EVM Terminology

EVM Terms

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 »

How Integrated Baseline Reviews (IBRs) Contribute to Project Success

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What is an Integrated Baseline Review or IBR?

An IBR is a formal review of a contractor’s performance measurement baseline (PMB) a customer conducts shortly after contract award or other project events to gain confidence in the contractor’s ability to deliver and meet contract objectives. Conducting an IBR helps to assure there is mutual agreement on the scope of work, schedule, resource requirements, and budget to meet the customer’s needs. It also assures there is a mutual understanding of the project’s risks and opportunities as well as how they will be managed.

Conducting an IBR is often a contractual requirement along with the requirement to implement an earned value management system (EVMS). Contractual documents specify the time frame for when the IBR must occur after contract award. This is typically within 90 to 180 calendar days. A customer may also conduct an IBR at critical milestones, funding gates, when transitioning to another project phase, or when significant changes are incorporated into a PMB.

What an IBR is Not

An IBR is not an EVMS compliance review. The intent of an IBR is not to devolve into a review of the contractor’s EVMS and whether it complies with the EIA-748 Standard for EVMS guidelines. That said, the contractor must be able to demonstrate they have a disciplined project control system in place. The contractor should be able to demonstrate to the customer that the project’s scope of work is properly planned, scheduled, resourced, budgeted, authorized, and managed using their project control system.

What are the benefits of conducting an IBR?

Conducting an IBR contributes to successful project execution because it helps to ensure a realistic PMB has been established.

IBRs provide the opportunity for the contractor and customer to verify:

  • There is shared understanding of the scope of work, technical requirements, and accomplishment criteria. As the work breakdown structure (WBS) is decomposed into manageable product-orientated work elements, it provides a common frame of reference for communication between the contractor and customer. The WBS dictionary should capture the technical requirements that must be met as well as expected deliverables and outcomes. The contractor must have a clear understanding of customer’s needs, assumptions, and expectations to be able to create a realistic schedule and budget plan. The IBR provides the opportunity for the contractor to verify the scope of work details with the customer before the project execution phase begins. In instances where the technical requirements evolve over time as work progresses, rolling wave planning is often used to detail plan the current work effort with more macro planning for future work effort to ensure the entire scope of work is included.
  • An executable PMB has been established for the entire contractual scope of work. The PMB should accurately reflect how the contractor plans to accomplish the work within the contractual period of performance and negotiated contract cost. The customer’s funding profile may also determine the timing of activities and when resources are required. The schedule and budget should be in alignment. The budget time phasing should reflect the schedule activities and resource requirements. It is also useful to verify appropriate earned value methods and techniques have been selected for the work packages to assure objective and meaningful project performance can be measured and reported as work progresses.
  • The required resources have been identified and assigned to the project. This contributes to producing an executable schedule and budget plan. The staffing plan should accurately reflect the sequence of work and skill mix as well as resource availability and demand to accomplish the project’s objectives. Flat loading labor hours may not accurately reflect common challenges of ramping up resources after contract award or the availability of critical resources for specific tasks. Other resource factors include the timing or availability of critical or high value materials as well as subcontractors responsible for performing work or providing services.
  • Project technical, schedule, and cost risks/opportunities have been identified and assessed. This also contributes to producing an executable schedule and budget plan. Where possible, risk mitigation actions have been incorporated into the PMB to reduce known risks to an acceptable level. For example, the timing or duration of activities as well as resource requirements may need to be adjusted. Schedule margin activities may be incorporated into the integrated master schedule (IMS). It also provides fact-based information to determine the amount of management reserve set aside to handle realized risks. This is often the most valuable component of the IBR. It is essential all parties have an understanding of the identified risks or opportunities, potential impact if they are realized, and risk mitigation or opportunity capture plans.

Why it is important to verify these details during an IBR?

A realistic schedule and budget plan helps to prevent cost growth surprises because of technical, schedule, or budget challenges. The better the up-front planning, the less the likelihood of cost growth during project execution. It also increases credibility with the customer. The contractor can demonstrate their ability to deliver to the customer needs and manage the work effectively.

