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The Role of EVM Consulting in Effectively Managing Projects Using Agile

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Understanding EVM Consulting 

EVM consulting helps in effectively managing projects where some work elements are using Agile product development processes by providing expertise in Earned Value Management and how to implement an EVMS that accommodates Agile. Since Agile is a product development methodology and EVM is project management discipline, it is possible to implement both approaches on the same project provided care is taken to document their alignment and linkages. EVM consulting assists with defining the specific areas where Agile and EVM processes and data integrate, increasing the likelihood of project success. 

Consultant Explaining about Managing Agile Projects Effectively

How EVM Consulting Helps Manage Projects Using Agile 

EVM consulting helps to effectively manage projects that are using Agile product development processes by providing expert guidance on implementing Earned Value Management practices that accommodate Agile. It allows project managers to track project performance, identify potential issues, and make informed decisions to ensure the project stays on track. EVM consulting also helps in establishing a realistic Performance Measurement Baseline (PMB), improving project forecasting, and enhancing communication among project stakeholders.

Key Components of EVM Consulting 

EVM consulting involves implementing a structured and integrated approach to organize, accomplish, and manage all project work effort. The processes include integrating project scope, schedule, and cost objectives, establishing a baseline plan to accomplish project objectives, and using earned value techniques for performance measurement throughout the project execution phase. The main components include:

  • Performance Measurement Baseline (PMB): Establishing the PMB is a culmination of the integrated planning, scheduling, and budgeting processes and provides a common basis to measure work accomplished as well as to track scope, schedule, and budget changes.
  • Variance Analysis: Identifying and addressing deviations from the plan helps to ensure technical, schedule, and cost objectives are met by implementing timely corrective actions. 
  • Forecasting: Predicting future project performance based on current trends. 
  • Risk Management: Assessing and mitigating potential threats to project success. 

Implementing EVM Consulting for Projects Using Agile 

EVM consulting can be an effective way to manage projects that are using Agile product development processes. It helps in tracking project performance and ensuring that it stays within budget and on schedule. With EVM consulting, you can gain valuable insights into the project’s progress and identify any areas needing improvement early on. For those interested in enhancing their EVM proficiency, the EVMS DOD Virtual Learning Lab offers an intensive online EVM training course. This can lead to better decision-making and more efficient project management, ultimately contributing to the project’s success.

Best Practices for EVM Consulting for Projects Using Agile 

Incorporating EVM consulting for projects using Agile helps in effective project management. Some best practices include: 

  • Integration: Producing a project directive or procedure that defines how the Agile processes will be integrated with the EVM processes to ensure alignment and data traceability for scope management, scheduling, budgeting, and forecasting as well as to track project progress and performance efficiently. This integration allows for greater visibility and control over the project’s financial and schedule performance, aiding in proactive decision-making and risk management. 
  • Adaptation: Incorporating content into your EVM System Description that discusses the touch points between the Agile and EVM processes to support the iterative and incremental nature of Agile product development, allowing for more accurate measurement of progress and forecasting of project outcomes. 
  • Transparency: Ensure clear communication between the project control team and Agile product development teams to foster collaboration and decision-making. Transparency strengthens trust and enables everyone to make informed contributions towards project success. 
  • Continuous Improvement: Regularly review and adapt EVM practices to enhance project control and product delivery. By embracing continuous improvement, project control teams can refine their EVM processes to better align with evolving project needs and industry best practices. 

Conclusion: Maximizing Project Management Effectiveness with EVM Consulting 

EVM consulting plays a vital role in maximizing project management effectiveness, especially for projects using Agile product development processes. By leveraging EVM techniques, project managers can gain valuable insights into project performance, identify potential risks, and make informed decisions to drive project success. With EVM consulting, project teams can maintain a strong focus on project objectives, assess progress against predefined criteria, and adapt their approaches as needed. This approach enables more effective resource allocation, risk mitigation, and ultimately, project success. 

FAQs: Frequently Asked Questions About EVM Training Courses 

  • Are EVM courses suitable for those who have no knowledge of EVM? Yes, the EVM courses offered by Humphreys & Associates are suitable for both beginners and professionals who want to improve their skills. They offer a range of course options, including online self-paced and live virtual instructor-led courses, to accommodate different schedules and learning styles. 
  • What is the method of delivery for the training? Humphreys & Associates offers online self-paced and live virtual instructor-led courses. The online training is a complete presentation of Humphreys & Associates’ highly regarded three-day EVMS training workshop in an online, interactive, multimedia format. 
  • What documentation is available that can help me understand EVMS and Agile and how they are related? To understand the relationship between EVMS and Agile, the DoD Acquisition Data and Analysis (ADA) Integrated Program Management (IPM) Division has produced resources such as the “Agile and EVM: A Program Manager’s Desk Guide.” This guide explains how Agile methodologies can be integrated with existing DoD program management and system engineering processes, including EVM: NDIA IPMD Industry Practice Guide for Agile on Earned Value Management Programs.
  • Does the fact that Agile/Scrum Sprints have very short durations cause a problem with EVMS? Agile/Scrum Sprints with very short durations do not cause a problem with EVMS. Teams update their progress daily, and it is preferable if the Sprints are four weeks or less and align with the cut-off dates for the EVMS. 
  • What roles within the Project Management Office (PMO) are there for EVMS and for Agile and how do they relate? The roles within the Project Management Office (PMO) for EVMS and for Agile are varied. For instance, the Scrum Master is a facilitator on the Scrum team and there is no corresponding EVMS role. The team members organize themselves so there is no team lead like the control account manager (CAM) in an EVMS, however, someone on the team will need to function as the CAM for required EVMS actions.
  • Should the EVM System Description be a single document or a summary document with supporting procedures?  There are pros and cons to each approach. The benefit of a single document is that it provides an integrated view of the entire EVMS process without having to reference multiple documents.
  • How can I ensure that my EVMS complies with the EIA-748 guideline requirements? Humphreys & Associates recommends conducting a requirements analysis or gap analysis to assess what you are currently doing against the EIA-748 32 guidelines taking into account your desired end state and current or impending contractual requirements. The assessment identifies strengths and weaknesses and provides specific recommendations to implement a compliant EVMS.
  • How can I prepare for an EVMS compliance review? Humphreys & Associates recommends conducting mock EVMS reviews. These reviews provide an independent, fact-based assessment of your EVMS, its implementation, data quality, and proficiency level of EVMS project personnel. 
  • What is the importance of continuous training in maintaining quality schedule and cost data in EVMS? Continuous training is important to ensure project personnel are using the schedule and cost tools effectively, are following the EVMS processes and procedures, and understand what is required to produce and maintain quality data. 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.
  • How can I ensure data integrity in my EVMS? Ensuring data integrity in your EVMS involves making sure that the schedule and cost software tools are properly configured, data validation checks are routinely performed, and that schedule and cost data align. 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.

