EVMS Application Thresholds and What They Mean

1. EVMS Application Thresholds and What They Mean George Stubbs, CBT Workshop The CBT Workshop www.cbtworkshop.com

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 Application Thresholds and What They Mean • Evolution of EV Requirements. • OMB Circular A-11 Section 300. • Key Changes in EV Requirements. • EV Application Thresholds. • Contract Greater Than $50M Validated EVMS Required. • Between $20M and $50M EVMS Required. • Less than $20M EVMS Optional. • EVMS Validation. • ANSI/EIA-748 Compliant System. • Tailored EVMS. • Government Agency EVMS Requirements. • References and Websites. The CBT Workshop www.cbtworkshop.com

4. Evolution of EV Requirements • Developed and applied by the DoD beginning in 1967. • Converted to an industry standard in 1997. • ANSI/EIA-748. • Required to be applied by DoD5000. • Requirement expanded to other US Government agencies by the Office of Management and Budget in 2002. The CBT Workshop www.cbtworkshop.com

5. Evolution of EV Requirements • Both private and public sectors recognize the positive impact that Earned Value Management has on predicting project performance. • Revisions to the DoD Earned Value Management Policy in 2005 lowered the cost threshold for cost or incentive contracts. • Other directives that have increased the focus on EVM are the Office of Budget and Management (OMB) Circular A-11 (Part 7, Section 300), the Sarbanes-Oxley Act, and the President’s Management Agenda Government-wide Initiative Number 5.

6. OMB Circular A-11 Section 300 • Issued by the Office of Management & Budget in June 2002. • Establishes policy for management of Federal capital assets. • Requires use of EVMS for capital asset management. • Agencies must use a management system based on ANSI/EIA-748 The CBT Workshop www.cbtworkshop.com

7. Key Changes in EV Requirements • OSD's EVM initiative resulted in several policy changes. • The revised policy requires that all EVM applications comply with the Industry Standard. • It also mandates new EVM application thresholds. • The separate thresholds for Research, Development, Test, and Evaluation (RDT&E) and Procurement were eliminated. • The lower threshold was raised from $6.3 million [the former Cost/Schedule Status Report (C/SSR) threshold] to $20 million. • The upper threshold was lowered from $73 million and $315 million (the former RDT&E and Procurement thresholds) to $50 million. The CBT Workshop www.cbtworkshop.com

8. Key Changes in EV Requirements • Revising and renaming the Contract Performance Report (CPR) previously titled Cost Performance Report. • Expanding the application of the Integrated Master Schedule (IMS) and integrating the IMS with the CPR. • Clarifying the requirement for Integrated Baseline Reviews (IBRs). • The C/SSR was eliminated. The CBT Workshop www.cbtworkshop.com

9. EV Application Thresholds • Thresholds determined by each agency. • Typical thresholds (DoD for example): • > $50 Million EVMS implementation & process must be validated. • $20-50 Million EVMS required. • <$20 Million EVMS may be tailored. • Most agencies have published thresholds. The CBT Workshop www.cbtworkshop.com

10. Contract Greater Than $50M Validated EVMS Required • Must use ANSI/EIA-748 compliant and validated management system. • CPR (all formats) is required. • Integrated Master Schedule is required. • Schedule Risk Assessment (SRA) is required • IBR required.

11. Between $20M and $50M EVMS Required • Required • Must use ANSI/EIA-748 compliant management system.  • No validation. • CPR Formats 1 and 5 are required. • Integrated Master Schedule is required. • IBR required • Optional • CPR Formats 2, 3, and 4 are optional. • Schedule Risk Assessment is optional. The CBT Workshop www.cbtworkshop.com

12. Less than $20M EVMS Optional • Optional at customer discretion. • ANSI/EIA-748 compliance is discretionary and should be based on risk. • CPR Formats 1 and 5 are recommended. • Integrated Master Schedule is optional. • Customer may tailor requirements • IBR required. The CBT Workshop www.cbtworkshop.com

13. EVMS Validation • Contractors must be validated when a contract is issued with an EVMS requirement > $50 M. • A validation ensures that the EVMS meets the requirements of ANSI/EIA-748. • Validation is also required when the ANSI/EIA-748 requirements are passed to a subcontractor. The CBT Workshop www.cbtworkshop.com

14. EVMS Validations (cont) • Most validations are conducted by the government. • The DCMA leads validations for the DoD. • Subcontractors are validated by either the prime contractor or the government. • Self and peer validations are also conducted. • Independent validations allowed. The CBT Workshop www.cbtworkshop.com

15. EVMS Validations (cont) • The EVMS is tested: • Does the EV system design meet the 32 criteria. • Is EV system being used in practice. • Is the system documented adequately for repeatability. • Typically, a letter of acceptance is issued. The CBT Workshop www.cbtworkshop.com

16. ANSI/EIA-748 Compliant System • Meet the 32 guidelines. • Must have a System Description Document (SDD). • Requires IMP and IMS. • The policies and procedures support the SDD for hands on applications. • The cost collection system, scheduling system and EV tool interface seamlessly with each other. • The CAMs are using the EVMS properly. The CBT Workshop www.cbtworkshop.com

17. Tailored EVMS • EVMS at Program Managers discretion. • Cost benefit analysis needed. • High risk (cost or schedule) items only. • If any EVMS is required then an IBR is required. The CBT Workshop www.cbtworkshop.com

18. 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

19. Integrated Baseline Review Actions • Corrective actions. • Inconsistent baseline elements. • Unacceptable risk levels. • Not using validated EV processes. • Corrective action plans required. • Is NOT a pass or fail event. The CBT Workshop www.cbtworkshop.com

20. EVMS Required by • Department of Defense (DoD) • Department of Transportation (DoT) • Federal Aviation Agency (FAA) • Department of Energy (DoE) • National Aeronautics and Space Agency (NASA) • Department of Homeland Security (HS) • Department of Health and Human Services (DHHS) • Center for Medicare & Medicaid • Department of Agriculture • Department of Commerce • Department of Education • Department of Housing and Urban Development (HUD) • Department of Interior • Department of Justice • Department of Labor • Department of State • Department of Treasury • Department of Veterans Affairs (VA) The CBT Workshop www.cbtworkshop.com

21. Government Agency Requirements The CBT Workshop www.cbtworkshop.com

22. Government Agency Requirements (cont) The CBT Workshop www.cbtworkshop.com

23. Government Agency Requirements (cont) The CBT Workshop www.cbtworkshop.com

24. References and Websites • DoD EVM Policy and Guidance - acc.dau.mil • OMB Circular A-11 – www.whitehouse.gov/omb/ • Earned Value Implementation Guide – guidebook.dcma.mil/79/EVMIG.doc • National Defense Industrial Association – www.ndia.org • Revision to DoD Earned Value Management Policy, March 7, 2005 • IBR Handbook - www.acq.osd.mil/pm/currentpolicy/IBR_Guide_April_2003.doc The CBT Workshop www.cbtworkshop.com

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

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