EVM Consulting

Also known as “Earned Value Consulting” or “EVMS Consulting”. EVM consulting is support services that an expert in Earned Value Management (EVM) provides to an organization to help them implement an Earned Value Management System (EVMS).

Preparing for EVMS Reviews: Strategies for Success with Humphreys & Associates 

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Preparing for EVMS Reviews

Facing an Earned Value Management System (EVMS) compliance review can be an imposing prospect for any organization with EVMS contractual requirements. With strategic preparation and expert guidance from Humphreys & Associates, renowned for their leadership in earned value consulting, this necessity can be transformed into an opportunity for process improvement to ensure an effective and efficient EVMS can be implemented on any project. This comprehensive guide, the first in a three-part series, takes a closer look at the strategic approach necessary for preparing for a Cognizant Federal Agency (CFA) EVMS compliance review. CFAs include the Defense Contract Management Agency (DCMA) for DoD and NASA contracts and the Department of Energy (DOE). A CFA conducts a formal review to determine whether the contractor’s EVMS is compliant with the EIA-748 Standard for EVMS Guidelines. A formally approved or certified EVMS is an EVMS the CFA has determined to be compliant with the EIA-748 Guidelines.

Key Elements in Preparing for an EVMS Compliance Review

A successful EVMS compliance review is predicated on several fundamental elements. Being well-prepared in these areas can make the difference between a review that goes smoothly and one that uncovers issues that require corrective action.

  • Thorough Documentation: Proper documentation is the backbone of any review process. It’s essential to maintain an EVM System Description that explains how the system complies with the EIA-748 Guideline requirements as well as any agency specific EVMS requirements. This includes documented policies and procedures as well as process flowcharts illustrating system inputs and outputs with responsibility assignments.
  • Mock Reviews: Conducting internal mock reviews can serve as a rehearsal for the actual review. These practice runs help to uncover any weaknesses in the system and provide a chance to correct them beforehand. Mock reviews also help familiarize the team with the compliance review process, reducing anxiety and ensuring that everyone knows what to expect.
  • Continuous Training: Regular and comprehensive training ensures that project personnel are familiar with the EVMS processes, know how to use the EVM data, and understand the importance of their role in maintaining quality schedule and cost data. This training should be updated regularly to reflect any changes in EVMS requirements, software tools, or company procedures.
  • Data Integrity: The accuracy and completeness of project data are crucial. Regular validation checks should be conducted to ensure data in the EVMS are valid, reliable, and traceable. This includes verifying the project data aligns with the corporate financial records and that the system accurately reflects the project’s current status.
  • Stakeholder Engagement: Effective reviews require the cooperation and understanding of all stakeholders. Engaging them early in the review process helps ensure everyone is on the same page and that the roles and responsibilities are clearly defined. This engagement includes regular communication and involvement in the compliance review preparation process.

Assistance in the Review Preparation Process

Humphreys & Associates provides comprehensive services designed to support organizations throughout the compliance review preparation process. This includes:

  • Compliance Review Readiness Assessments: These assessments are crucial in determining the readiness of an organization’s system, personnel, and data quality for a compliance review. The assessment identifies areas of strength and those requiring improvement, enabling targeted action to enhance readiness.
  • Preparation Workshops: Workshops conducted by experienced consultants can train and prepare the team for the compliance. These sessions cover everything from the basics of EVM to the nuances of the review process, tailored to the specific needs of the organization.
  • Documentation Review: Prior to an compliance review, it’s beneficial to have an external review of the documentation that will be presented. This review can identify areas where additional information is needed and ensure that the documentation accurately reflects the EVMS and compliance with the EIA-748 Guidelines.
  • Support Services: During the review, having expert support available can alleviate the challenges that may arise. This includes on-the-spot advice and assistance in addressing the CFA’s questions and concerns. Should the CFA issue formal corrective action requests (CARs), Humphreys & Associates can assist with producing and implementing the corrective action plans (CAPs) to resolve the deficiencies as quickly as possible.

Common EVMS Review Findings and Remediation

There are several common findings that an EVMS compliance review might reveal that could potentially impact an organization’s ability to obtain a formal CFA EVMS compliance approval or certification. Being aware of these potential findings and understanding how to address them is key to success.

