Earned Value Management EVM Basics

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Earned Value Management (EVM) Basics
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Industry EVM Definition
integrated

• Use of an management system
  that coordinates
• objectives and employs earned value methods for
  program planning and control

work scope,
schedule,
and cost
- Industry Standard Guidelines for EVMS (Aug 8,
1996)
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Statutes Related to EVM

• Establish performance Standards for Federal budget

• Government Performance and Results Act of 1993
  GPRA

• Federal Acquisition Streamlining Act of 1994 -
  Title V (FASA V)

• Report cost, schedule and performance goals and
  evaluate progress

• Information Technology Management Reform Act of
  1996 (ITMRA / Clinger-Cohen

• Report performance information systems acquisition

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Office of Management Budget EVM Policy

• OMB Circular A-11 Part 7 Capital Programming
  Guide

• Unified guidance to support OMB reporting to
  Congress

Circular A-11 Policy

• Capital Programming Guide
• Agencies must establish cost, schedule and
  performance goals for major acquisitions and then
  achieve, on average, 90 of those goals
• Version 2.0 provides guidance on integration of
  EVM, IBRs, and risk management.

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DoD EVM Implementation Instructions
Purpose
Policy Instruction

• MAR 7, 2005 ATL Policy Memorandum directs
  changes to DoDI 5000.2 regarding EVM

• Implements OMB Circular A-11

Table E3.T2 Regulatory Information Requirements

• Applies to cost and incentive contracts,
  subcontracts, and intra-government work
  agreements of 20M and above.
• Formal EVMS Validation is required above 50M
• Discouraged for FFP, LOE, and TM contracts
• Optional for efforts less 20M
• Implement EVMS guidelines in American National
  Standards Institute (ANSI)/Electronic Industries
  Alliance (EIA) 748-A-1998 (R2002)
• DoDI 5000.2 also directs when EVM required
• Use of a MIL-HDBK-881 Work Breakdown Structure
• Completion of Integrated Baseline Reviews
• Contract Performance Report (DI-MGMT-81466A)
• Integrated Master Schedule (DI-MGMT-81650)

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Increased Emphasis of EVM Within DoD
Jul 03, 2007 Use of Earned Value Management in
the Department of Defense

• Program management tool
• Best option available for effective management of
  complex projects
• Disciplined approach through an integrated system
• Critical pre-requisites to successful EVM
• Correctly imposing EVM requirements on contract
• Establishing realistic, executable Performance
  Measurement Baselines
• DoD Components will
• Flowdown requirements
• Comply with reporting requirements (CPR, IMS)
• Conduct IBRs/Surveillance

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Integrated Program Management
32 Criteria in ANSI/EIA-748
- Define the work - Assign responsibilities -
Define indirect procedures - Establish proper
management controls
- Understand contract status - Use data for
decision-making - Manage Risk
Organization
- Management Systems - Contract
Planning Scheduling Budgeting
Revisions and Data Maintenance
- Schedule all work - Authorize all work -
Time-phase the work - Develop control (or cost)
accounts
- Material costs - Unit/lot costs - Cost
Summarization
Accounting Considerations
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Integrated Management System
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Earned Value within the Contracting Process
GOVERNMENT
NEGOTIATION
SOURCE SELECTION
ACQUISITION
AWARD PROJECT
STRATEGY
STATUS
DEVELOP
REPORTS
RFP
PROVIDER
ESTABLISH
PROJECT
DEVELOP
PROJECT
EXECUTION
PROPOSAL
BASELINE
PERFORMANCE
MEASUREMENT
ASSESS RISK
TECH VOLUME
ASSIGN BUDGETS
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DoD EVM Application Thresholds
Thresholds
Contracts
Requirements
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DoDI 5000.2 EVM Policy for Cost Incentive
Contracts 50M (Interim)

• Comply with ANSI/EIA-748
• EVM system formally validated accepted by
  cognizant contracting officer
• DFAR clauses
• DFARS 252.242-7001 - Notice of EVMS - RFP
• DFARS 252.242-7002 EVMS RFP Contract
• EVM Data Requirements
• DI-MGMT-81466A - Contract Performance Report
  All five formats mandatory
• DI-MGMT-81650 Integrated Master Schedule
  Limited tailoring options
• Integrated Baseline Review begin within six
  months of contract award

