EVM Terminology Archives - Page 4 of 16

New IPMDAR DID and Implementation Guide

By Humphreys & Associates / June 3, 2020 / EVM, Integrated Program Management Data and Analysis Report, IPMDAR

EVM, Integrated Program Management Data and Analysis Report, IPMDAR

ALERT- New IPMDAR DID and Implementation Guide

The New Integrated Program Management Data and Analysis Report (IPMDAR) Data Item Description (DID) and Implementation Guide

On March 12, 2020, the Defense Department (OUSD/AAP) instituted the new Integrated Program Management Data and Analysis Report (IPMDAR), issuing the Data Item Description (DID) Number: DI-MGMT-81861B.
The IPMDAR is to be used for solicitations and RFPs for contracts with an EV reporting Requirement starting from March 12, 2020 forward. The IPMDAR can also be applied to modified contracts or to existing contracts (under the old IPMR or CPR requirements), but this has to be through a bi-lateral agreement (Government Program Office and Contractor).

Significant Change

This IPMDAR is a significant change from the previous iterations, the Integrated Program Management Report (IPMR) and the old Contract Performance Report (CPR). The IPMDAR has dispensed with the delivery of physical reports (Formats 1 – 7 of the old IPMR/ CPR), instead now requiring contractors to provide three (3) specific electronic data sets:

The Contract Performance Dataset (CPD)
The Schedule, comprised of
- The Native Schedule File and
- The Schedule Performance Dataset (SPD)
The Performance Narrative Report, comprised of
- The Executive Summary and
- The Detailed Analysis Report

The DID states: “The IPMDAR’s primary purpose to the Government is to reflect current contract performance status and the forecast of future contract performance.”

Implementation & Tailoring Guide

To help expedite the adoption of the New IPMDAR, on May 21, 2020, the AAP office also issued the 87-page Integrated Program Management Data Analysis Report (IPMDAR) Implementation & Tailoring Guide:
“This guide covers the application of the DID, how to tailor the DID in the Contract Data Requirements List (CDRL), and clarification on the intent of the DID.”

Interesting Features

The IPMDAR has introduced some interesting features that are clarified in the Guide:

The default reporting is at the Control Account, but there is the option to have Work Package Level reporting (negotiated item)
Reporting is by Hours and Elements of Cost (EOCs) (for either the CA or WP level)
Time-phased Future Baseline (BCWS) and ETC Forecast (for either CA or WP level)
Best Case/Worst Case/Most Likely EACs reported by hours and dollars
The Native Schedule is a direct export from the contractor’s scheduling tool
The SPD must match the CA or WP level negotiated
The Government may have any subcontractors provide the IPMDAR directly to the Government
- Even if this is required, the subcontractors must still provide the IPMDAR data to their prime contractor
The IPMDAR reporting components must be delivered to EVM-CR not later than 16 business days after a contractor’s accounting period
- Incremental deliveries may be authorized, but all the items must be in NLT the 16th business day and the incremental deliveries are negotiated. A potential example is IMS by third working day after close-of-month, the raw data by fifth working day, and format 5 narrative by the sixteenth working day.
Historical Contract Performance Data – The Government may request this “time-phased historical data from contract award” in place of the normally provided CPD (typically no more than annually).

Applicability

IPMDAR Applicability:

IPMDAR is intended to be applied completely (i.e., not tailored) for cost or incentive contracts ≥ $20M – unless tailoring is specified within the DID and coordinated with the Service/ Agency EVM Focal Point.
If EVM reporting is required on contracts less than $20M, tailoring is more flexible, BUT the Native Schedule and Performance Narrative Report are recommended.
IPMDAR typically not required on FFP.

Humphreys & Associates, Inc. can help you properly implement the new IPMDAR requirements, please contact us at (714) 685-1730

New IPMDAR DID and Implementation Guide Read Post »

Who Owns Subcontractor Management Reserve (MR)?

By Humphreys & Associates / March 2, 2020 / DCMA, EVMS, EVMSIG, Management Reserve (MR)

DCMA, EVMS, EVMSIG, Management Reserve (MR)

Subcontractor, Prime Contractor… Customer?

There has long been discussion regarding who “owns” a subcontractor’s Management Reserve (MR). Some believe that since the entire contract value was awarded by the prime contractor to the subcontractor, the MR belongs to the prime. Unfortunately, they might have been influenced by some of their customers who believe a prime contractor’s MR belongs to the customer – even to an extreme in which the customers interject themselves in the prime contractor’s decision process in using their MR. So contractors might figure that if the customer is doing that to them, they should do the same to their subcontractors.

