCMA, NASA, DOE, and others will need to update their EVMS compliance or surveillance processes and materials to reflect the EIA-748-E once it is published. Timing is unknown, however, representatives from the various agencies participated in the IPMD joint government and industry team that produced the final set of guidelines. They are aware of the changes and have been planning to make the necessary updates to documents such as the DoD EVMS Interpretation Guide (EVMSIG). The updates to these agency documents have the potential to impact a contractor’s EVM System Description.

Note that government agency regulations (FAR, DFARS) refer to the EIA-748 guideline requirements (Section 2 only), not the entire standard. They ignore the rest of the standard as they define their process for evaluating whether a contractor complies with the Section 2 guidelines; an example is the DoD EVMSIG.

Planning Ahead

This is a good time to consider updates to improve or streamline your EVM System Description or related processes as industry and government both need to digest the EIA-748-E. Likely your training materials will need a refresh as well. Hopefully, your EVM System Description was not organized by Guideline. In that case, you may have significant work ahead. If you have a CFA approved EVMS, be sure to coordinate with them on the updates to your EVM System Description as they will need to review your changes.

H&A earned value consultants often review and assess EVM System Descriptions. If you need an independent third party to assess your EVMS documentation and provide recommendations on what could be improved, simplified, or clarified, give us a call today at (714) 685-1730.

NDIA IPMD presentation PDF

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EVM and Unified Risk Management

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Working with numerous clients, H&A earned value consultants have observed many instances where project management teams consider the risk and opportunity (R&O) management process to be something technical in nature, run by engineers and focused on the technical aspects of the project’s product. Meanwhile, there is often a separate risk process going on much less formally to consider risks in terms of the project’s schedule and cost goals. This bifurcated approach is a source of risk itself.

Procuring agencies such as the DoD, NASA, DOE, and others have published their own risk management guides. The Government Accountability Office (GAO) has various reports on this topic including examples of their findings. DCMA mentions risk in their Business Practice 4  Guideline Evaluation Template (GET) Process/Implementation Verification Points often used by contractors to check whether their earned value management system (EVMS) meets the intent of the EIA-748 Standard for EVMS guidelines. The exact questions asked by DCMA are important but the overall idea that risk and EVMS are co-dependent is the critical aspect. This is also true for the DOE. They identify risk management as one of the 10 subprocesses necessary for an EVMS.

Setting the Stage

Risk is defined as a factor, element, constraint, or course of action that introduces an uncertainty of outcome that should it occur, could negatively impact the ability to meet the project’s planned technical, schedule, or cost objectives. Negative impacts are sometimes called a threat where the objective is to mitigate the risk. A realized risk becomes an issue that must be resolved to minimize the impact. An opportunity is defined as a positive risk where the objective is to capture the beneficial impacts. Opportunities are not as common as threats.

R&O management is defined as the process of identifying, assessing, and responding to risks and opportunities throughout the project’s life cycle. The goal of R&O management is to identify potential risks and opportunities, determine the likelihood or probability the risk or opportunity will occur, and determine the impact should a risk be realized, or an opportunity is captured. Risks and opportunities are prioritized so that those with greater impact and a higher probability of occurring receive a greater share of resources and attention.

In this blog, we are using the term risk with a focus on the negative impacts or threats to a project.

Example of Common Project Risks and Risk Assessment Approach

H&A’s senior management routinely reviews literature, considers our work with clients, and discusses with our earned value consultants the main contributors to project failure. These findings are updated regularly and presented in H&A training materials as an Ishikawa Fishbone Cause and Effect diagram. Figure 1 is an example of this type of diagram. 

Figure 1: Example of an Ishikawa Fishbone Case and Effect Diagram

Figure 1: Example of an Ishikawa Fishbone Case and Effect Diagram

When this approach is used for risk assessments, each contributing risk is assessed, and the response documented. An example of a risk/response table is shown below for the first three identified risks.

Risk ItemGood Example of a Real Project Response to an Identified Risk
Poor communicationsGoals are known and documented. Communications plan is in place. Have an established cadence for weekly internal and customer meetings to quickly resolve issues. An internal project performance management dashboard is updated daily with current data. Updated IMS and risk register are broadcast weekly to the team. A strong business rhythm has been established.
Scope creepWork scope (requirements and SOW) are well defined and a change control process is in place. Performers are trained in spotting scope creep and how to handle potential changes in scope.
Inaccurate cost estimateImplemented a process enabling cost estimators to search historical actual cost data, identify analogous tasks, substantiate, and document the basis of estimate. For high risk areas, techniques such as the Delphi method, SMEs, and non-advocate reviews are used. Performance is constantly monitored to spot work elements where the actual costs do not align with the budgeted costs or the estimate at completion (EAC) is triggering internal variance at completion (VAC) thresholds. 