EVM Training Course List 

To enhance your skills in this area, we present a comprehensive list of EVM Training Courses tailored to meet the needs of various stakeholders, from project managers to government contractors. Whether you’re preparing for a customer Integrated Baseline Review, seeking to improve your EVM proficiency, or aiming to pass certification exams, these courses offer valuable insights and practical experience. Delivered in an online format, these courses provide the flexibility to learn at your own pace while ensuring a deep understanding of EVM principles and their application in real-world scenarios. 

CAM Discussion: The CAM Discussion serves as an essential component of the preparation process for a customer Integrated Baseline Review (IBR), compliance review, or surveillance review. This simulation offers a practical experience of a CAM documentation review and interview session, illustrating how a proficient CAM conducts an interview with a government customer. Additionally, it provides a useful recap emphasizing key technical points along with suggestions for follow-up action items. 

CAM Essentials_DOD: CAM Essentials provides comprehensive training to improve EVM proficiency and understanding of the basics. This online training bundle features the EVMS Virtual Learning Lab (DOD), Scheduling Virtual Learning Lab, and CAM Discussion courses, all available separately. 

CAM Essentials_DOE: CAM Essentials offers comprehensive tools for improving EVM skills and understanding the fundamentals. This online training bundle includes the EVMS Virtual Learning Lab (DOE), Scheduling Virtual Learning Lab, and CAM Discussion courses, each available separately. 

CAM Essentials_NASA: CAM Essentials provides comprehensive training to improve EVM proficiency and understanding of the basics. The online training bundle includes the EVMS Virtual Learning Lab (NASA), Scheduling Virtual Learning Lab, and CAM Discussion courses, which are also available individually. 

CPR/IPMR/CFSR Completion and Reconciliation: The Integrated Program Management Report (IPMR) and Contract Funds Status Report (CFSR) are crucial communication tools between contractors and their customers. This online course provides valuable insights into the proper completion of these reports and their reconciliation. 

EVMS Certification and Preparation Quiz: This online course comprises 120 questions in four separate quizzes, covering the nine EVMS process groups, the Contract Performance Report (CPR)/Integrated Program Manager Report (IPMR), earned value data analysis, Integrated Baseline Review (IBR), and compliance reviews. It serves as an excellent study and preparation resource for the AACE International Earned Value Professional (EVP) or the PMI Project Management Professional (PMP) certification exams. 

EVMS DOD Virtual Learning Lab: The EVMS Virtual Learning Lab offers a comprehensive 21-hour instruction program. This online training delivers Humphreys & Associates’ acclaimed three-day EVMS workshop in an interactive, multimedia format. The video content includes all workshop coursework, quizzes, and case studies, allowing students to assess their understanding and receive prompt feedback through scored quizzes and exams. 

EVMS DOE Virtual Learning Lab: The EVMS Virtual Learning Lab offers a comprehensive 21-hour online training program. This interactive multimedia format is based on Humphreys & Associates’ acclaimed three-day EVMS workshop, delivering all course content, quizzes, and case studies in a video format. Students can assess their understanding through scored quizzes and exams. 

The course can be used for project personnel to enhance their EVM proficiency or for someone who wants to learn the basics of earned value management at their own pace.  

EVMS NASA Virtual Learning Lab: An intensive 21-hour online training program that offers a complete presentation of Humphreys & Associates’ three-day EVMS workshop. The course has been adapted into an interactive multimedia format, including all quizzes and case studies from the original workshop. Students can test their knowledge and receive immediate feedback through scored quizzes and exams. 

The course can be used for project personnel to enhance their EVM proficiency or for someone who wants to learn the basics of earned value management at their own pace.  

IBR – Online Video: The Integrated Baseline Review (IBR) course is designed to provide a comprehensive understanding of the IBR process. It is a fast-paced presentation that is essential for ensuring a clear grasp of the technical requirements of a project and establishing accurate schedule and cost goals. This course offers a detailed explanation of the review process and can be tailored to provide training for specific needs and timings. The approximate duration of the course is 2 hours. 

OTB/OTS Implementation – Online Video: Learn about Over Target Baseline (OTB) and Over Target Schedule (OTS) Implementations in this approximately 1 hour and 30-minute video. 

A formal re-programming action, known as an OTB and/or an OTS, may occur during risky major acquisitions. Understanding the rationale for and the various methods used to implement an OTB/OTS, as well as correctly completing the IPMR/CPR formats in accordance with the Data Item Description (DID) instructions, is not a simple process. Our video provides clarity on this complex process. 

The video includes completed IPMR/CPR Formats 1, 2, and 3, showcasing four OTB methods, along with before and after Baseline graphs for each method. It also contains examples and Baseline graphs for Over Target Schedule, Format 3. 

