1 / 41

Roberta Tomasini Defense Acquisition University DSN 655-3764 703-805-3764

Earned Value and the Acquisition Program. Roberta Tomasini Defense Acquisition University DSN 655-3764 703-805-3764 roberta.tomasini@dau.mil. What is Earned Value Management?. Definition EV Concept and Terms EV Policy Update (March 2005)

nikita
Download Presentation

Roberta Tomasini Defense Acquisition University DSN 655-3764 703-805-3764

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Earned Valueandthe Acquisition Program Roberta Tomasini Defense Acquisition University DSN 655-3764 703-805-3764 roberta.tomasini@dau.mil

  2. What is Earned Value Management? • Definition • EV Concept and Terms • EV Policy Update (March 2005) • EV in Program Execution (Reporting, Analysis, EACs, TCPI) • Things to Look At (Analysis Tips) • Possible Actions for EVM Reporting Issues • Possible Actions for Issues Highlighted by EVM

  3. Earned Value Management (EVM) Definition The use of an integrated management system that coordinates work scope, schedule, & cost goals & objectively measures progress toward these goals.

  4. Performance Schedule Earned Value Management Cost EARNED VALUE CONCEPT A Management Technique Emphases Disciplined Integration of Technical Performance to Associated Co$t & Schedule Objectively Measures Work Progress States Value of Work Completed in $s Provides Objective Cost & Schedule Metrics Enables Trend Analysis & CAIV Trades Industry Standard ANSI/EIA-748-2007 DoD & Industry embrace EARNED VALUE as a Risk Management Tool

  5. Earned Value Terminology Acronym Term Meaning BCWS Plan - Baseline - PMB Budget Cost of Work Scheduled BCWP Budget Cost of Work Performed Earned Value ACWP Actual Cost of Work Performed Actuals BAC Budget At Completion Planned Cost EAC Estimate At Completion Forecasted Cost Accomplishment Variance SV Schedule Variance EV vs Actual Cost CV Cost Variance Forecasted Overrun / Underrun VAC Variance At Completion

  6. 22 } Management Reserve 20 18 16 14 Budget at Completion Performance Measurement Baseline 12 10 Cumulative Budgeted Cost of Work Scheduled 8 6 4 2 0 0 2 4 6 8 10 12 14 16 18 20 The Time-Phased Spend Plan NEGOTIATED CONTRACT COST = Target Cost $ BAC PMB BCWS Completion Point Months

  7. Earned Value Management GuidanceNew Policy Established in March 2005 Risk Based Decision Cost Reimbursement & Incentive Contracts (EVM on FFP, LOE & T&M Contracts Discouraged) Contract Type Acquisition Funding Dollar thresholds are the same for all budget appropriation categories. Color of money is no longer an EVM discriminator. Conformance with ANSI / EIA 748 Formal EVMS validation required Conformance with ANSI / EIA 748 Formal EVMS validation not required EVM System Requirements No Mandatory Requirements Contract Performance Report (DI-MGMT-81466) (5 formats) Contract Performance Report (DI-MGMT-81466) (Tailored) EVM Data Requirements Integrated Master Schedule (DI-MGMT- 81650) Integrated Master Schedule (DI-MGMT-81650) (Tailored) Contract Value (TY $M) 50 0 20

  8. EV in Program Execution • Data Reporting • Data Analysis • Variances • Performance Indices • Trends • Estimates at Completion (EACs) • To Complete Performance Index (TCPI)

  9. NEGOTIATION SOURCE SELECTION ACQUISITION AWARD PROJECT STRATEGY DEVELOP RFP STATUS Program Execution& Performance Measurement REPORTS ESTABLISH Perf Meas. BASELINE DEVELOP PROPOSAL MGT VOLUME ASSESS RISK TECH VOLUME DEVELOP MR ASSIGN BUDGETS COST VOLUME Earned ValueWithin the Acquisition Process GOVERNMENT PROVIDER

  10. Contract/Cost Performance Report (CPR) • Format 1: WBS • Format 2: Organizational Categories • Format 3: Baseline • Format 4: Staffing • Format 5: Explanations and Problem Analysis NOTE: CPR DID, Jul 2005, DI-MGMT-81466A new IPMR DID, 20 Jun 2012, DI-MGMT-81861

  11. CPR Format 1: WBS BCWS BCWP ACWP BCWS BCWP ACWP SV CV SV CV BAC EAC VAC

  12. Basic Performance Data Analysis Objectives • Determine current status -- Where are we today? • Identify trends -- Where are we headed? -- Any cost, schedule surprises ? • Forecast the future -- What is the estimated cost at completion? • Indicate areas for management action -- What should we do now?