This same type of approach can be used by the project control team to create risk Ishikawa diagrams to identify technical risks that could impact the ability to achieve schedule and cost goals. Likewise, risk Ishikawa diagrams can be used to identify risks in the integrated master schedule (IMS) and time phased budget or estimate to complete (ETC) and EAC.

A Unified Approach to Risk

A unified approach includes technical, schedule, cost, and other risk identification and assessment that is an integral part of a contractor’s EVMS. R&O management should be integrated into the EVMS subsystems including work organization, planning and scheduling, work authorization and budgeting, management analysis and reporting, and change management. 

Identified risks are analyzed and quantified to develop a risk handling strategy. Where applicable, risk mitigation tasks have been entered into the IMS. Ideally a schedule risk assessment (SRA) has been completed to gain an understanding of duration risks that can help to improve the accuracy of the schedule. Assuming the IMS is resource loaded and leveled, the result is a more accurate time phased budget plan as it incorporates the risk handling strategies when the performance measurement baseline (PMB) is established. The R&O process also provides the necessary rationale for determining the budget amount set aside for management reserve (MR).

The R&O assessments should be a normal part of generating the Variance Analysis Reports (VARs) and updating the ETC and EAC. These assessments can also drive the need for processing baseline change requests (BCRs) as well as determining the best approach for corrective actions. 

Using Directed Searches of Identified Risks

To facilitate a unified approach, we recommend establishing a cadence of standing risk review sessions that are conducted in a methodical way to ensure the project manager, integrated product team (IPT) leads, control account managers (CAMs), schedulers, and financial analysts routinely walk through the identified risks that have the potential to impact the project’s IMS or time phased cost.

The intent is to establish a framework such as Ishikawa diagram to guide the risk review session, a directed search of the identified risks should anything further need to be addressed. It is important that a “does anyone have a risk to suggest” approach is not used. Every topic should be covered in every session by walking the Ishikawa risk items. Most of the time it will be a quick “no change” response. Separate Ishikawa diagrams could be used to guide the discussions for the contributing technical, schedule, and cost risks. The meeting room should have the ability to view the live IMS, cost data, and performance analysis data. Team members should be prepared to take notes during the meeting to compile action items.

Figure 2 is an example of a basic Ishikawa diagram of IMS risks the project control team could focus on for the risk review session. This would reflect the project control team’s identified risks to the IMS they routinely monitor.

Figure 2: Example of an IMS Ishikawa Fishbone Case and Effect Diagram

Figure 2: Example of an IMS Ishikawa Fishbone Case and Effect Diagram

For example, updating the current schedule every reporting period has the potential to compromise the integrity of the IMS to provide accurate forecast information about the project’s remaining work. Perhaps the project control team has identified a list of contributing schedule status risks, risk response, and example directed questions for each review meeting. These questions could be focused at the CAM level. The following table is a simple example. 

Risk ItemRisk ResponseExample Directed Questions
IMS critical or driving pathsVerify logic. Verify traceability exists and has not been damaged by updates. Review constraints, deadlines, and milestones. Perform data quality check, correct errors.Did milestones move? Did the end date move? What were the baseline dates for starts or finishes that fall into the period?What were the forecasted dates for starts and finishes that fall into the period?What did not happen? Why?
RealismCalculate and assess the Baseline Execution Index (BEI) and Current Execution Index (CEI). Compare the ratio of actual performance to the ratio of future performance.Is the BEI/CEI result within goals? Are there performance discrepancies? Does the forecast need to be updated to align with reality? Is the forecast showing the performance the team can achieve based on what has been achieved?
Quality of ETC/EACVerify updates are occurring. Compare current ETC/EAC to previous ETC/EAC.Has the ETC been updated? What changed and why? For example, for activities with material requirements, price or usage variances may impact the ETC/EAC. For activities with labor requirements, availability or personnel changes may impact future work effort ETC/EAC.

The same approach would be used for guided budget and cost risk discussions. Tailored cause and effect diagrams should be created for a company business environment and each project’s unique characteristics.

Interested in learning more?

H&A’s training courses purposely include content on R&O management and integrating it into the EVMS. H&A’s Project Scheduling as well as Advanced Earned Value Management Techniques (AEVMT) workshops in particular include more discussion on R&O topics.