Benefits of Preparing for an IBR

Establishing a project’s PMB is a significant and often formal event as it signals the transition from the planning to execution phase. It represents the culmination of the integrated planning, scheduling, budgeting, work authorization, and risk/opportunity management processes.

A common best practice is to conduct an internal baseline review regardless of whether a formal IBR with the customer is required prior to setting the PMB. Implementing a standard process to conduct an internal review of the complete set of project data and artifacts with the project personnel assures an executable schedule and budget plan has been established to accomplish the contractual scope of work within the contractual period of performance and negotiated contract cost in alignment with the contract’s funding profile.

These internal reviews help to ensure there is a common understanding of the scope of work, major project events, planned sequence of work, schedule of deliverables, resource requirements, time phased budget, funding profile, and project risks/opportunities. It also provides an opportunity to verify the quality of the integrated schedule and cost data as well as top down and bottom up traceability. 

Need help preparing for an IBR?

A common earned value consulting service H&A provides is conducting a mock IBR with project personnel to prepare for the formal customer IBR. The objective is to conduct a thorough assessment of the project’s PMB to verify it reflects the entire contractual scope of work and technical requirements as well as identified technical, schedule, cost, or resource risks that may impact the ability to execute the work as planned. This provides an opportunity to correct any issues with the PMB prior to the IBR event.

Another standard earned value consulting service we offer is conducting IBR training for project team members. H&A earned value consultants can help you to establish a standard internal process to verify an executable PMB is in place for a given project. Once again, the objective is to prevent cost growth surprises and management is aware of the project’s risks and opportunities that may impact profit margins. 

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

How Integrated Baseline Reviews (IBRs) Contribute to Project Success Read Post »

EVMS Guidelines 2 – Five Sections of Organizational Guidelines

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Video Contents

The EVMS Guidelines are Grouped in five major categories which address these five sections:

0:12 – Organization
0:32 – Planning, Scheduling, and Budgeting
0:46 – Accounting Considerations
0:56 – Analysis and Management Reports
1:15 – Revisions and Data Maintenance

More EVMS Training

If you liked this video you can purchase the entire course below. This video is an excerpt from the Department of Defense (DOD) version of this eLearning module. We also offer the same course customized for the Department of Energy’s (DOE) specific Earned Value Management (EVM) implementation/requirements, as well as a version of the course customized for NASA’s EVM implementation/requirements.  

— Purchase This Course —
EVMS DOD Virtual Learning Lab

— Purchase the DOE Version of this Course —
EVMS DOE Virtual Learning Lab

— Purchase the NASA Version of this Course —
EVMS NASA Virtual Learning Lab

EVMS Document Matrix

EVMS Document Matrix

Not sure what the different requirements are between the DOE and NASA? Can’t remember if Cost and Software Data Reporting (CSDR) is required for an NSA contract? Check out our easy to read Earned Value Management Systems Document Matrix

All Online Courses

All Online Courses Available from Humphreys & Associates

Earned Value Training

EVMS Guidelines 2 – Five Sections of Organizational Guidelines Read Post »

EVMS Guidelines and Required Elements

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Video Contents

This video reviews the data points that an Earned Value Management System provides and how variances can be calculated from those data points.  Timely analysis of performance data and variances assists contractors to proactively resolve issues and effectively manage the remaining work on a project.

You can use the links below to jump to a specific part of the video.

Earned Value Contractors’ Internal Systems must be able to provide the following:
00:06 – Budgeted Cost for Work Scheduled (BCWS)
00:26 – Budgeted Cost for Work Performed (BCWP)
00:38 – Actual Cost of Work Performed (ACWP)
00:47 – Buget At Completion (BAC)
00:52 – Estimate At Completion (EAC)

Variances can be calculated using the BCWS, BCWP, ACWP, BAC and EAC.
00:58 – Variances Explanations
01:03 – Schedule Variance (SV)
01:19 – Cost Variance (CV)
01:31 – Variance at Completion (VAC)
01:45 – Why do we calculate Variances?


01:54 – EAC and BAC Comparison
2:06 – What does Variance at Completion (VAC) indicate?
2:18 – Structure your Earned Value Management System so that Variances can be traced to their source.
2:32 – Use your existing project management systems.