Scheduling Virtual Learning Lab: The Scheduling Virtual Learning Lab offers an intensive 21 hours of instruction covering critical path fundamentals, schedule baseline, float, network logic development, risk assessment, changes, and scheduling in an EVMS environment. The content is based on the well-regarded three-day Project Scheduling Workshop by Humphreys & Associates, adapted to a video format and featuring quizzes and case studies for immediate knowledge testing and feedback. 

The course is designed for project personnel looking to enhance their project scheduling skills and for individuals who want to learn the fundamentals of project scheduling at their own pace. 

A student who completes the Scheduling course will earn 21 Professional Development Units (PDUs) or 2.1 Continuing Education Units (CEUs). 

For information on Corporate or Quantity Discount pricing, please contact us at products@humphreys-assoc.com or call us at (714) 685-1730. 

The Role of EVM Consulting in Effectively Managing Projects Using Agile Read Post »

DOE Releases Compliance Assessment Governance (CAG) Version 2.0

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Significant Overhaul

In June 2022, the Department of Energy (DOE) Office of Project Management (PM) released a new version of its Compliance Assessment Governance (CAG) Version 2.0, formally known as the Compliance Assessment Guidance. The change in name however so slight, reflects the significance the DOE PM places on the EVMS governance process where good governance provides a well-defined structure to continuously sustain and improve the practice of integrated project management. DOE PM believes that during the life cycle of a project EVMS governance is everyone’s responsibility, both customer and contractor alike. While this point has always been the position of DOE PM, its importance towards influencing project outcomes was further highlighted in the results of a recent research study conducted by Arizona State University (ASU) that was sponsored by DOE PM. DOE PM considers the release of CAG 2.0 a significant overhaul to the prior guidance and now aligns with the methodology and structure resulting from the ASU Study.  

The primary goal of the ASU Study was to design and produce an evaluation methodology and toolset that can be used across agencies and departments to consistently assess the maturity and environment of projects or programs of various types and sizes that use an EVMS. The toolset developed assesses a spectrum of EVMS maturity attributes centered around the EIA-748 Standard for EVMS Guidelines, while also referencing the Project Management Institute (PMI) American National Standards Institute (ANSI) standard for EVM (2019), and the International Organization for Standardization (ISO) 21508:2018 guidance. It also takes a novel approach by assessing the environment within which an EVMS is employed. This methodology and toolset are known as the Integrated Project/Program (IP2M) Maturity and Environment Total Risk Rating (METRR) (pronounced “IP2M Meter”). By using IP2M METRR to assess both the maturity and environment of an EVMS or less sophisticated management control systems where EIA-748 compliance is not required, project/program leaders and practitioners can understand the efficacy of the EVMS (or similar management control system) in support of integrated project/program management.

Environmental Factors

The new methodology has two primary components. The first component assesses the environmental factors that influence the implementation of an EVMS. The ASU Study identified four primary environmental categories:  Culture, People, Practices, and Resources. Each category is further broken down into 27 Environmental Factors (EFs) that are defined by Effectiveness Criteria.   

An example of the hierarchy for an EVMS Environmental Assessment is: 

  • Category 1 – Culture
    • Environmental Factor:  1A – The contractor organization supports and is committed to EVMS implementation, including making the necessary investments for regular maintenance and self-governance.
      • Factor Check Point:  1A(a) – a) The contractor integrated project team (IPT)—including corporate leadership, execution, and operations personnel, oversight personnel, and support staff—is in place, and it has a demonstrated belief in the intrinsic value of the EVMS to position the project for success.

Each of the 27 EFs is assessed using a 5-point grading scale (i.e., 1. Not Acceptable, 2. Needs Improvement, 3. Meets Some, 4. Meets Most, 5. High Performing) with each having predetermined weightings. When summarized, all EF scores add up to 1,000 possible points. Final weightings were determined through a rigorous statistical analysis of inputs from various professional sources including the survey of professionals experienced with the practice of project management and EVMS implementation. The results of the ASU Study show that the higher the environment score, the better the chances a project or program will achieve better schedule and budget outcomes.   

Below are the summary level weightings of the four EVMS Environmental Categories:

  1. Culture: Total Possible Points @ L5 is 313 (31%)
  2. People: Total Possible Points @ L5 is 238 (24%)
  3. Practices: Total Possible Points @ L5 is 235 (24%)
  4. Resources: Total Possible Points @ L5 is 214 (21%)

EVMS Maturity

The second component of the ASU Study and Compliance Assessment Governance (CAG, 2.0) addresses EVMS Maturity. The purpose of EVMS Maturity is to assist in the assessment of compliance with the guidelines in the EIA-748. The maturity assessment consists of ten subprocesses, each of which is further divided into 56 attributes. The ten subprocesses may look familiar to practitioners with EVMS experience with the notable addition of “Risk Management” to the traditional nine guideline process groupings. The ASU Study captured the ten subprocess groups with the associated EIA-748 guidelines by using the following graphic from National Defense Industry Association (NDIA) Integrated Program Management Division (IPMD) Earned Value Management Scalability Guide. The primary purpose for doing this was to place greater focus on management subprocesses which are recognized by most practicing project/program managers rather than placing the entire focus on a particular guideline(s).  