  13. Earned Value Metrics • Variances • Cost and schedule • Current month and cumulative • Performance indices • Cost Performance Index (CPI) • Schedule Performance Index (SPI) • Percent complete • Percent spent • To Complete Performance Index (TCPI) TRENDS RELATIONSHIPS

  14. BCWP The Earned Value Current Status Imposed On The Spend Plan NEGOTIATED CONTRACT COST } Management Reserve BCWS }SV Budget at Completion (BAC) ACWP }CV $ Completion Point Months Time Now

  15. CV SV Cumulative Dollar VarianceCost and Schedule Trends $ in Millions 1.0 0 (1.0) (2.0) (3.0) (4.0)

  16. Performance Metrics Percent Complete • = BCWP/BAC • = 10/20 = 50% Percent Spent • = ACWP/BAC • = 13/20 = 65% Schedule Performance Index • = BCWP/BCWS • = 10/14 = .71 • Cost Variance = BCWP - ACWP = 10-13 = -3M • Schedule Variance = BCWP - BCWS = 10 - 14 = -4M • Cost Performance Index = BCWP/ACWP = 10/13 = .77 Estimate at Completion BAC/CPI = 20/.77 = $26M

  17. Gold Card

  18. Budget at Completion = $20M BCWS = $14M (Planned to date) ACWP = $13M Work Remaining BCWP = $10M (EV) Estimate at Completion(EAC) EAC = Actual Costs accumulated to date + Estimated Cost of the Work Remaining

  19. EAC = ACWP + Work Remaining • Performance Factor • EAC = ACWP + (BAC - BCWP ) • CPIc • EAC = BAC • CPIc EAC Concept EAC = ACWP + Estimate to Complete Note: This EAC assumes that future performance will be the same as that represented by CPIc.

  20. BAC - BCWPC (BCWP) (ACWP) 3 MO BAC - BCWPC .8 CPIC + .2SPIC EAC Methods METHODFORMULA 1. Cumulative CPI ACWPC + 2. Composite ACWPC + 3. 3-Month CPI ACWPC + 4. Weighted ACWPC + BAC - BCWPC CPIC BAC - BCWPC CPIC X SPIC Note: c Indicates cumulative data

  21. TCPIEAC = Work Remaining Budget Required for EAC (or cost remaining) = BAC-Cumulative BCWP EAC- Cumulative ACWP The CPI from today until contract completion required to achieve the EAC. Or, The level of efficiency required from today to completion to achieve the EAC. Note: Compare TCPI EAC to cum CPI for “believability” check To Complete Performance Index (TCPI)

  22. Things to Look At(Analysis Tips) • Look at CPI in latest CPR - What is CPI cum now? • Look at CPI trend - Rate of change? CPI cum drop of 1% per month, not green • Look at SPI trend – Rate of change? Chasing schedule? • Compare CV and use of Management Reserve – MR vs Work Remaining? • Compare govt EAC to ktr LRE – Which is higher? • Calculate TCPI for each (govt Most Likely EAC and ktr ML LRE) • Compare percent complete to percent spent – greater than 10%, not green • Look at trend charts for rebaselinings – How many? When was last one? • Look at trend charts relative to +/- 10% (OSD) and +/- 5% (DCMA tripwires) • Take govt EAC to price and compare to budget (contract total on the R-3) • When was the last IBR? How did it go? – How many findings? CARs?

  23. Possible Actions for EVM Reporting Issues • PMO discussions with contractor • PMO engages DCMA for assistance • Discussions with contractor at levels above PM • PCO letter • Award/Incentive fee impact • CPAR input • CARs (Correction Action Request)-Levels 1-4 • DCMA initiated • Conduct an IBR • Conduct a compliance review • Withhold payment up to 5% • Pull contractor’s EVM validation

  24. Possible Actions for Issues Highlighted by EVM Question: What do you do? Answer: 1. Find the root cause…..talk to the contractor • Does it relate to a KPP or KSA? • If yes… • Is there any trade space? • Discuss options with the contractor • Discuss options with the user • If no… • Discuss options with the contractor • Discuss options within Acquisition community 2. Take action to help resolve/mitigate the problem

  25. Any Questions?

  26. BACKUP CHARTSfor the Integrated Baseline Review (IBR)

  27. Integrated Baseline Review (IBR) Goal Joint PM mutual understanding of the PMB content and the risk

  28. IBR – PMB Evaluation • Assess the following: • Technical scope of work is captured • Work flow and scope ties to contract schedule key milestones • Resources (budgets, facilities, personnel, skills, etc.) are adequate • Performance data will reflect project progress • Work measurement is objectively planned • Assumptions underlying the plan are reasonable SO WHAT DOES THIS MEAN?