We also have additional free resources for learning about

You can also find Earned Value Definitions as well as additional free resources for learning more about EVMS concepts like Budgeted Cost for Work Performed (BCWP), Actual Cost of Work Performed (ACWP), Buget At Completion (BAC), and Estimate At Completion (EAC) in our EVMS Education Center and in other posts on this blog.

More EVMS Training

If you liked this video you can purchase the entire course below. This video is an excerpt from the Department of Defense (DOD) version of this eLearning module. We also offer the same course customized for the Department of Energy’s (DOE) specific Earned Value Management (EVM) implementation/requirements, as well as a version of the course customized for NASA’s EVM implementation/requirements.  

— Purchase This Course —
EVMS DOD Virtual Learning Lab

— Purchase the DOE Version of this Course —
EVMS DOE Virtual Learning Lab

— Purchase the NASA Version of this Course —
EVMS NASA Virtual Learning Lab

EVMS Document Matrix

EVMS Document Matrix

Not sure what the different requirements are between the DOE and NASA? Can’t remember if Cost and Software Data Reporting (CSDR) is required for an NSA contract? Check out our easy to read Earned Value Management Systems Document Matrix

All Online Courses

All Online Courses Available from Humphreys & Associates

Earned Value Training

EVMS Guidelines and Required Elements Read Post »

Earned Value Management and Agile Integration – Work Scope as the Foundation

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A previous H&A blog, “EVM (Earned Value Management) vs. Agile Project Management,” provided an introduction to the differences between an Earned Value Management System (EVMS) and Agile development methodologies.

At first glance, it may seem that EVM and Agile development methodologies are incompatible. Agile is all about rapid incremental product deliveries and responding quickly to an evolving understanding of the desired deliverable or outcome. Depending on how an EVMS is implemented, the EVMS can often seem rigid in comparison.

Can the two methodologies coexist and complement each other to create an effective integrated project management system? The answer is yes, provided you have thought through how you intend to use the two systems together and map how and where they integrate. The goal is to leverage the benefits of each system and without forcing either system to do something it wasn’t meant to do.

There is a natural top down and bottom-up process integration when defining the scope of work and acceptance criteria. This process integration continues for planning and scheduling the feature estimates of effort, establishing the budget baseline, and ultimately maintaining the estimate to complete (ETC) in the EVMS. It also supports an integrated process for measuring completed work. The Agile daily standup meetings provide current information about accomplishments and impediments at the lowest level of the project. The Agile system provides the quantifiable backup data for claiming earned value in the EVMS for performance reporting.

The following image illustrates the relationship between the two systems.

The source for this image is the NDIA IPMD Industry Practice Guide for Agile on EVM Programs, Revision May 2019, Figure 2-4.

The Foundation for Integrating EVM and Agile: Defining the Scope of Work

A work breakdown structure (WBS) is commonly used to organize and decompose a project’s scope of work into manageable, product-oriented elements. It is an essential communication tool for the customer and contractor so they have a common frame of reference to capture and manage requirements as well as expected deliverables or outcomes. It establishes a common basis for measuring progress and defining accomplishment criteria. It is the framework for developing a project’s schedule (timing of tasks), identifying resources to accomplish the scheduled tasks, creating cost estimates as well as the budget baseline, and identifying risks. In an EVMS, the WBS is often decomposed to the control account level which is further decomposed into work packages or planning packages. Once extended to the lower level, it provides a framework for tracking technical accomplishments, measuring completed work, and identifying variances from the original plan to complete the work.

There is a similar planning hierarchy to Agile projects – the Product Backlog is the foundation for defining the scope of work. The Product Backlog starts at the Epic or Capability level and is further defined through product planning. The process includes prioritizing the capabilities and defining the sequence of deliverables to create the Product Roadmap (timing). The capabilities are decomposed into features along with an estimate of the effort to deliver the feature. Features should include exit criteria (definition of done) and have minimal dependencies. At the lowest level, features are decomposed into Sprint Stories and related tasks forming the basis for the schedule and measuring completed work in the EVMS. As illustrated in the image above, in the Product Backlog hierarchy, an Epic/Capability relates to the control account level in the EVMS. Features relate to the work packages in the EVMS.

