Project Management Best Practice Earned Value Management Executive Director Contract Operations and Customer Rela

1. Project Management Best Practice Earned Value Management Executive Director Contract Operations and Customer Relations June 6, 2007 1

2. What is Earned Value Management? • Disciplined and systematic approach to the practice of integrated project management • Ensures that suppliers use effective management systems and processes • Quantifies work progress using objective performance measures • Budgets are tied to achievements; what gets measured gets attention • Measures the net effectiveness and soundness of suppliers’ efforts 2

3. Goals of Earned Value Management • Provide an effective way to manage programs • Use a standard set of criteria for management • Produce metrics and measures for use in trend analysis • Provide indication of what lies ahead to enable proactive corrective actions 3

4. Cost Realism of the cost estimate Stability of funding sources Schedule Completeness of the schedule plan Realism of the schedule plan Technical Clear understanding of scope requirements Good technical definition of work Technological achievability Resources Realism of the resource plan (staffing availability and usage) Key Performance Parameters 4

5. DCMA’s Authority in Earned Value • December 1995: Office of Secretary of Defense (OSD) assigned DCMA as the Executive Agent for Earned Value Management System (EVMS) • Compliance and initial validation reviews • Ongoing system surveillance 5

6. Earned Value Definitions • Earned Value Management (EVM):  a project management methodology that effectively integrates the project scope of work with cost, schedule and performance elements for optimum project planning and control • The qualities and operating characteristics of an Earned Value Management System (EVMS) are described in American National Standards Institute (ANSI)/Electronics Industries Alliance (EIA) Standard-748 • ANSI/EIA-748 includes 32 program management EVMS guidelines 6

7. PEOPLE PROCESS Input Output TOOLS TECHNIQUES ANATOMY OF AN EVMS • Organizing • Planning • Accounting • Analysis • Revisions • Culture • Organization • Methods • Mgt Systems ANSI/EIA-748 7

8. Planning and Control Process Define the Work Guidelines 1 - 5 Identify Resources Plan and Schedule the Work Budget the Work Guidelines 6 - 15 Set Performance Measures Work the Plan Collect Actual Costs Guidelines 16 - 21 Measure Performance against the Plan Analyze Deviations from the Plan Guidelines 22 - 27 Report Status Make Changes to the Plan Guidelines 28 - 32 ORGANIZING PLANNING, BUDGETING, SCHEDULING ACCOUNTING CONSIDERATIONS ANALYSIS & MANAGEMENT REPORTS REVISIONS & DATA MAINTENANCE 8

9. DCMA Roles & Responsibilities • Ensure that suppliers’ EVM Systems are compliant with DoD EVMS guidelines • EVM Center resurgence - to effectively initiate and coordinate EVMS policy, implementation, and oversight • Effective EVMS surveillance and oversight to become a top priority • Clearly and continuously articulate to the services and industry the need for continuous process improvement 9

10. DCMA Roles & Responsibilities • Conduct EVMS surveillance to verify that a supplier’s management control system meets the full intention of ANSI/EIA 748-A Industry Standard • Evaluate the supplier’s EVMS policies, procedures and external reports to ensure that the EVMS is operated consistently, reliably, and effectively • Assess proposed changes to a supplier‘s EVMS policies and procedures to ensure continued compliance • Validate the accuracy, validity, and timeliness of the supplier’s program reported information • Establish procedures, metrics and corrective action plans that document and resolve EVMS deficiencies affecting the validity of the supplier’s reported program performance information • Verify that EVMS data can be used to make informed decisions 10

11. Successful Implementation of EVM • Shared responsibility • Industry • Government • Program Manager • Senior Leadership • Open and timely communication with industry and across the DoD enterprise is essential • Accountability 11

12. Summary • Using Earned Value Management Provides: • Forward looking, quantitative measurement of cost, schedule, and performance risk • Standardization of program management • Uniform measures and metrics with which to manage • Clear, effective set of communication tools to assess programs • Consistent workload planning, program management tool for all government programs 12