Figure 1 - Ten Subprocess Mapped To EIA 748 Guidelines
Figure 1: Ten Subprocess Groups and Associated EIA-748 Guidelines
Source: DOE PM CAG 2.0

EVMS Maturity Subprocesses

As shown in Figure 2, each of the ten subprocesses is further broken down into attributes. Each attribute is assessed for a maturity level on a 5-point grading scale, plus the option of “Not Applicable” for those attributes that are not relevant to the project/program. For example, some project/program teams do not use resource-loaded schedules while others do. The 5-point grading scale is as follows:  1-Not Yet Started, 2-Major Gaps, 3-Minor Gaps, 4-No Gaps, 5-Best in Class. Attributes that are mature enough to be deemed an EIA-748 compliant EVMS are at a maturity level of “4.” The IP2M METRR methodology allows for a grade of “5” acknowledging management practices that optimize the EVMS. There are two primary sources to make this assessment. The first is the Effectiveness Criteria established for each maturity level, and the second is the DOE Attribute Metrics defined in 188 EVMS Testing Specification Sheets.

Below are the summary level weightings of the ten EVMS Maturity Subprocesses:

  1. Organizing: Total Possible Points @ L5 is 96 (10%)
  2. Planning and Scheduling: Total Possible Points @ L5 is 202 (20%)
  3. Budgeting and Work Authorization: Total Possible Points @ L5 is 178 (18%)
  4. Accounting Considerations: Total Possible Points @ L5 is 65 (7%)
  5. Indirect Budget and Cost Management: Total Possible Points @ L5 is 55 (6%)
  6. Analysis and Management Reporting: Total Possible Points @ L5 is 109 (11%)
  7. Change Control: Total Possible Points @ L5 is 116 (12%)
  8. Material Management: Total Possible Points @ L5 is 59 (6%)
  9. Subcontract Management: Total Possible Points @ L5 is 60 (6%)
  10. Risk Management: Total Possible Points @ L5 is 60 (6%)
Figure 2 - Ten Subprocess Attributes - This image shows the summary level weightings of the ten EVMS Maturity Subprocesses on an example graph.
Figure 2: Ten Subprocess Groups Broken Down into Attributes
Source: DOE PM CAG 2.0

Of the ten subprocesses that constitute the EVMS, subprocesses B and C account for 380 points or 38% of the maximum score of 1,000 points (Figure 2). When combined with subprocesses F and G, these four subprocesses account for 605 points, or 61%, of the maximum score. Thus, emphasizing credible plans, schedules, and budgets with adequate controls and rigorous reporting best positions the EVMS to help the project/program team achieve their objectives.

An example of the evaluation hierarchy for an EVMS Maturity Assessment is: 

  • Sub-Process A:  Organizing
    • Attribute A.1:  A single product-oriented Work Breakdown Structure (WBS) encompasses all authorized work and is decomposed to the appropriate levels for effective management and reporting.
      • Effectiveness Criteria A.1.1:  The process to establish a singular, product-oriented WBS that accurately defines the products, services, and deliverables required to complete the project/program has been developed, documented, and approved. 
        • Metric ID A.01.05:  This metric confirms that the WBS includes all authorized project work and any revisions resulting from authorized changes and modifications.  This metric ensures that the WBS identifiers collectively provide a complete definition of work scope requirements.

DOE PM’s goal for the new guidance is to provide a synthesized and uniform approach to assessing an EVMS as a means to ensure fairness and consistency in its operations. The current version of the DOE EVMS Implementation Guidance and IP2M METRR documentation can be found here: 

https://www.energy.gov/projectmanagement/evms-implementation-guidance

and

https://www.energy.gov/projectmanagement/ecrsop-appendices-materials

and

https://ip2m.engineering.asu.edu/

DOE Releases Compliance Assessment Governance (CAG) Version 2.0 Read Post »

Determining Responsibility for Indirect Cost Variance Analysis – Part 3

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Indirect Cost Variance Analysis Process

The debate that has continued since the inception of the earned value concepts in the 1960’s has been: “Who should report on and analyze the cost variances attributable to indirect costs?”

This blog is the third in the series of blogs to help answer this question.  The first blog covered a few fundamentals about how indirect cost rates are established to set the stage.  The second blog discussed how indirect rates are applied and how project personnel display indirect costs for internal or performance reporting.  This blog concludes the discussion on the indirect cost variance analysis process.  It covers what the EIA-748 Standard for Earned Value Management Systems (EVMS) and related government agency guides have to say on the subject as well as discussing the best option for determining who is responsible for indirect cost variance analysis.  

Throughout a project’s execution phase, project managers and control account managers (CAMs) conduct their respective performance analysis at varying levels of detail to identify significant cost and schedule variances as well as variances at completion (VAC).  They use variance thresholds to focus on the work elements where challenges or problems are occurring.  As needed, they identify the root cause of the variance and determine the best path forward to mitigate or otherwise reduce the impact of an unfavorable variance.  

This effort includes performing additional analysis not just by the direct elements of cost (labor, material, subcontract, or other direct costs (ODCs)), but also by the indirect costs applied to those direct cost elements to identify the root cause.  For example, the CAMs check for labor variances (rate or efficiency/volume) and material variances (price or usage) to identify any potential issues.  As a side note, remember the rates used to calculate earned value are the same rates used for budget values.  Likewise, actual costs are collected into the same direct cost elements of cost and indirect cost pools as the budget plan elements of cost.  Those actual rates may vary from the budget/earned value rates.

At the total project level, a project manager performs indirect element of cost analysis.  They need to assess whether indirect costs are contributing to the project’s cost variances and quantify the impact.  Since indirect costs are directly related to the base time phased direct costs, it follows the variances for the element of cost categories are similarly skewed.  Figure 1 shows an example (produced from Encore Analytics Empower) of a contract with the variances attributable to the elements of cost (see previous 3-part blog: Planning and Managing EVM by Elements of Cost (EOC)). The indirect cost variances tend to vary with the changes in the direct costs base and/or indirect elements of cost over time at a pool level.  While not common, these could be different from month to month (the lightest blue shaded boxes in Figure 1) when annual, semi-annual, or quarterly rate adjustments occur (the project manager would be notified when these occur).  

