Example of Earned Value in Action

1. Example of Earned Value in Action George Stubbs, CBT Workshop

2. About George Stubbs the Presenter • Over 45 years Program Management Experience. • 5 Years United States Air Force. • 6 Years Raytheon. • 8 Years Boeing. • 7 Years Martin Marietta. • 9 Years Independent Consultant. • 12 Years Senior Partner The CBT Workshop. • The CBT Workshop. • A leading supplier for affordable skilled Earned Value Management System (EVMS) resources specializing in EVMS services, training, and tools support. The CBT Workshop www.cbtworkshop.com

3. EVMS Example • Road Building Example. • What are the Programs Actions. • Work Breakdown Structure (WBS). • Integrated Master Plan (IMP). • Integrated Master Schedule (IMS). • Performance Measurement Baseline (PMB). • Control Account (CA). • Responsibility Assignment Matrix (RAM). • Organizational Breakdown Structure (OBS). • Control Account Manager (CAM). • Establishing Budgets. • Opening Charge Numbers. • Taking Performance. • First submittals. • Data Submittal. • The IBR.

4. Road Building Example • Your company just won a cost plus contract to build 12 miles of road. • Period of performance is 12 months. • Your winning bid was for $14M. • The customer has specified that have to perform EV in accordance with ANSI EIA 748. • Your first Cost Performance Report (CPR) is due 60 days post award. • An Integrated Baseline Review (IBR) is scheduled 120 days post award. The CBT Workshop www.cbtworkshop.com

5. What Are The Program’s EV Actions • Assign a PM. • Develop a WBS. • Establish a PMB. • Establish budgets. • Establish a IMP and IMS. • Define the Control Accounts. • Develop the RAM. • Develop an OBS. • Assign CAMs. • Open charge numbers. • Take Performance. • Submit CPR and IMS on time. • Start planning for the IBR. The CBT Workshop www.cbtworkshop.com

6. Assign a Program Manager (PM) • Responsible for managing the project. • Responsible for accomplishing the project objectives within the constraints of the project. • Collects metrics data: baseline, actual cost values, schedule, work in progress, and execution completed. • Responsible to the project stakeholders for delivering a project’s objectives within scope, schedule, cost, while concentrating on quality. • John Jones is the assigned Program Manager The CBT Workshop www.cbtworkshop.com

7. Work Breakdown Structure (WBS) • A WBS is a tool used to define and group a project's discrete work elements in a way that helps organize and define the total work scope of the project. • The WBS is developed by starting with the end objective and successively subdividing it into manageable components in terms of size, duration, and responsibility which include all steps necessary to achieve the objective. • A hieratical rollup of work to perform the contract. • Mil Standard 881 is a ready reference. The CBT Workshop www.cbtworkshop.com

8. 12 Miles of Road WBS Example 1.0 12 Miles of Road 1.1 Program Office 1.2 Road Prep 1.3 Surfacing 1.4 Final Finish 1.1.1 Earned Value 1.2.1 Surveying 1.3.1 Install Forms 1.4.1 Remove Forms 1.2.2 Grading 1.3.2 Install Rebar 1.4.2 Back Fill 1.1.2 Program Management 1.2.2.3 Earth Removal 1.3.3 Pour Concrete 1.4.3 Striping 1.2.2.4 Surface Prep 1.3.4 Smoothing 1.4.4 Install Signs The CBT Workshop www.cbtworkshop.com

9. IMP and IMS • The IMP is a top-down planning tool. • Becomes part of the contract and is legally binding. • The IMS is a bottoms up execution tool for the plans in the IMP. • Becomes a monthly deliverable along with the EVMS reports.

10. Integrated Master Plan (IMP) • The IMP is an event-based plan consisting of a hierarchy of program events. • Each event being supported by specific accomplishments • Each accomplishment associated with specific criteria to be satisfied for its completion. • The three elements of the IMP. • Event - a program assessment point that occurs at the culmination of significant program activities. • Accomplishment - is the desired result(s) prior to or at completion of an Event that indicates a level of the program's progress. • Criteria - provides a definitive evidence that a specific Accomplishment has been completed. • The IMP is normally part of the contract and is contractually binding.

