Earned Value Executive Overview

1. Earned Value Executive Overview 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. Earned Value Executive Overview • Why Earned Value. • Earned Value Concept. • Earned Value Example. • What Makes up an Earned Value System. • Earned Value Software. • Earned Value Documentation. • Who is the Key to Earned Value Success. • Earned Value Training. • Major Earned Value Events. • The Integrated Baseline Review (IBR). • Validation/Certification. • The Earned Value Gap Analysis. • Some Bad Earned Value Events. The CBT Workshop www.cbtworkshop.com

4. Why Earned Value • DOD Contractual Requirement. • Earned Value Management System (EVMS) in compliance with guidelines in ANSI/EIA-748 is required on all cost or incentive contracts equal to or greater than $20M. • A formally validated and accepted EVMS is required for cost or incentive contracts equal to or greater than $50M. • EVM may be imposed on contracts less than $20M as a risk-based decision of the program manager. • Other Government Department and Agencies are requiring EV. • Some Contractors consider it best practice. The CBT Workshop www.cbtworkshop.com

5. The Earned Value Concept • Break work into measurable segments. • Segments are called work packages (WP). • Assign a cost per segment/WP. • Assign a duration per segment/WP. • Develop a measure of performance. • Collect actual costs (from accounting). • Collect performance (measure completion or progress). • Status schedule. • Determine Earned Value. • Compare actual costs verses actual performance. The CBT Workshop www.cbtworkshop.com

6. Earned Value Example • Build 12 miles of road for $12M in 12 Months • What if: • 1 mile in 1 month for $1M. • On schedule, on cost and will finish on target if progress continues. • 1 mile in 2 months for $2M. • One month behind schedule, $1 over cost and will finish in 24 month at a cost of $24m if progress continues. • 1.5 miles in 1 month for $1.25M. • .5 month ahead of schedule, $.25M cost under run and will finish in 8 (12/1.5) months for at total cost of $10M (1.25X8) if progress continues. The CBT Workshop www.cbtworkshop.com

7. What makes up Earned Value Systems • Software. • Accounting System. • Scheduling System. • Earned Value Engine. • Analysis tools(optional). • Documentation. • System Description Document. • Procedures (desktops). • Directives. • Training. • General EVMS. • CAM Specific. • Executive EV Overview. • Software tools. The CBT Workshop www.cbtworkshop.com

8. Earned Value Software • Accounting System. • Cost Point, In house developed, SAP. • Cost collection at the WP level, totals at the program level. • Scheduling System. • MS Project, Open Plan, Primavera. • Earned Value Engine. • Cobra, MPM, DekkerTrakker, Primavera Cost Manager, EcoSys, Artemis Costview. • Analysis tools(optional). • wInsight, Steel Ray, Acumen Fuse, Risk Plus, PM Compass, Active Risk Manager, The CBT Workshop www.cbtworkshop.com

9. Earned Value Documentation • System Description Document (SDD). • Describes how the contractor intends on complying with ANSI EIA 748-B. • Details how each of the 32 criteria will be addressed. • Procedures (desktops). • Explains in detail how company personnel will apply the companies SDD to specific EVM processes. • Directives. • Corporate/Company/Program direction that implements EVM or portions of EVM. The CBT Workshop www.cbtworkshop.com

10. The CAM is the Key to Earned Value Success • The Control Account Manager (CAM)will make or break a EV program. • The CAM sets, controls, and reports all performance criteria. • Is the daily face the customers team interacts with. • Are always interviewed by the customer for IBRs and Validations. • Knowledgeable CAMs can offset marginal EV systems. • Poor CAMs will cause a great EV system to fail. • The better the CAMs are, the better your EV system will perform.