A company’s EVMS should be designed to aid the identification and management of risks and opportunities. For example, during the process of developing the schedule and budget baseline, activity durations, resource requirements, and budget distribution can be refined to reflect identified and assessed risks. Proactively identifying and managing risks improves project performance. The expectation of specific risks occurring leads to contingency plans that lower the likelihood and impact of risks as well as the establishment of schedule margin and MR to address identified and assessed risks.

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

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EIA 748-D Released – Change Notes

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EIA 748 D Released

Portions extracted from the EIA-748-D © SAE International (with permission).

Are you aware that a revision to the Society of Automotive Engineers (SAE) / Electronics Industry Alliance (EIA)  Standard 748 Earned Value Management Systems, has been released? The new revision is SAE / EIA 748-D. Officials have been discussing the changes at recent industry conferences.

Sections 2.1-2.5 – No Changes to EVMS Guidelines

No changes have been made to the 32 EVMS Guidelines in Sections 2.1-2.5 of the standard. The changes are primarily clarifications of the existing text:

Section 1 – Additional 4th Note

Section 1 “Scope of EVMS” previously “Introduction” in 748-C now has an additional 4th Note:

“Note 4: There are occasions where it is beneficial for complementary systems or methodologies (e.g., Enterprise/ Manufacturing Resource Planning, Agile Software Development, Theory of Constraints) to interface with the EVM System. These complementary systems or methodologies can be used to deliver functionality and value to the customer while EVM provides a standardized method for measuring progress and reporting across the contract. The EVMS documentation should describe the interface content as well as the recurring control process to maintain data conformance and system compliance.” © SAE

Section 2.6 –  Six Additional Terms

Section 2.6 “Common Terminology” includes six additional terms:

ACTIVITY OR TASK: An element of work with an expected duration in the network schedule that is performed during the course of a project. Activities generally have expected resource requirements used to determine the budget for the work effort. One or more activities may relate to a work package.

AUTHORIZED UNPRICED WORK (AUW): A contract scope change which has been directed by the customer’s contracting officer but has not yet been fully negotiated/definitized. It includes a value, excluding fee or profit, typically associated with the authorized, unpriced change order.

ELEMENT OF COST (EOC): The categories of cost such as labor, material, subcontractor, and other direct costs as defined by company accounting practices.

OVER TARGET SCHEDULE (OTS): A replanned schedule baseline that extends beyond contract milestone dates, delivery dates, or completion date. An OTS is usually accompanied by an increase in budgets resulting in a corresponding Over Target Baseline (OTB). It typically requires customer approval to implement.

RISK AND OPPORTUNITY (R&O): An uncertain future event or situation that could impact the ability to achieve overall project requirements within defined cost, schedule, and technical objectives. Risk has two components: (1) the probability (or likelihood) of a particular outcome and (2) the consequences (or impact) of that outcome. The consequences of risks are typically thought of as negative that may need to be mitigated to minimize the impact to the project. A risk event with positive consequences is referred to as an opportunity that may be captured as a benefit to the project.

SUMMARY LEVEL PLANNING PACKAGE (SLPP): An aggregation of far-term work efforts (scope, schedule, and budget) that are not able to be identified at the control account level but can be distributed to reporting level WBS elements.

Section 2.6 – Term Changes

Section 2.6 “Common Terminology” includes changes/clarifications to existing terms:

ESTIMATE AT COMPLETION (EAC): The current estimated total cost for authorized project work. It equals the cumulative to date Actual Cost of Work Performed (ACWP) plus the estimated costs to complete (Estimate to Complete or ETC) the authorized work remaining.

LEVEL OF EFFORT (LOE): Support type activities that lack measurable output or product that cannot be discretely planned or objectively measured in a practical manner. LOE automatically earns performance with the passage of time, an earned value technique.

MANAGEMENT RESERVE (MR): An amount of the total budget set aside for unplanned, in scope effort that may arise during the course of the project which cannot be identified in advance and is used to handle execution risks. Management reserve budget should be commensurate with the level of project risk. It is not part of the Performance Measurement Baseline (PMB).

OVER-TARGET BASELINE (OTB): A Performance Measurement Baseline (PMB) that exceeds the Contract Budget Base (CBB). It is implemented to produce a realistic schedule and budget plan for the project’s remaining work. It typically requires customer approval to implement.