  • Inadequate Baseline Control: Maintaining a current and accurate performance measurement baseline is essential. When a government review team finds baseline control to be lacking, it’s often due to inadequate processes for incorporating changes into the baseline or failing to maintain traceability of the changes.
  • Insufficient Documentation: Documentation gaps can lead to findings of non-compliance. Government review teams need to see evidence that a complete set of processes are in place and that these processes are being followed. This includes having proper version control and evidence of management approvals.
  • Data Discrepancies: Differences between what’s reported in the project reports and the actual project data can indicate serious issues with data management systems. Ensuring that the EVMS software is properly configured, data validation checks are routinely performed, and that schedule and cost data align can prevent such discrepancies.

To address and prevent these common issues, Humphreys & Associates recommends a proactive stance, with robust change control processes, continuous enhancement of documented practices, and improvements to data management systems to ensure accuracy and traceability.

Preparing for an EVMS compliance review is a critical task that can significantly impact the management and success of government contracts. With the strategies provided here and the support of Humphreys & Associates, organizations can confidently navigate the EVMS compliance review process.

Explore the nuances of the implementation phase in “Effective EVMS Implementation for Government Contracts: Roles and Challenges,” and enhance your understanding of the certification process in “Navigating EVMS Certification: A Step-by-Step Guide to Compliance.”

Preparing for EVMS Reviews: Strategies for Success with Humphreys & Associates  Read Post »

Effective EVMS Implementation for Government Contracts: Roles and Challenges

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Effective EVMS Implementation for Government Contracts

Embarking on implementing an Earned Value Management System (EVMS) for government contracts is a complex task. With the expert guidance of Humphreys & Associates, leaders in earned value consulting, organizations can effectively navigate this intricate process. This detailed exploration, the second in a three-part series, delves into the best practices, key roles, and common challenges of implementing an EVMS on government projects.

Best Practices for Implementing an EVMS on Government Projects

The implementation of an EVMS for a government project demands team work and strategic planning. Following best practices facilitates the EVMS compliance process and enhances overall project performance.

  1. Begin with a Clear Strategy: Starting with a clear strategy requires a full understanding of the scope of contract requirements and aligning project management processes with the EIA-748 Standard for EVMS Guidelines. This means establishing clear technical, schedule, and cost objectives as well as establishing a performance measurement baseline that are in harmony with contractual obligations.
  2. Use a Phased Approach: A phased approach to EVMS implementation allows for better management of resources and more focused attention on each aspect of the system. By prioritizing critical areas, such as organizing and decomposing the entire contractual scope of work into manageable product-oriented elements that can assigned to responsible managers, organizations can ensure that the foundational elements of an EVMS are solid before expanding to other areas.
  3. Involve All Stakeholders Early: The early involvement of all stakeholders, including project managers, project controls team, finance, procurement, and even suppliers, ensures that everyone understands the EVMS requirements and their role in the implementation. This early buy-in helps to streamline the integration of EVMS into existing processes and encourages collaborative problem-solving.
  4. Ensure Adequate Training: Comprehensive training programs are essential to equip all team members with the necessary knowledge of EVMS principles as well as how to use the schedule and cost tools that support the EVMS. This training should be tailored to the various roles within the team and include practical exercises that reflect the challenges they will face during implementation.
  5. Focus on Data Quality: High-quality data is the cornerstone of an effective EVMS. Ensuring accuracy, timeliness, and reliability of project data involves setting up rigorous data collection and processing systems, continuous data verification, and validation processes.
  6. Continuously Improve: Continuous improvement involves regularly reviewing and refining the EVMS processes based on project performance, self-governance feedback, and lessons learned. It’s about fostering a culture of constant enhancement to adapt to project changes and industry advancements.

Who’s Who in EVMS Development and Deployment

A successful EVMS implementation relies on the collaborative efforts of a dedicated team, each member plays a critical role.

  • Project Managers: They are the linchpins in ensuring that the EVMS is implemented as intended on the project. They coordinate between different teams, manage resources, and ensure that project contractual objectives are being met.
  • Control Account Managers (CAMs): CAMs have a focused role in managing specific project segments of work. They are responsible for the scope of the work, schedule, and budget for their control accounts that are decomposed into detail work packages or planning packages.  They are critical in ensuring work completion, developing and implementing corrective actions when needed, and providing accurate work status information.
  • EVMS Analysts: These specialists monitor and analyze project performance against the established baselines. They provide forecasts, identify variances, and offer insights that guide decision-making and corrective actions.
  • Finance Personnel: The finance team ensures the integrity of project accounting and its alignment with EVMS requirements. They are responsible for cost recording, allocation, and reporting, playing a vital role in the financial aspect of project control.