11. Establish the IMP • Deliver 12 Miles of Road • Surfacing the road (Event) • Surveying (Accomplishment) • Complete Survey (Criteria) • Grading (Accomplishment) • Complete Grading (Criteria) • Earth removal (Accomplishment) • Complete Surface Prep (Criteria) • Surfacing (Accomplishment) • Complete Install Forms (Criteria) • Complete Install rebar (Criteria) • Complete Smoothing (Criteria) • Complete Remove Forms (Criteria) • Apply Road surface (Accomplishment) • Complete Pour Concrete (Criteria) • Finish (Event) • Striping (Accomplishment) • Complete Striping (Criteria) • Install signs (Accomplishment) • Complete Sign Installation (Criteria)

12. Establish a IMS • The IMS is a time-based schedule containing the networked, detailed tasks necessary to ensure successful program/contract execution. • The IMS is traceable to the integrated master plan, the contract work breakdown structure, and the statement of work. • The IMS is used to verify attainability of contract objectives, to evaluate progress toward meeting program objectives, and to integrate the program schedule activities with all related components The CBT Workshop www.cbtworkshop.com

13. IMS Example The CBT Workshop www.cbtworkshop.com

14. Performance Measurement Baseline (PMB) • Is a time-phased budget plan for accomplishing work, against which contract performance is measured. • It includes the budgets assigned to scheduled control accounts and the applicable indirect budgets. • For future effort, not planned to the control account level, the PMB also includes budgets assigned to higher level Contractor Work Breakdown Structure (CWBS) elements, and to undistributed budgets. The CBT Workshop www.cbtworkshop.com

15. Performance Measurement Baseline (PMB) • Is fundamental to earned value management. • Includes the undistributed budget, all summary level planning package budgets, and all control account budgets. • It establishes the contract level timed phased baseline against which contract level earned value metrics are computed. • It establishes the scope, schedule, and budget targets for the program. The CBT Workshop www.cbtworkshop.com

16. The PMB Contract Price Total Allocated Budget (TAB) Fee / Profit / Margin • This is where EV starts Over Target Baseline (OTB) (if applicable) Contract Budget Base (CBB) Negotiated Contract Cost (NCC) Authorized Unpriced Work (AUW) Performance Measurement Baseline (PMB) Management Reserve (MR) Distributed Budget (DB) Undistributed Budget (UB) Control Accounts Summary Level Planning Packages Planning Packages Work Packages Discrete Work Apportioned Work Level of Effort Work The CBT Workshop www.cbtworkshop.com

17. Develop the PMB • Contract Price $14.0M • Less Fee/Profit $1.27M • Negotiated Contract Cost $12.73M • Less Management Reserve $0.73M • Performance Measurement Baseline $12.0M

18. 12 Miles of Road WBS Example With Budget 1.0 12 Miles of Road $12,000,000 1.1 Program Office $1,800,000 1.2 Road Prep $3,600,000 1.3 Surfacing $5,400,000 1.4 Final Finish $1,200,00 1.1.1 Earned Value $600,000 1.2.1 Surveying $600,000 1.3.1 Install Forms $600,000 1.4.1 Remove Forms $300,000 1.2.2 Grading $1,200,000 1.3.2 Install Rebar $1,200,000 1.4.2 Back Fill $300,000 1.1.2 Program Management $1,200,000 1.2.2.3 Earth Removal $1,200,000 1.3.3 Pour Concrete $3,000,000 1.4.3 Striping $300,000 1.2.2.4 Surface Prep $600,000 1.3.4 Smoothing $600,000 1.4.4 Install Signs $300,000 The CBT Workshop www.cbtworkshop.com

19. Control Accounts (CA) • A CA is a management control point at which budgets and actual costs are accumulated and compared to earned value for management control purposes. • A CA is a natural management point for planning and control since it represents the work assigned to one responsible organizational element for a single program Work Breakdown Structure (WBS) element.

20. 12 Miles of Road Control Accounts 1.0 12 Miles of Road $12,000,000 1.1 Program Office $1,800,000 1.2 Road Prep $3,600,000 1.3 Surfacing $5,400,000 1.4 Final Finish $1,200,00 1.1.1 Earned Value $600,000 1.2.1 Surveying $600,000 1.3.1 Install Forms $600,000 1.4.1 Remove Forms $300,000 1.2.2 Grading $1,200,000 1.3.2 Install Rebar $1,200,000 1.4.2 Back Fill $300,000 1.1.2 Program Management $1,200,000 1.2.2.3 Earth Removal $1,200,000 1.3.3 Pour Concrete $3,000,000 1.4.3 Striping $300,000 1.2.2.4 Surface Prep $600,000 1.3.4 Smoothing $600,000 1.4.4 Install Signs $300,000 The CBT Workshop www.cbtworkshop.com