Figure 1: Example Cumulative Variance Analysis by Elements of Cost

The project manager and CAMs are also responsible for completing their variance analysis reports.  These include the Integrated Program Management Report (IPMR) Format 5 (Explanation and Problem Analysis) or Integrated Program Management Data and Analysis Report (IPMDAR) Performance Narrative Report.  As part of this analysis, they need to discuss whether rate changes are impacting the project’s current and cumulative cost and schedule variances, as well as the calculated EAC (cumulative to date actual costs plus ETC). 

Customers often require additional indirect cost detail on the formal performance reports when thresholds are exceeded.  The narrative reports are used to address those indirect cost pool base versus rate variances.  Project managers and CAMs (when indirect costs are displayed as part of their budgets), need base versus rate variance analysis from finance or accounting.  Finance or accounting is responsible for establishing the indirect cost rates to date and forecasting what the indirect rates will be for future fiscal years. 

Who is responsible for the indirect cost variance analysis?

Back to our original question: “Who should report on and analyze the cost variances attributable to indirect costs?”  Can the EIA-748 Standard for Earned Value Management Systems (EVMS) 32 guidelines provide any guidance?  There are also various government agencies that place EVMS requirements on contracts.  Do their policies, compliance business practices, or standard operating procedures provide any guidance?  

The fact is, the EIA-748 Guidelines, dating back to the Cost/Schedule Control Systems Criteria (C/SCSC) in the 1960s, have never specified the level where the management and analysis of indirect costs must occur.  The founders of the earned value concept realized there are several levels of management where indirect rates are applied versus the level at which they are displayed for management.  

The EIA-748 Standard for EVMS (Rev D) Guidelines say the following:

4. Identify the organization or function responsible for controlling overhead (indirect costs).

13. Establish overhead budgets for each significant organizational component of the company for expenses, which will become indirect costs. Reflect in the program budgets, at the appropriate level, the amounts in overhead pools that are planned to be allocated to the program as indirect costs.

19. Record all indirect costs which will be allocated to the program consistent with the overhead budgets.

24. Identify budgeted and applied (or actual) indirect costs at the level and frequency needed by management for effective control, along with the reasons for any significant variances.

The Defense Contract Management Agency (DCMA) Cross Reference Checklist (CRC) sub-questions for these guidelines do not specify any particular level where these actions must occur, and do not even mention the control account level.  For example, for the Guideline 4 sub-questions, they reference “the management position” assigned the responsibility and authority for controlling indirect costs.  For one of the Guideline 24 sub-questions, they ask: “Are the variances between budgeted and actual indirect costs identified and analyzed at the level of assigned responsibility for their control (indirect pool, department, etc.)?”  

Likewise, the Department of Energy’s (DOE) detailed Compliance Review Checklist is equally non-specific on the level of management where these actions occur.  Below are excerpts from that DOE document with text highlighted for reference.

E.1E.1 – Indirect Account Organization Structure 
E.1.1Indirect procedures must clearly identify managers who are assigned responsibility and authority for establishing budgets and controlling indirect costs and who have the authority to approve expenditure of resources.
E.1.3The management process for establishing and controlling indirect cost rates should be documented to ensure responsibility is clear.
E.2E.2 – Indirect Budget Management 
E.2.2The contractor must establish indirect (i.e., overhead, burden, cost of money, and G&A expense) budgets at the appropriate organizational level for each pool and cost sub‐ element.
E.2.3Contractor recurring DOE rate performance reviews should be conducted on a regular basis (i.e. monthly, quarterly, etc.) to ensure effective control and management of the indirect expenses and indirect budgets.
E.3E.3 – Record/Allocate Indirect Costs 
E.3.2Periodically, reviews must be made to assure that indirect costs are being charged to the appropriate indirect pools and by the appropriate incurring organization.
E.3.3If incurred indirect costs vary significantly from budgets, periodic adjustments must be made to prevent the need for a significant year‐end adjustment.
E.4E.4 – Indirect Variance Analysis
E.4.1This guideline requires a monthly documented indirect cost analysis to be performed by those assigned responsibility, comparing indirect budgets to indirect actual costs and explaining the cause of resultant variance(s).
E.4.4The contractor should define thresholds for each budget category and a process for management by exception for indirect performance and analysis.

It is not by accident the Guidelines and supporting questions/attributes do not specify any one way all contractors have to manage, analyze, and report on indirect cost variances.  Indirect costs can be handled in a number of different ways.  The Guidelines have always been designed to give contractors the flexibility to manage their projects within the bounds of those Guidelines.  

So, what is a best answer?

While contractors may choose other viable options, a best practice is for the corporate entity responsible for controlling those indirect costs to do the indirect cost variance analysis at the pool levels.  They control the rates, know the reason for variances, and can forecast what the rates will be over time.    As the first blog in this series pointed out, finance or accounting is responsible for establishing and maintaining the direct and indirect rates based on the contractor’s firm and potential direct business base (or volume).  

The designated higher level management entity should also be responsible for providing the necessary indirect cost variance analysis, rate impacts and narrative details to the project managers.  The project managers need to be aware of corporate actions and potential indirect rate revisions that impact the range of EACs they need to prepare for the IPMR or IMPDAR submittals.  This communication is essential so they have the data and narrative text necessary for managing their project, as well as for producing their performance reports explaining the source and impact of indirect cost variances on the project’s EAC to their customer. 

While not a hard requirement, many contractors elect to include both direct and indirect costs in the CAM control account work authorizations.  This does not make the CAMs responsible for these indirect costs since they have little to no control over the indirect rates – they simply apply the current or forecast rates that accounting provides.  But this format does  provide for the necessary visibility CAMs must have regardless in order to conduct the expected variance analysis, inclusive of an assessment of all cost elements (direct and indirect) and price/usage analysis, in order to explain impacts on performance and on their EACs. (See previous blog: EVMS Variance Analysis — EVMS Analysis and Management Reports.) They then forward these to higher level management to incorporate and to provide the rationale for the variances and to determine any corrective action to mitigate the problems. 