  29. Contract Price Total Allocated Budget CBB NCC Fee/Profit OTB AUW Performance Measurement Baseline Management Reserve - Withheld for Unknowns - No Scope or Schedule Undistributed Budget Control Accounts Summary Level Planning Packages - Temporary Holding - Work Authorized but no detailed Budget or Schedule - Specific Scope @ higher WBS level - Time-phased budget - Strict Controls Work Packages Planning Packages - Integrated Scope, Schedule & Budget - No Detailed Plans - Integrated Scope, Schedule & Budget - Detailed Plans PMB Budget Allocation Top - Down Version 3 Overrun

  30. 1. Scope Negotiated Contract Cost MR $ PMB 2. Schedule 3. Budget 100 Time 40 60 Developing the PMB Reports 1. Decompose SOW 2. Extend WBS to control account work package 1. Arrange work packages in order 2. Sequence over time 1. Budget the work packages 2. Classify the work and select an EV technique 3. Calculate cumulative BCWS

  31. WORK BREAKDOWN STRUCTURE LEVEL 1 SYSTEM LEVEL 2 ENGINE TRAINING LEVEL 3 FAN COMPRESSOR LEVEL 4 FAN ASSEMBLY FULL SCALE RIG TEST LEVEL 5 STATOR ASSY ROTOR ASSY CASE ASSY DATA COMPANY ENG 40 MECHANICAL DESIGN CONTROL ACCOUNT 100 DESIGN CONTROL ACCOUNT ANALYTICAL DESIGN 60 MFG Work Packages DRAFTING/ CHECKING CONTROL ACCOUNT CONTROL ACCOUNT Control AccountA Key Management Control Point Work Packages

  32. 0 / 100 % 1 Mth 30 0 50 / 50 % 2-3 Mths 15 15 % Complete Varies 35% Variant Milestone 3 or More Mths 5 15 10 Level of Effort Varies 10 10 10 5%WP3 5%WP3 Apportioned Effort Varies EARNED VALUE TECHNIQUES LENGTH METHOD BCWP CALCULATION

  33. BACKUP CHARTS

  34. How to Tailor the CPR • Can tailor content and/or frequency • Format 1: WBS • Default WBS level 3 • Consider Level 4/5 for high risk/dollar areas • No more than 2 pages • Format 2: Organizational Categories • This should be useful for your program • Consider aligning to IPTs • Format 3: Baseline • Format 4: Staffing • This will be in the same breakout as Format 2 • Format 5: Explanations and Problem Analysis • Thresholds for variance analysis reporting should support management by exception concept • Review thresholds periodically NOTE: Smaller programs may only need Formats 1 or 2 and Format 5

  35. Integrated Baseline Review (IBR) • Initial review conducted within 180 days • Ongoing reviews triggered by Mods and/or OTBs • Outcome of the review • Cost • Schedule • Technical Baseline Risk • Resources • Processes Primary Trip Wires • EVM Center Contractor EVMS confidence rating • Corrective Action Requests (CAR Levels 1-4) • EVM System maturity levels

  36. Secondary: Trip Wire Metrics • Baseline Execution Index (BEI) – IMS • Cum index less than .95 • Schedule Performance Index (SPI) – CPR • Cum index less than .95 • Critical Path Length Index (CPLI) – IMS • Cum index less than .95 • Cost Performance Index (CPI) – CPR • Cum index less than .95 • To Complete Performance Index (TCPI) – CPR • CPI to TCPI delta of 10% • Contract Mods – ACO, PCO • Contract Mods to Original Base value of 10% • PMB Revisions – CPR, CFSR • Changes to Monthly Time-Phased PMB value of 5%

  37. wInsight Current Period Entries in Black are Input data Entries in Red are Calculated

  38. wInsight Cumulative

  39. wInsight At Completion

  40. wInsight EAC Forecasts

  41. OSD Position on EACs: 20% • When a contract is more than complete: • 1. The overrun at completion will be than the overrun incurred to date • 2. The percent overrun at completion will be than percent overrun incurred to date • Based on OSD database of more than 500 major DOD contracts since 1977 more greater

More Related