DCMA Cross Reference Checklist

They may try to justify this by pointing out that in the DCMA Cross Reference Checklist (CRC dated 22 March 2019) Guideline # 14 Sub-question b asks:

“Is major subcontractor Management Reserve (MR) incorporated and traceable to the prime contractor’s EVMS?”

While this might sound to some as though it justifies the argument that the MR belongs to the prime, it really doesn’t. The actual guideline 14 question is simply asking if the contractor implementing EVMS (in this case the subcontractor) simply does or does not “Identify management reserves and undistributed budget.” Since the subcontractor is implementing their management system on their contract with the prime, the only requirement is that the subcontractor identifies a Management Reserve (MR) amount (which could be zero, by the way). If they do, then (strangely) subquestion b puts the onus on the prime contractor to reflect the subcontractor’s MR in their EVM system [i.e., strange because how would a subcontractor demonstrate to a review team that their MR is being reflected in the prime’s EVM System?]. This question would be more appropriate if the subcontractor was also the prime to a lower-tier subcontractor.

Reporting vs. Ownership

The above only addresses the reporting of a subcontractor’s MR, but what does the government documentation actually say about the “ownership” of the subcontractor’s MR?

Note: A point to remember in this entire discussion is that the Guidelines, the EVMIG, the Cross Reference Checklist (CRC), and the EVMSIG were written to apply to any contractor required to implement EVMS on a contract – whether they be a prime contractor to a government customer or a subcontractor to a prime contractor (their “customer”).

EVMSIG Chapter 3 Introduction

The EVMSIG Chapter 3 Introduction (pg. 17) says this about MR:

“An allowance is made for a portion of the CBB to be withheld outside of the PMB as Management Reserve (MR) for internal management control purposes. MR is intended to provide the contractor with a budget to manage risk within the established contract scope (Guideline 14).”

As this introductory paragraph points out, MR is established by the contractor (or the subcontractor) for their internal management control purposes to have budget to manage risk within the contract scope. There is no mention of customer involvement in the decision-making process.

Para 3.9 (Guideline 14), Intent of Guideline

A more definitive statement in the EVMSIG is: “Para 3.9 (Guideline 14), Intent of Guideline” in the second paragraph – bullets and underlines have been added for emphasis:

“MR belongs to the contractor Program Manager, not the Government,…” [ergo, NOT the prime in a prime/ sub relationship]
[It] “provides the contractor with a budget for unplanned activities within the current program scope. MR enables program management to respond to future unforeseen events within the work scope of the program by distributing budget to mitigate program risks.”
“To establish MR, the contractor’s program management sets aside budget based on the program’s risk management process and assessment.”
[MR] “is not a source of funding for additional work scope or the elimination of performance variances.”
“MR is not a contingency fund and may neither be eliminated from contract prices by the customer during subsequent negotiations nor used to absorb the cost of contract changes.” And finally,
“MR belonging to a major subcontractor must be incorporated into the prime contractor’s EVMS with traceability to the subcontractor’s reported MR.”

Subcontractor Reports

This last bullet specifically points out that the MR belongs to the subcontractor, and that it must be reflected in the prime’s EVMS as reported by the subcontractor. Some choose to include a subcontractor’s MR in their own MR value; having it there, however, increases the risk of having the prime think they have more MR to use when, in fact, they do not. The subcontractor’s MR is not the prime’s to use, so the prime would need a very good mechanism in place to keep the two MR amounts separated. This needed segregation becomes more complicated if the prime has more than one subcontractor. Regardless of where the contractor places the subcontractor MR, EVMS requires it to be traceable to the MR value the subcontractor reports.

A Contractor’s Control Mechanism

Management Reserve (MR) is something that is allowed to provide a contractor with flexibility in handling the unknowns on a contract. It doesn’t matter if it is a prime contractor to a government customer or a lower-tier subcontractor to a higher level (or prime) contractor. MR is a contractor’s control mechanism and should not be subjected to any level of customer involvement. The guidelines and implementation/ interpretation documentation try to control improper uses of MR (e.g., covering performance variances, performing out of scope work, etc.), but customers – at all levels – should not interject themselves in a contractor’s decision-making process on the use of MR. Remember also, if customers involve themselves in that process, there is a risk that their perceived “direction” to the contractor could make them complicit in poor MR decisions.