Common Challenges and Solutions for an EVMS Implementation

While implementing an EVMS, organizations may encounter several challenges, but with the right strategies, these can be mitigated.

  • Promote Organizational Buy-In: Resistance to change is a common barrier. Overcoming this requires demonstrating the value of the EVMS to the stakeholders, highlighting its benefits in terms of improved project visibility and control. Engaging team members by making them part of the implementation process can foster acceptance and support.
  • Maintain Data Integrity: To ensure the accuracy and completeness of data, it’s imperative to establish standard data governance practices. This includes documenting best practices to help project personnel develop and maintain quality schedule and cost data, performing regular data quality assessments, and conducting continuous training.
  • Seek Expert Advice: Leveraging the knowledge and expertise of EVMS consultants like Humphreys & Associates can be invaluable. Consultants can offer guidance, best practices, and training that are tailored to the organization’s specific needs and challenges.

The implementation of an EVMS is a critical step towards achieving project success, especially in the highly regulated government contracting environment. The insights provided here, coupled with the expertise of Humphreys & Associates, can help organizations to navigate the EVMS implementation landscape effectively.

For a deeper dive into this topic, read our full article, “Navigating EVMS Certification: A Step-by-Step Guide to Compliance.” And stay tuned for the final installment in this series, where we will explore strategies for preparing for compliance or surveillance reviews in “Preparing for EVMS Reviews: Strategies for Success with Humphreys & Associates.”

Effective EVMS Implementation for Government Contracts: Roles and Challenges Read Post »

Introduction to the IPMDAR Data Deliverable – Tips for Producing the Outputs

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Contractors new to earned value management (EVM) often give us a call to help them respond to a government customer request for proposal (RFP) that includes the FAR or DFARS Notice of Earned Value Management System (EVMS) contract clause. Depending on the contract value threshold, the contractor will need to implement an EVMS that can at least produce the contract performance data submittals ($20M or greater) or complete a formal EVMS compliance review ($100M or greater) by a cognizant federal agency (CFA) such as the Defense Contract Management Agency (DCMA). Required data deliverables for a DoD or NASA customer reference the Integrated Program Management and Data Analysis Report (IPMDAR) Data Item Description (DID) as the means to submit monthly performance data. 

What is the objective for placing the IPMDAR on contract?

The government customer wants the monthly source schedule and cost data from the contractor for their own contract performance analysis in a standard format. They need to have reliable schedule and cost data for visibility into current contract performance as well as credible schedule and cost projections for the remaining work. Will the contractor complete the remaining work effort within the contractual schedule and cost targets? The government program manager needs this information for their own planning and budgeting as well as forecasting their funding requirements.

A standard format for collecting the data is important for the government customer so they can perform program portfolio analysis. The DoD established their EVM Central Repository (EVM-CR) to routinely collect contractor data submittals for program portfolio analysis. The data is organized using the MIL-STD-881 (the DoD Standard for Work Breakdown Structures or WBS), as a common basis to organize program data. The IMPDAR DID data submission requirements are defined in the File Format Specifications (FFS) and Data Exchange Instructions (DEI). The FFS and DEI specify the required set of data tables using JSON encoding for the IPMDAR cost and schedule data submissions while narrative text is submitted using Microsoft Word or PDF files so the customer can perform text searches. 

The government program manager can tailor the IPMDAR requirements as defined in the DoD IMPDAR Implementation and Tailoring Guide that complements the DID. For example, they can specify the level of data detail (control account or work package level), whether data can be delivered incrementally, variance analysis options, and requirements for the Performance Narrative Report content.

What is included in the IPMDAR deliverable?

There are three components as outlined below

IPMDAR Components

Notes:

  1. At a minimum, the IPMDAR requires data at the control account level with summary element of cost detail. The contract may specify work package level data.
  2. Inputs from a recent schedule risk assessment (SRA) should be included in the native schedule file submission when available. Depending on the schedule tool, the SRA data may need to be a separate file submission (Word or PDF). Results from the SRA along with other schedule analysis discussions (critical path, driving path, and schedule margin) are required to be included in the Detailed Analysis Report narrative. 
  3. The customer may request the results from a schedule data quality assessment and health metrics be included in the Detail Analysis Report narrative. 

What is required to produce the IPMDAR deliverables? 

For contractors new to EVM, one of their first objectives is to figure out what schedule and cost tools they need to be able to provide the required IPMDAR data and narrative analysis to their customer. H&A earned value consultants are sometimes asked to provide recommendations on commercial off the shelf (COTS) tools for this purpose. Much depends on what the contractor already has in place. 