11. Earned Value Training • General EVMS. • Basic EVMS training to all personnel on the EV program. • CAM Specific. • Detailed training to all Control Account Managers on how to perform EV. • Schedulers and Finance Analysts. • Detailed training on what the customer expects in their reports and on analysis tools used to review the submitted data. • Executive EV Overview. • EV overview training for all company executives in the EV program reporting chain and should include all supporting departments. • Software. • Hands on software and EV training of all personnel using the EVMS tool sets. The CBT Workshop www.cbtworkshop.com

12. Major Earned Value Events • Periodic Reporting. • Contract Performance Report (CPR)(monthly). • Schedule Reporting (monthly). • Other customer required (usually monthly). • Contract Funds Status Report (CFSR)(usually quarterly). • Milestones. • Integrated Baseline Review (IBR) (90 to 120 days after contract award). • Validation/Certification (after IBR and when required by customer). • Other. • Earned Value Gap Analysis. The CBT Workshop www.cbtworkshop.com

13. Integrated Baseline Review (IBR) • A formal review conducted by the customer. • At the contractors site. • Within 6 months of contract award. • Verifies the technical and cost content of the Performance Measurement Baseline (PMB). • Confirm the program baseline. • Review actual work performed. • Review the latest Revised Estimate to Complete (ETC). • Identification of Any Risks or Concerns. • Review the Earned Value Management System (EVMS). The CBT Workshop www.cbtworkshop.com

14. What is a EVMS Validation/Certification? • Also called Compliance review. • Required for all companies with more than $50 M in EVMS contracts. • Detailed review of all EVMS related items. • Similar to a IBR. • Concentrates on the CAMs and processes. • Results in a “Compliant” EVMS. • Single Validation required for each business entity. • Review and verify prior CARs, DRs and other EV actions.

15. What Does Not Passing Mean? Potential of extra withholding on payments that could be as much as 10% additional. Disadvantage in bidding future EVM contracts. Potential for additional oversight on existing EVM contracts. Brings in question the Companies ability to control and manage multi million dollar Programs.

16. Earned Value Gap Analysis • A review of a contractor’s internal policies and procedures to gage their compliance with all 32 guidelines called out in by ANSI/EIA-748. • Answers the following four key questions: • How does the existing management processes comply with ANSI/EIA-748? • Are there policies and procedures in place and are personnel following the processes? • Do the supporting program management systems provide the data required to support ANSI/EIA-748? • If any of the above does not support ANSI/EIA-748, what must be done to bring them into compliance? • All Gaps must be resolved before the contractor will have a compliant EVMS.

17. Some Bad Earned Value Events • A-12 • Based on the contractor’s Earned Value analysis that showed ‘catastrophic’ cost and schedule problems on this complex, multi-billion $ fixed price incentive contract, the then Sec. of Defense Dick Cheney withdrew his support for the program. Program litigation continues today. • Bell Helicopter • Previous estimates for the System Development Demonstration portion of the ARH program had grown from $210 million to over $300 million. • The Army filed a Nunn-McCurdy cost and schedule breach on July 9, 2008, when new cost estimates showed a 40% cost increase above initial estimates. • The cancelation was the result of excessive costs of the program which had increased over 70 percent with an estimated per-unit cost of US$14.5 million, up from US$8.5 million. • The Navy pulled Bell’s certification affecting its standing in the Cobra/Huey program. The company was eventually recertified, but only after great effort and expense. • Lockheed F-35 • The Pentagon has suspended its certification of Lockheed's Earned Value Management System. • The company’s system was deficient in 19 of 32 areas. The CBT Workshop www.cbtworkshop.com

18. EVM Works When Management embraces it. When the Program uses it to manage. When all Program levels understands how it works. When CAMs are rewarded for their additional work. Being a CAM is a “Stepping Stone” to becoming a Program Manager.

19. EVM does not work When Management pays lip service to it. When the Program fights it. When Management focuses on metrics not performance. When program levels do not understand how it works and what it does. When Performance or Actuals are tailored to fit desired metrics. When CAMs are not rewarded for their additional effort. When Management makes EVMS related decisions without feed back from program.

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

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