Who Owns Subcontractor Management Reserve (MR)? Read Post »

Planning and Managing EVM by Elements of Cost (EOC) – Use a New EOC – Part 3

By Humphreys & Associates / May 1, 2019 / ACWP, BCWP, CAM, earned value training, Elements of Cost, EOC, EVM Training

ACWP, BCWP, CAM, earned value training, Elements of Cost, EOC, EVM Training

<< Review Part 2

In Part 2 we talked about the over-application of EOCs at or below the Work Package level and how a CAR assuming that a charge against an Element Of Cost (EOC) equals a charge against a “zero-budgeted WP” was inaccurate.

Use a New EOC

Both of the examples from part 2 were over-applications of the EOC requirement. The point here was that the work (it was to design a circuit card), was planned as labor and was also accomplished (earned) in the month it was planned; so the value would be “earned” as planned. In that period, however, it happened that the planned resource was not available, so the work was actually accomplished using a different EOC such as a subcontractor engineer. The contractor’s system properly showed that the design had been completed and the value earned and that the ACWP for that completion was also in the system (i.e. consistent with the BCWP). However, it just happened to be the Subcontract EOC instead of the Labor EOC originally planned, and the CAM addressed the cost difference in the VAR for the Control Account. The team’s comments on the CARs were that the CAM should have replanned the effort using the new EOC instead of the original one. The problem with this is that in many cases the CAM does not know the original resource is not going to be available until the day it happens. There would (1) be no time to process the change and (2) the change would occur in the “freeze period” (actually in the current month), and (3) this could result in unnecessarily large numbers of Change Requests since these types of events commonly occur in the industry.

Noted instances:

Work planned and earned as internal labor (Labor EOC) had to be performed by contract support (subcontract EOC) in that period because of the non-availability of the planned resource.
[Some Contractors consider each labor grade a separate EOC within labor] Work planned and earned for an Engineer 2. However, the period the work was performed used an Engineer 3 (higher cost).
The plan was to build sub-assemblies in-house (Labor EOC), but a machine breakdown necessitated having a vendor provide substitute off-the-shelf assemblies (Material EOC) that month.

In each of these cases, the “EOC ACWP substitution” was temporary, and the work resumed the next period as planned, using the originally planned Element of Cost. The key here is that in each case, the work was performed, and so it was earned; as it should have been. The only difference was that a different EOC was used to accomplish the work – a simple Cost Variance. While it is certainly true that each WP (and PP) should be planned and WPs earned using a single EOC, the misinterpretation here was that every EOC then is a Work package and they are not. In other words, temporarily using a different Engineer category than planned, or using contract support instead of internal labor, or substituting a purchased material item instead of fabricating internally, etc. simply represents a Cost Variances, and should not be cited as a violation of the EVMS Guidelines.

The “consistency” required by the Guideline and the sub-question is that the EOC actually used was expended in the same period in which the work was completed and the Earned Value claimed (i.e. consistent with the BCWP). The variance analysis would show BCWS, BCWP, and ACWP at the CA level with the EOC details at lower levels.

Now for the big “HOWEVER”!

If the switch in use of the alternate EOC is short term, then the differences should be addressed as a Cost Variance (which could be higher or lower than with the planned EOC); HOWEVER, if the change is expected to be permanent or long term, then the CAM should replan the remainder of the work package using the new EOC, and the EAC should be updated, as well, to reflect the new anticipated total cost using that revised EOC.

Note: Some contractors have what is called a “gray badge” environment, whereby a subcontractor charges their labor directly into the Prime contractor’s labor system. Under this arrangement, for this subcontractor, there would be no difference in EOC if the subcontractor performed the work instead of the prime contractor.

Humphreys & Associates is available for consulting and information on this topic. Give us a call!

Planning and Managing EVM by Elements of Cost (EOC) – Use a New EOC – Part 3 Read Post »

Planning and Managing EVM by Elements of Cost (EOC) – Over-Application of EOCs – Part 2

By Humphreys & Associates / April 1, 2019 / CAR, Corrective Action Requests, earned value training, EIA-748-C, Elements of Cost, EOC, EVM Standard 748, EVM Training

CAR, Corrective Action Requests, earned value training, EIA-748-C, Elements of Cost, EOC, EVM Standard 748, EVM Training

<< Review Part 1

In part one of our series on Elements of Cost (EOC), we explained what EOCs are and gave an analogy of how EOCs would relate to building a patio. We also reviewed how EOCs can be “over thought” and emphasized the importance of properly applying indirect cost rates. This post is going to be focused on the Over-Application of EOCs.

Over-Application of EOCs

During some government reviews, the teams issued Corrective Action Requests (CARs) citing multiple examples of ACWP occurring on “zero-budgeted” Work Packages within Control Accounts. On the surface, this sounds pretty serious, but there were several “over-applications” in play here.