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DoDI 5000.2 EVM Policy for Cost Incentive
Contracts 20M and lt 50M (Interim)

• Comply with ANSI/EIA-748
• No formal EVM Validation
• DFAR clauses
• DFARS 252.242-7001 - Notice of EVMS - RFP
• DFARS 252.242-7002 EVMS RFP Contract
• Required SOW Statement In regards to DFARS
  252.242-7001 and 252.242-7002, the contractor is
  required to have an Earned Value Management
  System that complies with ANSI/EIA-748 however,
  the government will not formally accept the
  contractors management system (no validation
  review).
• EVM Data Requirements
• DI-MGMT-81466A - Contract Performance Report
  Formats 1 5 mandatory Format 2, 3, 4
  optional
• DI-MGMT-81650 Integrated Master Schedule
  Flexibility exists for tailoring
• Integrated Baseline Review begin within six
  months of contract award

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EVMS Data Items

• Work Breakdown Structure - Mil-HDBK-881A
  mandatory common WBS for CPR, IMS CCDRs through
  WBS Level 3
• EVM Related Data Item Descriptions (DiDs)
• Contract Performance Report DI-MGMT-81466A
• Integrated Master Schedule DI-MGMT-81650
• Contract Work Breakdown Structure
  DI-MGMT-81334B
• Contract Funds Status Report DI-MGMT-81468A
• Contract Data Requirements List (CDRL) used to
  put CPR and IMS reports on contract
• EVM CDRLs can and should be tailored within
  bounds of policy
• Tailoring options are limited for contracts gt
  50M
• Most aspects are tailorable for contracts lt 50M
• Consider all risk factors when tailoring CPR and
  IMS DiDs
• Type of contract (determined by cost risk)
• Technology
• Schedule
• Past contractor performance

New CFSR DiD is pending approval Early CY 2007
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EVM Data Item Tailoring

• CPR Tailoring Guidance
• Format 1 2 Reporting Levels
• Reporting Frequency
• Submission Dates
• Date of first and last reports
• Format 5 variance reporting thresholds
• Fixed Number of Variances
• Percentage or Dollar Thresholds
• Specific Variances
• Contractor format
• Electronic data interchange format

• IMS Tailoring Guidance
• Degree of networking
• Reporting Frequency
• Submission Dates
• Date of first and last reports
• Frequency of schedule risk analysis
• Electronic data interchange format

See EVMIG (Earned Value Management Implementation
Guide), Sections 2.2.5.5 through 2.2.5.8 for
tailoring guidance
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• EVMS Training and References

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EVMS Tailored Training

• DAU can provide targeted training
• Tailored to specific organization needs
• Part of our Consulting/Performance Support
  efforts
• Potential Topics
• Integrated Baseline Review Workshop
• Program Startup Workshop
• EVMS Basics/Intermediate
• Scheduling Basics/Intermediate
• Source Selection
• For More Info, Contact Professor Kim Meyer
• 937-781-1040, kimberly.meyer_at_dau.mil

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• Back-Up Slides

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DAU Acquisition Community Connection
https//acc.dau.mil/evm
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ACC Included References

• https//acc.dau.mil/evm
• DoD Policy
• OMB Recommended References

EVMIG
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EVMS TrainingACC EVMS CoP
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EVMS TrainingDAU Continuous Learning Modules
https//learn.dau.mil/html/clc/Clc1.jsp?cl
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• Back-Up Slides

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Key EVM Inputs in the RFP Development Process

• Do you include EVM at all?
• May find EVM addressed in the RFP in
• Section C - Description/Specs/Work Statement
• Section I - General Provisions
• Section J - Exhibits/Attachments
• Section L - Instructions to Offerors
• Section M - Evaluation Factors for Award

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Section I - General Provisions