Common schedule COTS tools such as MSP or Oracle Primavera P6 that have already been implemented will require an add-on to produce the SPD. Keep in mind that the IPMDAR does require SRA data and may require results from performing routine schedule data quality assessments. Some COTS add-ons to MSP or P6 are able to produce the typical schedule data quality metrics as well as produce the SPD. Other COTS scheduling tools such as Deltek Open Plan incorporate the SRA functionality, data quality metrics, and the ability to produce the SPD as part of the core product capabilities.

In most instances, contractors new to EVM do have an accounting/financial system in place to at least capture some level of contract or program/project budget and actual cost data. There may also be some capability to produce ETC data required for EAC financial analysis. The issue is organizing the complete set of time phased cost data (budget, earned value, actual cost, ETC) at the control account and work package level by summary element of cost that aligns with the schedule activity data. A contractor may be able to get by with Excel for a small project, however, it is time and cost prohibitive to create Excel macros to produce the CPD. Most COTS EVM cost tools are able to produce the CPD and have successfully completed the DoD EVM-CR data submission validation checks. This is a better alternative to building an in-house tool.

A data analysis tool such as Encore Analytics Empower is also a good option. Empower can import the time phased cost data from Excel or other COTS EVM tools and produce the CPD output. Empower can also import data from common COTS schedule tools. The benefit to using Empower is the ability to analyze the schedule and cost data in one place to verify alignment, produce interactive dashboards and a variety of analysis data views, and produce the IPMDAR Performance Narrative Executive Summary and Detailed Analysis Report.

Top Three Tips for Implementing Tools to Produce the IPMDAR Outputs

Here are a few tips from H&A’s earned value consultants on implementing tools to support the IPMDAR data submittals. Focus on getting the basics right.

  • Continuously verify the quality of the schedule and cost data. Routinely perform schedule data quality assessment and health checks to proactively resolve schedule construction, status, or data issues. Perform routine cost data validation checks such as earned value and no actual costs for a work package or the cumulative to date earned value exceeds the budget at completion (BAC). Correct all data anomalies before producing the deliverables.
  • Continuously verify the schedule and cost data are in alignment. Consistent schedule and cost data coding is critical to ensure integration and traceability. 
  • Anticipate the scope and level of data detail required. This can impact tool configuration, data structures, and data pulled from other business systems such accounting. For example, be prepared to provide the work package level of detail; actual costs will need to be available at this level. Another example is providing schedule risk assessment inputs; this is usually required at intervals specified in the CDRL.

H&A earned value consultants routinely help clients with constructing the schedule to support the IPMDAR data requirements, setting up the process to do routine data quality checks, integrating the schedule and cost data, and verifying the data before producing the performance reporting data submittals. Another common focus is producing clear and concise variance analysis narrative content. 

We can do the same for you. Call us today at (714) 685-1730 to get started.

Introduction to the IPMDAR Data Deliverable – Tips for Producing the Outputs Read Post »

Using Earned Value Management (EVM) Performance Metrics for Evaluating EACs

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A previous blog, Maintaining a Credible Estimate at Completion (EAC), discussed why producing a realistic EAC is essential to managing the remaining work on a contract. Internal management and the customer need visibility into the most likely total cost for the contract at completion to ensure it is within the negotiated contract cost and funding limits.

As noted in the earlier blog, one common technique to test the realism of the EAC is to compare the cumulative to date Cost Performance Index (CPI) to the To Complete Performance Index (TCPI).

Example of Using the Metrics for Evaluating Data

One example of documented guidance to industry for evaluating the realism of the EAC is the DOE Office of Project Management (PM) Compliance Assessment Governance (CAG) 2.0, and the related DOE EVMS Metric Specifications they use to assess the quality of schedule and cost data. This blog highlights the use of this guidance and how any contractor can incorporate similar best practices to verify EACs at a given WBS element, control account, or project level are realistic.

To refresh, the CPI is the efficiency at which work has been performed so far for a WBS element, control account, or at the total project level. The formula for the cumulative to date CPI is as follows.

Best practice tip: To ensure a valid CPI calculation, verify the BCWP and ACWP are recorded in the same month for the same work performed.

The TCPI provides the same information, however, it is forward looking. While the CPI is the work efficiency so far, the TCPI is the efficiency required to complete the remaining work to achieve the EAC. The formula for the TCPI is as follows.