First, the review was being performed at (and in some cases below) the Work Package (WP) level, when the intent of the Guidelines has always been for variance analysis to be performed at the Control Account (CA) Level;
Second, the CAR assumption was that a charge against an Element Of Cost (EOC) equals a charge against a “zero-budgeted WP”.

For the first point we’ll look at Guideline 22 in the EVM Standard 748:

GL 22. At least on a monthly basis, generate the following information at the Control Account and other levels as necessary for management control using actual cost data from, or reconcilable with, the accounting system:

1) Comparison of the amount of planned budget and the amount of budget earned for work accomplished. This comparison provides the schedule variance.

2) Comparison of the amount of the budget earned and the actual direct costs for the same work. This comparison provides the cost variance.

Even the government’s sub-question e. under GL 22 reiterates this requirement:

e. Are the following elements for measuring performance available at the levels selected for control and analysis (at a minimum at the control account level):

1) Budgeted Cost for Work Scheduled (BCWS)?

2) Budgeted Cost for Work Performed (BCWP)?

3) Actual Cost of Work Performed (ACWP)?

While the intent of the words “and other levels” and “at a minimum” was to ensure that contractors did not only perform analysis at some higher, summary level, the government’s choice of those sub-question words also opens up the application of the analysis at lower levels. Be that as it may, the over-application still exists where it should not. Variance Analysis is supposed to be at the CA level and rolled up to higher levels for analysis. The bottom line for each of the CARs written is that BCWS, BCWP, and ACWP existed at the Control Account level, and the EOC visibility was available for variance analysis explanations at the lower levels in the contractors’ systems.

For the second point, let’s look at all the EVM Standard 748 Guidelines, specifically Guideline 16.

There is no Guideline that specifically requires BCWP to be claimed the exact same way BCWS was planned; however, it is intuitive that this has to be true in order for cumulative values for BCWP and BCWS to equal BAC so that the work can be considered complete. [While the government’s sub-question b. under Guideline 22 expects BCWP to be calculated “consistent with the way the work is planned”, GL 22 itself (above) is silent on that inferred expectation.] The Guideline 16 and its sub-question b. also require consistency of the direct costs:

GL 16. Record direct costs in a manner consistent with the budgets in a formal system controlled by the general books of account.

Are elements of direct cost (labor, material, subcontractor, and other direct costs) accumulated within control accounts in a manner consistent with budgets using recognized acceptable costing techniques and controlled by the general books of account?

In the examples noted for the CAR referenced above, the work package task was a specific Element Of Cost (EOC) and was planned and completed in the same period, but no ACWP was accumulated for that specific EOC because the work was accomplished using another resource that fell into another EOC category. When the team looked at that EOC containing the ACWP, they interpreted the finding as a “zero-budgeted Work Package” with ACWP against it. [They also cited the original Work Package itself for having BCWP with no ACWP for the element of cost that was planned and earned.]

Humphreys & Associates is available for consulting and information on this topic. Give us a call!

Planning and Managing EVM by Elements of Cost (EOC) – Over-Application of EOCs – Part 2 Read Post »

EVM Consulting | Corrective Action Response

By Humphreys & Associates / December 3, 2018 / CAP, CAR, Corrective Action Requests, CPR/IPMR, EVM Consulting, IBR, IMS, SSI

CAP, CAR, Corrective Action Requests, CPR/IPMR, EVM Consulting, IBR, IMS, SSI

How do I respond to a Corrective Action Request?

In EVM Consulting, we deal with Corrective Action Requests (CARs) on a regular basis, so we have plenty of real-world experience. We created an outline of valuable information about DRs / CARs based on our collective experience. Part 1 of the guide is designed to inform you of why CARs are received and who issues them, so you can work to prevent them. Part 2 will prepare you to respond to a CAR in an effective and efficient way.

Corrective Action Response: Sources – Part 1 of 2

In Part 1 of the series we illuminated the varied sources of Corrective Action Requests:
1) Standard Surveillance Instruction (SSI)
2) Agencies that do not use the DCMA for surveillance, such as the Department of Energy.
3) Integrated Baseline Review (IBR)
4) Procedures that are compliant with the EIA-748 Guidelines
5) Contract Performance Report (CPR)
6) Integrated Project Management Report (IPMR)
7) Integrated Master Schedule (IMS)
8) Discrepancy Reports (Levels I-IV)

Corrective Action Response: Planning and Closure – Part 2 of 2

In part 2 of the series, we addressed responding to a Corrective Action Request (CAR):
1) Review the DRs/CARs with the customer
2) Organize for successful CAP management
3) Begin a thorough Root Cause Analysis
4) Develop and evaluate Corrective Action Plans
5) Develop verification closure steps
6) Develop a detailed Integrated Master Schedule for CAP implementation
7) Submit CAP and CAP IMS to the customer for approval prior to implementing the Corrective Actions
8) Implement Corrective Action Plans and track progress to successful completion
9) CAR closure and follow-up

EVM Consulting | Corrective Action Response Read Post »

EVM: Is DCMA A Contractor’s “Friend or Foe?”