Section 2.7 – 3 Additional References

Section 2.7 “List of Suggested References” has been updated to include 3 additional references. The complete list is below:

– NDIA IPMD EVMS Intent Guide
– NDIA IPMD IBR Guide
– NDIA IPMD Surveillance Guide
– NDIA IPMD EVMS Acceptance Guide
– NDIA IPMD EVMS Application Guide
– NDIA IPMD Planning and Scheduling Excellence Guide (PASEG)
– NDIA IPMD Industry Practice Guide for Agile on Earned Value Management Programs (New)
– NDIA IPMD Master Definitions List for IPMD Guides (New)
– NDIA IPMD Earned Value Management System Guideline Scalability Guide (New)

Sections 3 thru 5

In Section 3.2.1 WBS Dictionary, discussion regarding segregation by WBS element for direct costs has been removed.

In Section 3.3.1 Control Accounts, discussion regarding guidance that a Control Account shall not span multiple WBS elements has been removed.

In Section 3.3.1, a new figure, Figure 1 – Establishing Control Accounts was added.

In Section 3.4.3 Subcontract/Procurement Schedules, the phrase “high risk” has been removed.

In Section 3.8.2 Cost Performance, The Labor Rate and Efficiency variance calculations were corrected. The corrected equations are below.

• Labor Rate Variance Calculation = Actual Hours x (Earned Rate – Actual Rate)
• Efficiency Variance Calculation = Earned Rate x (Earned Hours – Actual hours)

In Section 3.8.2 Cost Performance, the acronym “EAC” has been replaced with “ETC”.

In Section 3.10.2 Authorized Changes, discussion regarding allowable changes for optimum utility has been removed.

In Section 4 System Documentation, the term “GEIA” has been replaced with “SAE”.

In Section 5.1, Evaluation Process, the term “officer” has been replaced with “authority”.

In summary, EIA 748-D has added/modified a few items for clarification but does not change any of the implementation, reporting, surveillance, or enforcement aspects of Earned Value Management Systems.

Purchase a copy of the standard here: https://www.sae.org/standards/content/eia748d/

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Clarification on the New Department of Defense Earned Value Management System EVMS Thresholds | DOD & DPAP

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New Department of Defense Earned Value Management System (EVMS) ThresholdsOn September 28, 2015, the Defense Procurement and Acquisition Policy Directorate (<abbr=”Defense Procurement and Acquisition Policy Directorate”>DPAP) released a memorandum entitled “Class Deviation – Earned Value Management System Threshold”. In this memo the DoD changed the threshold for <abbr=”Earned Value Management System”>EVMS application to $100 million for compliance with EIA-748 for cost or incentive contracts and subcontracts. That same memorandum stated that no EVMS surveillance activities will be routinely conducted by the Defense Contract Management Agency (<abbr=”Defense Contract Management Agency”>DCMA) on contracts or subcontracts between $20 million to $100 million. As attachments to this memorandum, there was a reissuance of the Notice of Earned Value Management System <abbr=”Department of Defense Federal Acquisition Regulations”>DFARs clause (252.234-7001) and the Earned Value Management Systems DFARs clause (252.234-7002), with both reflecting the new $100 million threshold.In response to this guidance, a series of questions from both contractors and other government personnel were submitted to Shane Olsen of the DCMA EVM Implementation Division (<abbr=”EVM Implementation Division”>EVMID). Below are the salient points from this communication:

  • There will be no EVMS surveillance of DFARs contracts under $100 million. Contracts without the DFARs clause, such as those under other agencies using the FAR EVM clause, will continue surveillance under their current thresholds.
  • The $100 million threshold is determined on the larger of the contract’s Ceiling Price or Target Price; as reported on the Integrated Program Management Report (IPMR) or Contract Performance Report (CPR) Format 1.
  • The threshold is based on the Contract Value including fee (at Price) as noted above. If there is an approved Over Target Baseline (OTB) which increases the Total Allocated Budget (TAB), this cannot push a contract over the threshold.
  • The new thresholds not only apply to subcontracts, but also Inter-organizational work orders with an EVMS flow-down.
  • Regardless of the circumstances, the DCMA will not conduct surveillance on contracts less than $100 million. However, if there are Earned Value issues that the buying command or other parties believe need to be reviewed, then the DCMA may conduct a Review for Cause (RFC) of the system against potentially affected guidelines.
  • The DCMA Operations EVM Implementation Division (EVMID) will not be conducting Compliance Reviews in FY-2016 unless there is an “emergent need”.
  • If a site is selected for a Compliance Review, only contracts greater than $100 million would be in the initial scope of the Implementation Review (IR). However, if an issue is discovered that requires the team to “open the aperture”, other contracts are not precluded.