TCPI Formula

Best practice tip: To ensure a valid TCPI, verify the BCWP and ACWP are recorded in the same month for the same work performed, and the BAC and EAC are for the same work scope. In other words, the scope of work assumptions are the same for the budget and remaining cost. This is why anticipated changes should not be included in the EAC.

The DOE uses the CPI in two of their assessment metrics and the TCPI in one, however, these are critical metrics partly because they are the only ones used to assess two different data evaluations: 1) commingling level of effort (LOE) and discrete work, and 2) EAC realism.

Commingling LOE and Discrete Work

The first use of CPI (no TCPI in this metric) falls under the Budgeting and Work Authorization subprocess. The primary purpose is to evaluate the effect of commingling LOE and discrete work scope has on control account metrics. The basic premise for this metric is that if the CPI for the LOE scope is significantly different than that for the discrete, the mixture of LOE in that control account is likely skewing overall performance reporting.

Here is the formulation DOE uses.

C.09.01:  Control Account CPI delta between Discrete and LOE >= ±0.1

X = Number of incomplete control accounts (WBS elements) in the EVMS cost tool, where

  1. The LOE portion of the budget is between 15% and 80% of the total budget, and
  2. The difference between the CPI for the discrete work and the LOE work is >= ±0.1.
Y = Number of incomplete control accounts (WBS elements) in the EVMS cost tool.
Threshold = 0%

Best practice tip: Run this metric quarterly on your control accounts that commingle LOE and discrete work packages. When there is a significant discrepancy between the performance of the LOE versus discrete work effort, consider isolating the LOE effort from the discrete effort at the earliest opportunity. An example could be the next rolling wave planning window or as part of an internal replanning action. Alternatively, it may be necessary to perform the calculations at the work package level to assess the performance of just the discrete effort when it is impractical to isolate by other means.

Process and procedure tip: Ensure the LOE work packages within a control account are kept to minimum (typically less than 15%), during the baseline development phase. This helps to prevent discrete work effort performance measurement distortion during the execution phase. A useful best practice H&A earned value consultants have helped contractors to implement during the budget baseline development process is to perform an analysis of the earned value methods used within a control account and the associated work package budgets. This helps to verify any LOE work packages are less than the 15% threshold for the control account. In some instances, it may be logical to segregate the LOE work effort into a separate control account. The objective is to identify and resolve the issue before the performance measurement baseline (PMB) is set.

EAC Realism

One DOE metric uses the TCPI and this involves a comparison to the CPI. This falls in the Analysis and Management Reporting subprocess. This DOE EVMS Metric Specification states: “This metric confirms that estimates of costs at completion are accurate and detailed.” As noted above, the metric compares the cost performance efficiency so far to the cost efficiency needed to achieve the EAC and is specific to the EAC a control account manager (CAM) would review for their scope of work. Depending on the level actual costs are collected, this analysis may need to be performed at the work package level instead of the control account level.  

Here is the formulation DOE uses assuming actual costs are collected at the work package level.

F.05.06:  Work Package CPI – EAC TCPI > ±0.1
X = Number of incomplete (>10% complete) work packages where CPI –TCPI > ±0.1.
Y = Number of incomplete (>10% complete) work packages in the EVMS cost tool.
Threshold = 5%

There is no requirement that the forecast of future costs has a linear relationship with past performance. While there may be legitimate reasons why future cost performance will fluctuate from the past, outside reviewers who receive EVM data will look for a trend or preponderance of data that would indicate the EACs are not realistic. When a significant number of active work packages are outside the ±0.1 CPI-TCPI threshold, it is an indication that the EACs are not being maintained or are driven by factors other than project performance.

Best practice tip: Run this metric every month for each active work package prior to month-end close. For those work packages outside the ±0.1 threshold, review the EAC to ensure it is an intentional forecast of costs given the current conditions.

Process and procedure tip: One of the training courses H&A earned value consultants often conduct is a Variance Analysis Reporting (VAR) workshop. This workshop is designed to help CAMs become more proficient with using the EVM metrics to assess the performance to date for their work effort, identify the root cause of significant variances, and document their findings as well as recommended corrective actions. This analysis includes verifying their estimate to complete (ETC) is a reasonable assessment of what is required to complete the remaining authorized work and their EACs are credible.