Another important advantage of providing CAMs fully burdened budgets, earned value, and actual cost data broken out by the direct and indirect cost elements includes but is not limited to facilitating “make to buy” and “buy to make” decisions because a CAM has an apples-to-apples cost comparison as noted in the second blog. 

Need help sorting out the best levels for reporting and managing your direct and indirect costs?  Call us today at (714) 685-1730.  

Other Posts from this Series

Determining Responsibility for Indirect Cost Variance Analysis – Part 3 Read Post »

Life After EVMS Certification – Surveillance

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Your company has just spent a year or more pursuing the EVM System Certification, going through the formal Compliance Review by the DCMA, and clearing the Corrective Action Requests identified during that review.  Finally, the company has received that coveted System Certification notification from the DCMA!  So, now the company is finally through with that process, right? 

Well… not exactly!

Now comes the really hard part – living up to that certification throughout the life of the contract(s). 

Can you lose DCMA System Certification?

All too often contractors, who have suffered through many months of trying to get their EVM Systems accepted by the government, have tended to let their guard down once certification is attained, letting their implementation of EVMS fall into disrepair.  Doing so can only end badly: poor or late data submittals, cost and/ or schedule surprises (overruns/ missed delivery dates, etc.), and generally unhappy customers.  When the customer is not happy, nobody is happy!  Failure to correct this situation on the company’s part could ultimately result in what is known as a Review For Cause conducted by the DCMA to determine if the company’s EVM Certification should be withdrawn.  Losing the EVMS Certification not only means the contractor can no longer claim in proposals that they have a certified EVMS, it can also cause a company several unwanted contractual, monetary, and reputation impacts – and the recertification process itself is no picnic either.

EVMS Business Practices

To help avoid the above unpleasant consequences, part of the DCMA’s EVMS review series includes ongoing Surveillance of a contractor’s EVM System, starting immediately after it has been certified.  The DCMA has a series of EVMS related Business Practices (BP) [updated May 2020]

  • BP0 – Earned Value Management Systems-Overall guidance on DCMA EVMS assessments
    • BP1 – Pre-Award EVM System Plan Review -of contractor proposal for EVM compliance
    • BP2 – System Description Review –of contractors EVM System and related documents
    • BP3 – Program Support – DCMA’s general EVMS-related support (IBRs, data review, etc.)
    • BP4 – System Surveillance – post-EVMS ongoing review of continued EVMS compliance
    • BP5 – Review for Cause – to assess if an EVMS acceptance is to be withdrawn
    • BP6 – Compliance Review Execution – how a Compliance Review will be run

The focus of this article is BP4 – System Surveillance, but do note that there is also BP5 on conducting a Review For Cause (RFC) discussed briefly above.

The stated purpose of BP4 is that it: “Defines the process to evaluate contractor EVMS compliance through continuing surveillance.” 

Yes, this means it is a compliance review after a contractor has gone through their Compliance Review! The basic intent of this process is to keep some pressure on the contractor to make sure EVMS implementation remains high quality throughout the life of the contract.

Drive the Car

Using our building-a-car analogy from Part 1 of this series: we have designed and built our car and trained our people how to drive, so it is now time to DRIVE OUR CAR. If we do not maintain all the car’s systems properly we are likely to encounter a lot of warning indicator lights (poor performance). If we ignore those indicators, the car is likely to fail on us. If the car blows up, we may have to go through the whole car building process again.

The DCMA does not want a contractor’s EVM System to fall into disrepair either.  The Review For Cause (RFC) and overall recertification process is unpleasant for the DCMA, too. This is also why, unlike in the past, the EVMS Center team players for Surveillance reviews are pretty much the same ones who participated in the formal Compliance Review:

  • Director, EVMS Center
  • Group Lead, EVMS Center
  • Team Lead, EVMS Center
  • Team Member, EVMS Center

There will likely be fewer Team Members than were on the full Compliance Review team, but as you can see, the Leaders will be the same. The DCMA has been placed in charge of all surveillance activities, and Government Program if team members may be needed to augment the DCMA Team.

The Compliance Review (CR) process [BP6] consisted of 5 phases:

  1. Plan
  2. Execute Pre-Event activities
  3. Execute – CR Onsite Activities
  4. Report
  5. Closing Actions

The Surveillance Review process [BP4], however, is comprised of only 3 phases:

  1. Plan
  2. Conduct
  3. Report

The Surveillance Process is primarily conducted off-site, although some on-site interviews could be required if follow-up action is required because potential non-compliances exist as a result of the data analysis.  Typically, on-site actions would be interviews of CAMs or other contractor personnel.

Plan phase:

  • Identify Requirements:  The EVMS Center Team Member works with the contractor’s EVMS point of contact to establish or update an Annual EVMS Surveillance Plan (SP).  They will jointly identify the contracts with EVMS requirements that may be subject to the surveillance activities, which may include existing contracts, new contracts, modifications to existing contracts, or even subcontracts with EVMS requirements.
  • Risk Assessment: The EVMS Center Team Member will use a Risk Assessment Worksheet to “identify a population of representative contracts” against which the DCMA can test all aspects of the system.
  • Create/ Update the Surveillance Plan (SP):  Before the start of each Fiscal Year, the EVMS Center Team Member will create or update the Surveillance Plan to document the surveillance activities using all the candidate contracts for the upcoming Fiscal Year.  The Plan is to ensure the complete evaluation of all 32 Guidelines for the site’s EVMS over a 3-year cycle to support the site re-certification.  This evaluation includes data analysis and the DCMA EVMS Compliance Metrics (DECM) for the particular Guidelines identified in the plan for each surveillance event.  This means that over the 3-year cycle 10 or 11 Guidelines must be evaluated each year in order to cover the 32 Guidelines.  This Surveillance Plan must be reviewed and approved by the EVMS Center Group Lead.