By Robert “Too Tall” Kenney / August 15, 2018 / CAP, CAR, DCMA, Defense Contract Management Agency, EAC, EVM, EVM Consulting, EVMS

CAP, CAR, DCMA, Defense Contract Management Agency, EAC, EVM, EVM Consulting, EVMS

Is DCMA A Contractor’s “Friend or Foe?”

I’ll answer this provocative question now. DCMA, local and headquarters, are an EVM contractor’s “friend” with remarkable, but not unlimited, patience. When required, DCMA can become the contractor’s “tough love” friend.

DCMA and the contractor share the same interests – successful contract performance. DCMA is part of a triad that includes the Government’s program team, the contractor’s program team and their DCMA counterparts.

The title “Defense Contract Management Agency” reminds me of “grilled cheese sandwich” – the recipe and the product are in the name – “contract management” leads to well managed contracts.

EAC Vignette – Part One:

Contractor A has learned that their collocated DCMA has concerns about the company’s EAC process and resulting declared EACs. The company has learned that a Level III CAR on GL # 27 is being considered. Contractor A’s senior management decides to replace their EVM Core Leader with “new blood” to improve the company’s “relationship” with DCMA and avoid a Level III CAR.

Contractor A’s new EVM leader meets with her team and with the program managers that have an EVM contractual requirement. Company A’s new EVM leader is told that DCMA’s EAC concerns are a new issue. The company’s new EVM leader asks to meet with her DCMA counterpart to discuss their GL # 27 concerns, and to present a draft of a Corrective Action Plan (CAP).

During the meeting with DCMA’s EVM leader she mentions that the EAC concerns were a surprise to the company. The company’s new EVM leader briefs her draft CAP to her DCMA counterpart.

After the draft CAP has been briefed, the DCMA EVM leader comments, “your draft CAP is a good start. After I have time to fully digest your draft CAP I will send my comments and suggestions. As for being surprised by our EAC concerns, here is a file with 3+ years of letters, emails, meeting minutes from DCMA to your company outlining our continuing and growing concerns with your company’s EAC process.”

EAC Vignette – Part Two:

DCMA issued a Level III Corrective Action Request (CAR) to the contractor and is considering withholdings as an incentive for the company to quickly improve their EAC processes.

As promised, the DCMA EVM leader sent the following note to the company’s new EVM leader:

“I sent your draft GL # 27 CAP to my team for their comments and recommendations. My team’s key recommendations are:

1). Identify the weaknesses in your existing EAC processes. For each weakness, identify a corrective action. As much as possible, “mistake proof” your new processes. You should consider a review of several 100% complete contracts, and “replay” those contracts month-by-month using your new EAC processes to test their effectiveness.

2). As noted in our CAR, the company is required to report progress on the Corrective Action Plan (CAP). You should treat your CAP as a program. At a minimum, you should have an IMS and use appropriate earned value techniques to measure progress.

3). A sister division in your parent corporation, has a very mature and effective EAC process. You should considering asking for their assistance as you develop your CAP and begin its execution.

4). If you have questions as you execute your CAP, please don’t hesitate to contact me. If I don’t know the answer to your question, I’ll find someone that does know the answer and will share it with you.”

Personal Observations:

Based on my 32 years as an employee of defense contractors, and 7 years in earned value consulting, I offer the following:

1). DCMA “local” knows your company much better than you might think.

2). DCMA “headquarters” has knowledge and insight into many companies. From DCMA’s website: “We are the independent eyes and ears of DoD and its partners, delivering actionable acquisition insight from the factory floor to the front line …. around the world.”

3). A CAR from DCMA informs the company of “what” needs corrected but not “how” to correct the issue. That said, DCMA knows what will or will not work. Maintain a dialogue with DCMA.

4). “Compliance” is a lower bound for performance. DCMA will not object if a company decides to improve well beyond mere compliance.

5). Please consider the possibility that what may appear to be a “new” problem for your company, may have already been solved by another company. Find who has already solved your “new” problem. Ask for help.

DCMA will never be a foe. Never.

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