 

Additional References

Further discussion on using the CPI and TCPI to assess the EAC realism at the project level can be found in the DOE CAG, Analysis and Management reporting subprocess, Estimates at Completion. This section provides a good overview of comparing the cumulative to date CPI to the TCPI as well as comparing an EAC to calculated independent EACs (IEACs) for further analysis to assess the EAC credibility. 

Interested in learning more about using EVM metrics as a means to verify EACs at the detail or project level are realistic? H&A earned value consultants can help you incorporate best practices into your processes and procedures as well as conduct targeted training to improve your ETC and EAC process. Call us today at (714) 685-1730.

Using Earned Value Management (EVM) Performance Metrics for Evaluating EACs Read Post »

Maintaining a Credible Estimate at Completion (EAC)

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Issues with a contractor’s estimate at completion (EAC) process is a common Earned Value Management System (EVMS) surveillance finding H&A earned value consultants are frequently asked to help resolve. The EAC process can become a major issue when the government customer lacks confidence in the contractor’s EAC data.

Why does a credible EAC matter? 

EACs are important because they provide a projection of the cost at contract or project completion, which is also an estimate of total funds required by the customer. It matters because EACs represent real money. When the most likely EAC exceeds the negotiated contract cost, the contractor’s profit margins may be at risk. It also creates a problem for the customer when the most likely EAC exceeds the funding limits. The customer may either need to secure additional funding or modify the work scope. No one likes cost growth surprises.

Figure 1 illustrates comparing the funding limits with the range of contractor’s EACs to verify they are within the bounds of the funding available to complete the scope of work.

Graph Showing Contractor’s Management EACs with Funding Profile
Figure 1: Contractor’s Management EACs with Funding Profile

What determines whether an EAC is credible? 

A credible EAC reflects the cumulative to date actual costs of work performed (ACWP) (costs the contractor has already incurred) plus the current estimate to complete (ETC). The ETC must provide a realistic estimate of what is required to complete the remaining authorized work and represents the time phased estimate of future funds required.

EACs should be based on performance to date, actual costs to date, projections of future performance, risks and opportunities, economic escalation, expected direct and indirect rates, and material commitments. As illustrated in Figure 1, a project manager should routinely evaluate their project’s ACWP, ETC, and EAC along with the funding profile to verify amounts expended and committed are within the parameters of available contract funds. 

What project control practices help to ensure EACs are realistic?

Three recommended best practices H&A earned value consultants either help implement or have observed that ensure the EAC data are credible include:

  1. Actively maintain the bottom up ETC data every reporting cycle. This starts with updating the current schedule resource loaded activities based on performance to date and the latest planning (timing and resource requirements) for work in progress as well as upcoming work effort. This becomes the basis for updating the time phased cost estimate for work in progress that is added to the cumulative to date actual costs or the cost estimate for future work/planning packages. The current schedule and time phased cost estimate should be in alignment. When data is routinely maintained, it minimizes the time required to update it and capture useful information. The control account managers (CAMs) have the basis to substantiate their estimates as well as relevant data they can use to analyze and take action to address a significant variance at completion (VAC).
  2. Actively monitor project EACs from the top down. Project managers that actively maintain a range of data driven EACs (best case, most likely, and worst case) are better prepared to verify the bottom up EACs are realistic, handle realized risks, and prepare for emerging risks. They routinely incorporate metrics such as comparing the Cost Performance Index (CPI) to the To Complete Performance Index (TCPI) to test the realism of the EAC. They can demonstrate their EACs are credible with backup data, rationale, and narratives they provide to management as well as the customer. 
  3. Maintain open communications at all levels of management, subcontractors, and the customer. As a result, project personnel can quickly handle issues or project changes. The project manager is often the main conduit to handle impacts to their project’s EAC such as when corporate management changes direct or indirect rates, changes in resource availability, a spike in commodity prices, or the customer modifies the scope of work or funding.

What are some things to avoid?

H&A earned value consultants often observe practices that negate the purpose and value of maintaining the ETC and EAC data. Issues with the EAC process are often captured in the government customer’s EVMS corrective action requests (CARs). The CARs frequently point out ad-hoc processes or corporate culture issues. Examples:

  1. Management provides a target EAC number the CAMs must match. This approach increases the likelihood the ETC data are unrealistic. There may be a valid reason for this directive as a management what-if exercise. When done as a routine management strategy, it diminishes the value of the ETC data to manage the project’s remaining work and prevent financial surprises. The CAMs should be in a position where they can substantiate their schedule timeline, resource requirements, and cost estimate to complete the remaining work. The project manager should be in a position where they can verify the bottom up ETC/EAC data to establish a level of confidence in their project level EACs they provide to management as well as the customer.
  2. Project personnel take the path of least resistance. This is often a result of a lack of direction or an established process. They either do not create the ETC data or maintain it on a routine basis. A typical approach is to set a cost management tool option where the EAC is static; the CAM may manually update the EAC number once a quarter. The ETC data has limited to no value. This usually surfaces as a major issue when the contractor must provide an Integrated Program Management Report (IPMR)  Format 7 (time phased history and forecast data), or the Integrated Program Management Data and Analysis Report (IPMDAR) Contract Performance Dataset (CPD) to the customer. The customer quickly discovers the ETC data is lacking for their own analysis.
  3. Schedule and cost are created/maintained separately. This often occurs when the schedule and cost tools are not integrated for the duration of the project. A good deal of effort may go into ensuring the schedule and cost data are in alignment to establish the performance measurement baseline (PMB). The integrated master schedule (IMS) resource loaded activities may be used as the basis for the time phased budget baseline in the cost tool. However, the ETC data in the current schedule may not exist or actively maintained. Project personnel only maintain the ETC data in the cost tool and fail to verify it aligns with the current schedule activities (timing) and resource requirements. Once again, personnel are often lacking an established best practice EAC process.

Pay Attention to Your EAC Process

The ETC and EAC data are just as important as the PMB budget plan because it represents real money. As discussed in the blog How Integrated Baseline Reviews (IBRs) Contribute to Project Success, the goal of the IBR is to verify an executable PMB has been established for the entire contractual scope of work. Similarly, the goal of maintaining a credible ETC and EAC is to verify an executable plan is being regularly updated to accomplish the remaining scope of work within the contract’s schedule, cost, and funding targets. The customer must have confidence in the contractor’s ability to deliver and meet the remaining contract objectives.

The best way to avoid an EAC process CAR is to ensure you have an established process personnel follow, and they know how to use the schedule and cost tools to consistently maintain quality ETC and EAC data. H&A earned value consultants have worked with numerous clients to design or enhance their EAC process. H&A also offers EVMS training workshops that include content on how to develop a realistic EAC. Regular EVMS training always helps to reinforce best practices. Call us today at (714) 685-1730 to get started.

Maintaining a Credible Estimate at Completion (EAC) Read Post »

Creating a Scalable Earned Value Management System (EVMS)

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Creating a scalable Earned Value Management System (EVMS) is a topic H&A earned value consultants frequently encounter while assisting clients implementing an EVMS. These clients are often responding to a contractual EVMS requirement and are using it as the impetus to improve their project control system. A common theme is they would like to leverage the EVMS to win more contracts as well as increase project visibility and control to prevent cost growth surprises that impact their profit margins. They consider having an EVMS in place to be a competitive advantage.

Depending on the company size and their line of business, they typically have some project controls in place. They also realize they have gaps and processes are ad-hoc. They lack a standard repeatable process project personnel can follow. And that’s where H&A earned value consultants play a role – to help the client focus on the basics and simplify the process of implementing an EVMS that can be scaled for all types of projects.

What is a scalable EVMS?

A scalable EVMS is a flexible project control system that incorporates earned value management (EVM) practices for all projects. The level of data detail, range, and rigor reflect the type or scope of work, size, duration, complexity, risk, or contractual requirements. This is illustrated in Figure 1.

Scalable Earned Value Management System Infographic - the image shows how the size of a project relates to the level of detail, amount of EVM practices and rigor we are recommending.
Figure 1 – The type of project determines the level of data detail, range, and rigor of EVM practices.

Establishing a Common Base for All Projects

The foundation for a scalable EVMS is to establish a common project control system that incorporates EVM practices. Identify which practices apply to all projects and which practices apply based on the scope of work and risk as well as the level of data detail needed for management visibility and control. Identify and quantify project attributes so it is clear what is expected.

Use this information to create guidance for project personnel so they know what is required for their project. Include this guidance in the EVM System Description.

What are the steps to create a scalable EVMS?

Step 1 – Determine the project categories.

These will be specific to your business environment. The goal is to establish a small set of clearly defined project categories as illustrated in Figure 1. Identify measurable project attributes so a project manager can easily determine their project category. An example is illustrated below.