Conduct Phase:

  • Data Call:  At least 45 days prior to each surveillance event, data will be required based on the specific Guidelines being covered in that particular event.  This will typically be a subset of the Data Call required for the Compliance Review.
  • Execute Data Analysis:  Using data provided in the Data Call, the Team Member will use the tests identified in the DECM for the Guidelines being reviewed in each surveillance event.  The contractor should be running these metric checks as part of their own self-evaluation, and the EVMS Center Team Member can use those results in addition to running independent calculations on those metrics.  This is often done if Joint Surveillance is used by the DCMA, but the DCMA Team Member must still perform independent assessments and document results of those checks.
  • Evaluate Results:  Identify potential compliance issues resulting from data analysis metric tests.
  • Follow-up:  Discuss issue with the contractor, get more data samples to test further, conduct interviews of contractor personnel, as needed.  Convey data analysis concerns to the contractor before the surveillance event.
  • Closeout:  To close out the action, one of these will take place:
  • Accept as the correct execution of the contractor system
  • Highlight as a risk for future surveillance
  • Issue a Corrective Action Request (CARs)

The EVMS Center Team Member provides an out brief at the end of the surveillance event.

Report Phase:

  • Document results:  summarize/ provide the following:
  • A report with an Executive Summary
  • Results from all metrics evaluated
  • Follow-up actions taken on metric results
  • Summary of CARs issued/ observations made
  • Summary of contractor internal CARs/ findings
  • Summary of reasons for a Risk Assessment/ Surveillance Plan update (if applicable)
  • Identified risks for evaluation at future surveillance events
  • CAR/ Corrective Action Plan (CAP) status for the site

The EVMS Center Team Member identifies any significant deficiencies to the Team Lead, and then (as necessary) to the Group Lead and the Director for concurrence and processing.  A letter will be issued to the Contracting Officer (CO) notifying them of the completion of the 3-year EVMS compliance assessment, current system status, and any outstanding Corrective Action Requests (CARs) or Corrective Action Plans (CAPs).  The EVMS Center Team Member enters the approved plans/ reports to the Integrated Workflow Management System (IWMS) and for subsequent distribution to appropriate offices and the contractor (as required).

Compliance Review Support

As you can see, this seems almost as involved as getting ready for a full-up Compliance Review.  This is probably by design, since the DCMA wants to emphasize the importance of maintaining the EVM System in a compliant state for the life of the contract.  As a contractor, it is equally important to you because if your system application falls apart and you lose your EVMS certification (via BP5), the recertification process (BP6) starts all over again.

Humphreys & Associates has people ready to help you wade through the government requirements for EVMS certification, whether you are new to EVMS, or you are an experienced contractor needing help getting ready for a Compliance Review, System Surveillance, or even a Review For Cause.  We also have a wide range of training courses for beginners in EVMS or advanced courses for experienced Earned Value professionals.  We can also prepare your company for Surveillance, an IBR, an RFC, or even a full blown Compliance Review. Contact us today at (714) 685-1730 or e-mail us.

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Earned Value Management Pocket Guide

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Earned Value Management Pocket Guide shown in an EVM Professionals PocketA pocketful of information goes a long way in Earned Value Management Systems (EVMS). Welcome to the Humphreys & Associates Pocket Guide to Project Management Using Earned Value. The real value in this little booklet is that it contains information commonly used in the industry in an easy-to-read, digestible format. This booklet augments earned value training and is a great resource for project managers and project personnel. With everything from formulae of basic analysis (such as schedule and cost variances, schedule performance index, and Independent Estimates at Completion—IEAC), to diagrams and charts of risk assessment and basic scheduling, this pamphlet also contains a glossary of abbreviations and acronyms common to the industry.

Succinct and Portable

The Humphreys & Associates Pocket Guide is best suited for project managers, team leads, control account managers (CAM)s, administrators, and other project stakeholders regardless of their level of EVM training and knowledge. This guide is a perfect supplement to any earned value management (EVM) education course because it provides a succinct description of EVM best practices. Small enough to fit in a pocket, the front of a folder, or the pocket of a briefcase, this handy booklet is the go-to reference for any manager or analyst evaluating and analyzing project performance.

Easy to Read

The information is presented in an easy-to-read outline format and is based on a typical industry performance measurement system using earned value management practices.  This pocket guide is carried daily by many earned value (EV) professionals and is frequently used to remind them of the equations and relationships of key project performance metrics. Ensure your team is ready for their meetings, evaluations, and training related to EVM with this convenient pocket guide. You can purchase these guides using our website: Earned Value Management Pocket Guide or by calling (714) 685-1730.

Digital Format Coming Soon

Starting in early 2021, this essential guide will be available in digital format, accessible anywhere with a Humphreys account. Make sure to visit the official Humphreys & Associates website for more information on our services as well as other training, certification, and workshop material: https://www.humphreysassoc.com/evms/home.php

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Tips for Implementing Effective Earned Value Training

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Banner Image - Tips for Implementing Effective Earned Value Training

Likely you have been on the receiving end of this advice.  The common solution to every problem seems to be: do more training.  Well, yes, that is often a logical conclusion.  The hard part is, how do you implement earned value training that actually helps project personnel improve their knowledge levels and skill sets that makes a difference in how projects are managed?  Conducting training just to check something off a to-do list is a waste of everyone’s time.

Here are a few tips to help you implement an effective EVM training plan.

Tip 1 – What’s the problem you want to resolve?

A clear understanding of the problem you want to solve helps determine the scope of the training, who needs the training, and what kind of training will make a difference.  Here are a few examples to illustrate a range of the scope of the training from the complex to targeted training.