In an integrated environment, there can be a natural mapping between the WBS and the Product Backlog regardless of the starting point. When starting from the Agile system, the Product Backlog could be used to create the project’s WBS. The customer may also pre-define the top level WBS elements that could form the backlog structure. The DoD uses MIL-STD-881, Work Breakdown Structures for Defense Materiel Items, for this purpose so they have a set of common templates they can use across programs to capture historical actual cost data for cost estimating and should cost analysis. Even though the top level WBS elements may be pre-defined, the lower-level content can reflect an outcome based Agile structure that focuses on customer driven deliverables.
An example is illustrated here.

Possible Agile software development MIL-STD-881 WBS breakout. The source for this image is the DoD ADA Agile and Earned Value Management: A Program Manager’s Desk Guide, Revision November 2020, Figure 2.

What’s common between the two systems?  You have:

  • Decomposed a common understanding of the scope of work into manageable, product or outcome-oriented elements of work.
  • Defined the agreed upon accomplishment criteria or definition of done for a given deliverable or outcome.
  • Built a framework to determine the timing of tasks, identifying the resource requirements, creating a cost estimate to do the work, and means to objectively measure completed work.  Ideally, you have also identified the risks or uncertainties so you know where potential issues may surface.

Best Practices for Integrating the WBS and Product Backlog

Keeping in mind you have a similar decomposition of work between the two systems, you can set up the WBS and Product Backlog to align with each other.  The goal is to ensure traceability so you can easily support the EVMS requirements. 

Here are a few best practices for integrating the WBS and Product Backlog.

  1. Verify the WBS aligns with the prioritized Product Backlog to at least the Epic/Capability level (control account level in the WBS).  Determine how you intend to maintain traceability between the WBS elements and the work items in the Product Backlog so it doesn’t matter which system you use to review or confirm the agreed upon scope of work.  Identify and document how you intend to map the WBS elements to a work item in the Product Backlog so you always have the necessary cross references identified.  Keep it simple.  Where possible, minimize the need to enter something more than once. 
  2. Use the Product Backlog to tailor the WBS.  This is particularly true for projects where Agile development is central to the final deliverable.  Consider your two end objectives: you need to provide project performance reporting via the EVMS and organize the items in the Product Backlog so you can decompose them from the Epic/Capability level to the Feature level and then to the Sprint Story and task level.
  3. Watch the level of detail in the WBS.  Avoid driving the WBS to too low a level of detail.  Depending on the project, it may be appropriate to go no lower than the Epic/Capability level (control account level).  The reasoning: in the Agile system, the lower-level Stories and tasks are flexible and subject to change.  You are focused on completing current near-term work effort within a Sprint.  Better to let the Agile system manage and track what is happening at the rapidly changing detail level – it is designed to do that.  For EVMS purposes, project monitoring and control should be at a higher level where scope can be consistently defined, aligned to the schedule and budget, and claimed as done (technical accomplishment).  The WBS should reflect the level of detail that is aligned to the permissible variation in requirements or configuration.  Otherwise, you create too much change “noise” in the EVMS.
  4. Confirm the WBS and Product Backlog contains 100% of the contract scope of work.  Verify the statement of work has been mapped to the WBS elements or work items in the Product Backlog.  Why is this important?  You need to demonstrate you have captured the entire technical scope of work to at least the Epic/Capability level.  You need this for internal planning purposes so your development teams have an understanding of the technical requirements and expected outcomes as well as managing changes.  Your customer also needs confidence that you have an understanding of the entire scope of work and have planned accordingly for the duration of the project. 
  5. Verify you have defined the Feature accomplishment criteria or definition of done so it is easy to measure completed work.  This could be in the WBS dictionary or documented in the Agile system Product Backlog.  Determine where that information can be found and document the process to maintain it.  Ideally it is in one place so you only have to maintain it in one system and everyone on the project knows they are referencing current information.  Clearly defined accomplishment criteria mean you can objectively measure accomplishments – in both systems.  Enable that capability right from the start when you set up a new project in the two systems.

Are your EVM and Agile systems are sharing useful information?  Perhaps you have learned the hard way the WBS and Product Backlog aren’t sufficiently mapped for you to maintain traceability between the two systems.  We can help.  Call us today at (714) 685-1730

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