Project AttributeSmall, low risk projectsIn-between projectsLarge, high-risk projects
Scope of workRoutine, repeatable tasks. Well defined.Mix of known and unknowns. Some requirements are well defined, others likely to evolve.High percentage of unknowns. Near term requirements are defined. TBD requirements are progressively defined.
Size (contract value is a typical measure)< $20M= or > $20M and < $50M= or > $50M
Duration< 18 months> 18 months> 18 months
Overall risk assessment, threat of schedule slip, cost growth or lower profit marginLowModerateHigh
Resource availability, skill set requirementsIn-house resources are available, able to match demandIn-house resources are available, manageable number of specialized resources that may require out-sourcing.Some in-house resources available. Must hire additional resources with specialized skill sets or out-source.
Percentage (or value range) of subcontract work effort< 30%= or > 30% and < 50%= or > 50%
EVMS FAR or DFARS clause on contract, reporting DIDNonePotential for IPMR or IPMDAR DID deliverableIncluded in contract, IPMR or IPMDAR DID deliverable

Some contractors rank or apply a weight to the attributes useful for determining the level of data detail, range, and rigor of EVMS practices required. For example, the overall risk assessment and the scope of work may rank higher than other attributes. Step 2 builds on the project categories identified in Step 1.

Step 2 – Identify the level of data detail and EVM practices that apply.

This will be specific to your EVMS, EVM System Description, and how the content is organized. Include use notes to identify practices that may not apply or what can be scaled for the project category. A simple example is illustrated below. This example assumes core EVM practices are followed for all projects such as using a work breakdown structure (WBS) to decompose the scope of work.

EVMS ComponentsSmall, low risk projectsIn-between projectsLarge, high-risk projects
WBS, WBS Dictionary, project organization, control account levelHigh level. Control accounts are larger and longer duration.Scale to match scope of work and riskLower level of detail. Depth dependent on scope of work and risk.
Work authorizationSimple workflow form and process with one or two approval levels.Detailed element of cost workflow form, additional process steps, approval levels.
Summary level planning packagesUsually not applicable.Used when appropriate for scope of work.
Work packagesLarger and longer duration. Fewer milestones, more percent complete earned value techniques (EVTs).Shorter duration. Majority of discrete EVTs use milestones and quantifiable backup data (QBDs) to objectively measure work completed.
Planning packagesOptional use.Routinely used.
Rolling wave planningUsually not applicable.Routinely used.
Network schedulesHigh level.Detailed.
Schedule risk assessment (SRA)Usually not necessary.Required. Routinely performed.
Variance thresholdsHigh level or simple.Reflect contract or project manager requirements, scope of work, or risk level.
Baseline change requests (BCRs)High level, simple log.Formal workflow process, forms, and logs to document changes and rationale. Approval levels depend on scope of the change.
Change control board (CCB)Not used. Project manager approves all changes.Required.
Risk and opportunity (R&O) managementHigh level assessment. May use simple R&O log.Formal process to assess, R&O register maintained.
Annual EVMS self-surveillanceNot applicable.Required when EVMS on contract.

Step 3 – Establish scalable templates or artifacts.

To complement the EVM System Description, provide a set of scaled templates or artifacts for project personnel. For example, a project manager for a small low risk project would select a simple work authorization or BCR form and workflow process, report templates, and logs to implement on their project. Provide a separate set of templates and artifacts for large high-risk projects that require additional procedures, data detail, workflow approval levels, forms, reports, and change tracking that can support an EVMS compliance or surveillance review.

Provide training on how to use the templates and artifacts. This helps to establish a standard repeatable process with a base set of artifacts. It also promotes a more disciplined process regardless of the type of project as personnel have a better understanding of what is required.

Another best practice is to use project directives to document the level of data detail, range, and rigor of the EVM practices implemented on a project. These provide clear direction for all project personnel on how to implement the EVMS. Project managers are often responsible for producing these. Create a template for each project category so they can easily document and communicate their management approach.

What are the benefits of establishing a scalable EVMS?

Establishing a common repeatable process along with a standard framework for organizing project scope of work, schedule, budget, and performance data enables project portfolio analysis to assess profitability. It also provides the basis to capture historical data a proposal team can use to substantiate their cost estimates. A common process eliminates the need to maintain different project control systems. It also makes it easier to move personnel between projects and increase the project control maturity level as everyone is following the same core processes – just the level of data detail or rigor of EVM practices may be different.

H&A earned value consultants have worked with numerous clients to design, implement, and maintain an EVMS. Scalability is a feature that can be designed into an EVMS and EVM System Description whether new or existing. Call us today at (714) 685-1730 to get started.

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