  • The good news?  You just won a government contract with EVMS contract clauses.  The bad news?  Your company’s project control system is immature at best and will need to become more disciplined to support the contractual EVMS requirements.  You are going to need a robust education and training plan to rapidly increase the project control maturity level of your company.  Likely you will need to enhance your current project control practices, add process and procedures, perhaps implement new software tools, and educate a variety of functional managers and project personnel on the upgraded best practices they will need to follow. 
  • You have an influx of new project personnel that need to learn the ropes.  Where are they with their current skill sets and what will help them improve?  Perhaps they have a basic understanding of project control or scheduling, but don’t know how to apply your company’s preferred practices or how to effectively use the software tools.  They may need a broader earned value training plan that covers a number of disciplines or hands-on workshops that combine process training and using the software tools to effectively perform their project control tasks.
  • You have a contractual or audit event coming up.  Examples include an Integrated Baseline Review (IBR) for a new project or the DCMA is coming in to do a compliance review.  That means you need to make sure all levels of project personnel are prepared for the review and that quality schedule and cost data have been established.  Different types of focused training or mentoring is often required to prepare for these events where there is interaction with the customer project manager or audit agency personnel.  Personnel knowledge, the EVMS, how they apply the EVMS on their project, and data traceability will all be assessed.   
  • As part of your internal process improvement activities, you discover a number of control account managers (CAMs) are having difficulty producing useful variance analysis report (VAR) narratives.  Or, perhaps the schedulers are having trouble creating or maintaining their integrated master schedules (IMS) to the level of data quality you expect. Targeted or role specific training could make a difference here.

Tip 2 – Determine what you need to accomplish your training objective

Here is a sort list of factors to consider as you begin to sort out what type of training or training materials you need to have in place to accomplish your training objectives.

  • Do you intend to create and maintain a set of EVM related training materials internally?  What types of materials you intend to maintain?  This could be a range of materials such as instructor led presentation and course materials, role specific training materials or templates, desktop instructions, online help, or self-paced instructional videos.  Do you have the personnel, time, and budget to do this?  Do you have the internal EVM expertise?  You may need help creating your internal materials or you may need to rely on outside services to supplement your internal training. 
  • How do you intend to deliver the earned value training, how often, and how many people?  A day or two dedicated to classroom instruction may or may not be option.  Perhaps project personnel need to complete the training remotely or are only available for a short duration.  How do you accomplish your training objectives and verify personnel are applying what they are learning? 
  • You need to prepare a contractual event such as an IBR.  This presents a different set of factors and you may or may not have a process or EVM expertise in place to handle this.  Depending on your company, you may have the internal project management resources you can pull from another division to help the project personnel prepare for the event and perform an independent review of the schedule and cost data.  How do you intend to handle these events?
  • Targeted training to address a recurring issue or a unique project situation such an implementing an over target baseline/over target schedule (OTB/OTS).  For example, targeted training would be useful for CAMs or schedulers that need help getting to the next level of proficiency.  One option could be to solicit the help of an internal “power user” to help mentor project personnel in how to do things or how to effectively use the software tools.  Or, you could leverage the expertise of outside services to help mentor them and expand the base of proficient project personnel over time.

Tip 3 – Who you select to help you with your earned value training objectives matters

There are a number of companies that offer earned value and related training.  There are a number of factors to consider as you start to evaluate their services, expertise, scope and availability of training materials, and range of training options. 

There is a reason why H&A has been the leading provider of earned value training and earned value consulting services for over four decades.  We have proven, cost effective approaches to increasing your project control team’s skills so they become more valuable assets to your organization.  For example:

  • We have built the largest, most comprehensive library of training materials in the EVM consulting industry including basic and advanced courses as well as specific topic areas such as developing a WBS, OTB/OTS, preparing a VAR or government performance report, subcontract management, change management, or IBRs. 

What’s the benefit to you?  Should you need source material for a training course, our courses are available for lease and can be tailored to your environment.  You don’t have to start from scratch.  We actively maintain our course materials and provide updates as requirements change over time including specific versions for DoD, DOE, and NASA.  This takes the burden off you and reduces the cost of keeping up with changes.  We provide train-the-trainer sessions for the courses, so your company’s training department can become proficient with the materials to build out your internal training library over time. 

  • We offer our hands-on courses as public workshops, in-house, or remotely.  We also offer our most popular three-day workshops as distance learning courses.  We refer to these as our EVMS Virtual Learning Lab and Scheduling Virtual Learning Lab (VLL) so your project personnel can learn at their own pace – even if they are working from home.  The benefit is you can select a combination of training options to fit your needs as well as personnel availability or location.
  • We offer two career path certifications you could leverage to assist project personnel looking to advance their knowledge and skills.  We created the H&A Control Account Manager (CAM) Certification program over 5 years ago and approximately 600 people have gone through this rigorous certification process.  We also created a Project Control/Analyst (PC/A) Certification for personnel that support CAMs and Project Managers.  These certifications mean the individual has demonstrated a knowledge level that establishes a sound foundation for success as a CAM or PC/A.
  • H&A senior personnel typically have over 30 years of experience in industry, government, and consulting across a variety of industries.  When you need help with an IBR or government compliance review, our consultants can help prepare and mentor your project personnel to successfully navigate the review process as well as perform data traces with them to verify the quality of the schedule and cost data.  When you need help training personnel on a specific EVM topic such as OTB/OTS or how to prepare a VAR that requires additional EVM expertise, we can conduct the training for you whether in-house or remotely.  

You can rely on the H&A team of experts to help you with your EVM, scheduling, and related training needs.  For more information about our courses, descriptions, and delivery options, visit our web page at: https://www.humphreys-assoc.com/evms/evms_training_courses.php. 

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