The DCMA is still working on a response to the following questions:

  • How do I handle a contract that is currently below $100 million but has options that, in aggregate, would exceed $100 million?
  • How is the contract value determined on:
    • Indefinite Delivery/Indefinite Quantity (ID/IQ) Contracts
    • Non-ID/IQ with Multiple CLIN-Level or Task Order reports?

This blog will be updated and reposted as answers to these questions are given.

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EVMS Variance Analysis — EVMS Analysis and Management Reports

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A Variance Analysis Report (VAR) that includes specific information about the cause, impact, and corrective action “provides management with early insight into the extent of problems and allows corrective actions to be implemented in time to affect the future course of the program” [reference: NDIA, IPMD EIA-748 (Revision D) EVMS Intent Guide]. Unfortunately, variance analysis is an easy target for criticism during EVMS reviews. There are many examples of inadequate variance analysis to choose from, but what they all have in common is the lack of specific information on the “why, what, how, when, and who” of any variance. The variance analysis reporting requirements are found in the EIA-748 (Revision D) Guidelines in Section IV., Analysis and Management Reports, Guidelines 22-27.

EIA-748 Guidelines
Section IV. Analysis and Management Reports
22 2-4a Control Account Monthly Summary, Identification of CV and SV
23* 2-4b Explain Significant Variances | Earned Value Management
24 2-4c Identify and Explain Indirect Cost Variances
25 2-4d Summarize Data Elements and Variances thru WBS/OBS for Management
26* 2-4e Implement Management Actions as Result of EVM Analysis
27* 2-4f Revise EAC Based on Performance Data; Calculate VAC


A VAR that includes specific information and data about a problem will allow management to make informed decisions and mitigate project risk. Getting specific about variance analysis reporting includes the following elements.

Overall:

  • Emphasis on the quantitative, not qualitative
  • Emphasis on the specific, not the general
  • Emphasis on significant problems, not all problems
  • Define abbreviations and acronyms at first use
  • The Control Account Manager (CAM) is the most knowledgeable person to write the variance analysis report but will need information from the business support team

Cause:

  • Isolate significant variances
  • Discuss cost and schedule variances separately
  • Clearly identify the reason (root cause) for the variance (ties to the corrective action plan)
  • Clear, concise explanation of the technical reason for the variance
  • Provide cost element analysis
    • Labor – hours, direct rates, skill mix, overtime (rate & volume)
    • Material – unplanned requirements, excess quantities, unfavorable prices (price & usage)
    • Subcontracts – changing requirements, additional in-scope work, schedule changes
    • Other Direct Costs – unanticipated usage, in-house vendor
    • Overhead (indirect) – direct base, rate changes
  • Identify what tasks are behind schedule and why

Impact:

  • Describe specific cost, schedule, and technical impact on the project
  • Project future control account performance (continuing problem)
  • Address effect on immediate tasks, intermediate schedules, critical path, driving paths, risk mitigation tasks
  • Describe erosion of schedule margin, impacts to contractual milestones or delivery dates, and when the schedule variance will become zero (this may only mean the work getting completed late (BCWPcum =BCWScum); and does not necessarily mean getting “back on schedule”
  • Describe any impact to other control accounts
  • Assess the need to revise and provide rationale for the Estimate at Completion (justify ETC realism – CPI to TCPI comparison, impacts of corrective action plan, risk mitigation, open commitments, staffing changes, etc.)
  • Note: If there is a root cause, there will be an impact. It could be related to cost, schedule, lessons learned to be applied to future activity, an update required to a process to support the corrective action or a re-prioritization of resources to meet a schedule.

Corrective Action Planning:

  • Describe specific actions being taken, or to be taken, to alleviate or minimize the impact of the problem
  • Include the individual or organization responsible for the required action
  • Include schedules for the actions and estimated completion dates (ECD)
  • If no corrective action is possible, explain why
  • Include results of corrective action plans in previous VARs.

Ask yourself, is the analyses presented in a manner that is understandable? Does the data support the narrative? Does the variance explanation provide specifics of:

“why” the problem occurred,
“what” is impacted now or in the future,
“how” the corrective action is being taken,
“when” the corrective actions will occur,
“when” the schedule variance will become zero, and/ or the work gets “back on schedule”
“who” is responsible for implementing the corrections?

Remember, a well-developed Variance Analysis Report can reduce the risk of a Corrective Action Request (CAR) during an EVMS review.

EVMS Variance Analysis — EVMS Analysis and Management Reports Read Post »

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