• New FAR Clauses July 2006
• FAR 52.234-2 Notice of EVMS Pre-Award IBR
• FAR 52-234-3 Notice of EVMS Post Award IBR
• FAR 52-234-4 EVMS The Gov will conduct an IBR
  if a pre-award IBR has not been conducted.
• FAR EVM clauses not tied to dollar thresholds
• DoD Interim guidance (until new DFARS approved)
  
• Apply existing clauses (252.242-7001 and
  252.242-7002) directly on contracts gt 50M
• Include the following paragraph in statement of
  work for contracts gt 20M but lt 50M
• In regards to DFARS 252.242-7001 and
  252.242-7002, the contractor is required to have
  an Earned Value Management System that complies
  with ANSI/EIA-748 however, the government will
  not formally accept the contractors management
  system (no compliance review).
• DoD Policy EVM DFAR clauses are equivalent to
  the EVM FAR clauses and only the EVM DFAR clauses
  will be used on DoD contract

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Section L - Instructions to Offerors

• Guidance to bidders for the assembly of their
  proposals
• Each offerors proposal shall include a
  description of the EVMS to be used in accordance
  with the appropriate RFP DFAR clauses
• Compliance with Validation requires
• Reference to an Advance Agreement and a copy of
  the approved EVM system description or
• A plan to obtain EVM validation to include how
  the system will be validated.
• Compliance Only requires a written summary of
  the proposed EVMS reference in sufficient detail
  to show how it addresses all ANSI/EIA-748
  guidelines

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Section M - Evaluation Factors for Award

• Evaluation of the proposed EVMS is normally
  undertaken as part of the proposal evaluation
  process to determine the probability of the
  system meeting the guidelines.
• For Existing Systems - evaluation may consist of
  a confirmation that the referenced validation is
  accurate and current. The system should be
  currently in use, and surveillance should not
  have identified significant, uncorrected
  problems.
• For EVMS (without validation) - the EVM system
  description should be evaluated for completeness
  against the guidelines in ANSI/EIA-748.
• An on-site examination of a proposed EVMS should
  not normally be required during proposal
  evaluation. But if deficiencies are identified,
  written communications or an on-site visit may be
  required when approved by the Source Selection
  Board and Procuring Activity.
• DCMA should be requested to provide insight
  regarding EVMS capability, quality, and past
  performance.

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Work Breakdown Structure---CPR Format 1

• Gives contract type pricing arrangements
• Provides schedule and cost performance by WBS
• product -services-data
• Top contract level to lower detailed levels
• Contractor Budget EAC by WBS
• Cost of Money
• General Administrative (G A)
• Undistributed Budget (UB)
• Management Reserve (MR)

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Functional Categories---CPR Format 2

• Gives same contract, cost of money, GA, UB, MR
  and contract total budget LRE info
• Costs are broken out by contractors functional
  organization (Vs. WBS)
• Provides schedule and cost performance status by
  organizational element where is problem
  occurring, e.g.,
• Engineering
• Manufacturing
• Subcontracts
• Best place to look at subcontract status
• Useful to compare with man-loading status of
  Format 4

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Baseline---CPR Format 3

• Gives summary contract cost change history
• Gives summary contract schedule dates
• Gives contract budget plan
• total to date
• amount this month
• the remaining budget by month for 6 months as
  government specified to contract completion
• at the beginning then the end of the month
• Important to note changes
• number, amount and location
• during month, next 6 months and far term
• Used to indicate ability to meet schedule plan

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Manpower Loading/Staffing---CPR Format 4

• Uses same Format 2 functional organization
  reporting elements except for subcontracts.
• Uses same Format 3 reporting time periods
• Facilitates comparison of cost schedule plan
  performance with manpower loading plan
  performance
• Useful for identifying manpower hiring shortfalls
  and growth
• Useful for projection for manpower requirements

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Problem Analysis/Explanations---CPR Format 5

• Gives contractors summary contract status
• Gives explanation of variances
• Where
• How much
• What happened
• The solution
• Impact
• schedule
• cost
• technical
• Other analysis
• Over Target Baseline (OTB)

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Earned Value Management (EVM) Basics