21. Develop a RAM • The Responsibility Assignment Matrix (RAM) is developed by integrating the Organization Breakdown Structure (OBS) with the Contract Work Breakdown Structure (CWBS). • This matrix displays the CWBS on one axis and the OBS on the second axis. • By inserting the budgets defined for each Task Plan into the designated location of the RAM the "Dollarized" RAM is created. The CBT Workshop www.cbtworkshop.com

22. RAM Example

23. Dollarized RAM Example

24. Develop a Organizational Breakdown Structure (OBS) • The organizational breakdown structure should be established at the onset of the activity to help in the purposes of organization. • This is an organization chart describes the hierarchical nature of the organization, what departments exist, and who reports to whom. The CBT Workshop www.cbtworkshop.com

25. OBS Example Acme Construction President VP of Program Management VP of Finance VP of Engineering VP of Procurement Field Engineering Bert Black Subcontract Manager Jake Blake 12 Mile Program Manager John Jones Program Planning and Control Kevin Kennedy Site Finish Adam Smith Ty Owens Sid Bud Vito’s Concrete Co. Site Prep Joe White Jon Grey Tim Owens

26. Assign the Control Account Managers (CAMs) • The CAM plays a critical role in an Earned Value Management System. • The CAM is responsible for the planning, coordination and achievement of all work within a Control Account (CA). • The CAM provides a single authority for all scope, technical and cost issues for the CA. The CBT Workshop www.cbtworkshop.com

27. Assign CAMs

28. Establish Time Phased Budgets

29. Open Charge Numbers • New programs biggest first mistake is opening charge numbers before the PMB and CAs are set up. • Charge Numbers must align with the CAs. • Actuals collected must be at the same level as budgets. • Actual should never have to be allocated for EV reporting purposes or for billing. The CBT Workshop www.cbtworkshop.com

30. Take Performance (Month 1)

31. Submit IMS and CPR on time • IMS usually due 30 to 60 days after contract award. • The Cost Performance Report (CPR) is usually due the third or fourth month after contract award. • The CPR due date is stated in specific days after the start of the month to give the contractor time to prepare the report. • 20th day of the month following the report date. • September CPR is due the 20th of October. • If the 20th is a weekend or holiday it usually is due the following work day. • Read the contract to make sure or ask for clarification. • If the IMS is the first submittal all subsequent submittals should be on the same date as the CPR. • You don’t want to submit the IMS before you have completed the CPR. The CBT Workshop www.cbtworkshop.com

32. CPR – (Month Zero)

33. Statused IMS

34. What Is an IBR? • A formal review conducted by the customer. • The first formal review after contract award. • At the contractors site. • Within 6 months of contract award. • Usually after two to three reporting cycles. • Verifies the technical and cost content of the Performance Measurement Baseline (PMB). The CBT Workshop www.cbtworkshop.com

35. What Is the Purpose of an IBR? • Confirm the program baseline. • Work defined. • Work scheduled. • Work budgeted. • Review actual work performed. • Review the last CPR and IMS. • Measured correctly. • Consistently. • With objected metrics. The CBT Workshop www.cbtworkshop.com

36. What Is the Purpose of an IBR? (cont’d) • Review the latest estimate to complete (ETC). • Is it correct. • ETC processes established. • ETC threshold defined. • Identification of any risks or concerns. • Include any mitigation required. • Review the Earned Value Management System (EVMS). • Customer understands the EVMS. • Contractor is using the EVMS properly. • It is not a EV Validation! The CBT Workshop www.cbtworkshop.com

37. IBR Preparation • Establish the PMB. • Develop the Integrated Master Schedule (IMS). • Develop required documentation. • Risk identification and mitigation. • Work Breakdown Structure (WBS). • Develop Control Account Manager (CAM) notebook. • Review team composition. • IBR Training. • Develop CAM briefing charts. • Perform mock CAM interviews. The CBT Workshop www.cbtworkshop.com

38. Contact Information • www.cbtworkshop.com • gstubbs@cbtworkshop.com • 1-303-877-7201 Mobile • 1-888-644-5613 The CBT Workshop www.cbtworkshop.com

39. Q&A The CBT Workshop www.cbtworkshop.com