ﬁghting ﬁre - PMI Baltimore Chapterpmibaltimore.org/pmi/events/attachments/20110210-Aberdeen... · Sam Phillips Devised the Minuteman Contractor Performance Measurement System

Copyright 2011 HotFoot Technology & Management Solutions™, LLC. All Rights Reserved.

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EVMS: Look at It as More Than Just a Requirement

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Preamble

•! Audience Demographic Assumptions –! Employees & Owners of Private Commercial Companies & Consulting Firms

–! Government Employees / Agents

–! Mid-to-Executive Level Professionals

–! Knowledge of EVMS: Wide Ranging

•! Terminologies: Tonight’s Definition of EVMS Includes: –! Program, Planning & Control (PP&C)

–! Program / Project Management / Project Management O!ce (PMO)

–! Cost / Financial Analysis

–! Integrated Master Schedule (IMS)

–! Risk Management / Mitigation

•! Tonight’s Discussion –! Educate

–! Inject Some Humor (try anyway)

–! 10 Min’s Q&A at Conclusion: Please Hold Your Thoughts & Questions until the End

–! This Presentation Will Be Available on LinkedIn and HotFoot Website on Friday (02/11/2011)

!"


Discussion Topics

•! Level-Set ……………………………….. 15 Min –! What is EVMS? –! Where & Who Uses It? –! Who Enforces It? –! Watch for CARs

•! Another Perspective …………..…….. 35 Min –! What’s All the Hubbub About? –! What’s Really Being Provided? –! Putting it All Together

•! Q&A / Open Discussion ………...….. 10 Min

#"


EVMS

Level-Set Origins & History

Quick Overview Levels / Tiers

The Infamous ‘32’ …Don’t Practice EVM Without It


Level-Set

•! Audience Participation:

–! One Sentence That Describes Your Perspective or Understanding of (actual) EVMS

•! Consider EVMS & It’s Application from these Perspectives: –! Sales & Marketing –! Engineering –! Research & Development –! Supply Chain & Procurement –! Business Operations –! Financial Operations –! Infrastructure –! Project / Program Management

•! Look at EVMS as a Business Development Tool & Practice

–! Doesn’t Matter if You’re

•! One-Person Band (…politically correct) •! Professional Services Company– Any Size

•! Manufacturer or Systems Integrator $"


1968: Brig. Gen. Sam Phillips,

Minuteman Project Director –

briefing Co. Gov. John Love

EVMS: Origins & History

•! Late 1960’s: Driven by Cost & Schedule Overruns in Notable C-5A Galaxy, F-111 Bomber, Minuteman Missile Programs …

–! Brig. Gen. Sam Phillips Devised the Minuteman Contractor Performance Measurement System (MCPM)

–! MCPM Embodied EV Performance Principles But Had Very Rigid & Costly Guidelines for Contractors

–! Dec. 22 US DoD Introduced DOD 7000.2 Instruction Called “Performance Measurement for Selected Acquisitions”

–! DOD 7000.2 Used 35 “Cost/Schedule Control Systems Criteria (C/SCSC) or “C-Spec”

•! 1990’s: C/SCSC While Successful Did Not Address “Good Value” for Government Purchased Items ($4,000 Hammer)

•! 1996: DOD Issued 5000 Series Directives Focusing on Total System Acquisition Process, E"ective Integration of Systems, Best Value & Formation of IPT’s

•! Late 1950’s: First Systematic Attempt to Plan Projects & Control Progress

–! Critical Path Methods (CPM) and Program Evaluation & Review Technique (PERT) by Means of New Computer Technology

•! 1962: DoD & NASA First to Impose PERT/COST System to Major Contractors

–! PERT/COST Applied Cost Rates to Hours & Durations for Project Activities Thus ‘Earned Value’ Term First Appeared

•! 1965: PERT/COST Method Was Dead Due to Cumbersome Three-Estimate Methodologies

•! Industry Still Used CPM Method Due Simplicity and Did Not Require Three-Estimate Method found in PERT

%"


EVMS Overview

•! Earned Value Management System (EVMS) Reflects How Well a Program is “Performing” Compared to the Original Plan or Baseline;

–! Measures Cost vs. Schedule vs. Technical Delivery

•! EVMS Measures the Amount of Actual Work Performed on a Program

•! Forecasts Program’s Cost & Completion Date Using Historical & Statistical Projections

•! EVMS is Required on Federally Funded Programs with Varying Requirements Based on Program Funding Levels

•! Depending on the Size of the Program – up to 32 EVM Criteria Maybe Required to Employ

•! Once Properly Obtained EVM Data Forecasts How Well the Program Will Perform in the Future & Provides for “Early Warning” or Alarm

&"


EVMS: Implementation Levels

Level 1 – Starting Point: • Defined as a starting point for EVM • Limited or no EVM practices implemented on-site or Program

Level 2 – Narrow or Localized (“EVM Lite”): • Simplified EVM implementation • Less than fully compliant with ANSI 748 • May be su!cient for smaller projects • May meet organizational needs – negotiable with customers • Consistent with a modest investment in EVMS • Provides valuable project insight

Level 3 – ANSI/EIA 748 compliant: • ANSI/EIA 748 compliant implementation • EVMS training program • Earned Value Process Group (EVPG) (i.e. PMO, Business Operations) • EVMS organization repository • Organizational policy (System Description)

Level 4 – Quality Measurements: • Measures the quality of EVM data • Adjusts EV data per a technical baseline and variance • Applies EVMS health metrics to measure program and EV quality

Level 5 – Optimization: • Planning and tracking improvement to the EV System • Prevention of defect is proactively planned • Defect causes are determined, prioritized, and reduced

TIER 3 3 2 1 1

LEVEL 1 2 3 4 5

Organization X X X X

Planning, Scheduling, Budgeting X X X X

Accounting X X X X

Analysis And Reporting X X X X

Revisions And Data Maintenance X X X X

Process Metrics X X

Process Improvement X

'"


EVMS Implementation Criteria

!

Examples of EVMS Applied to

Contract Types

•! Cost Plus Award Fee (CPAF) •! Cost-Plus-A-Fixed-Fee (CPFF)

•! Firm-Fixed Price (FFP)* •! Firm-Fixed Price Incentive (FFIP)*

•! Firm-Fixed-Price (FFP), Level-Of-Effort*

* EVM policy applies to all cost or incentive type contracts, subcontracts, intra-

government work agreements, and other agreements valued at or greater than $20

million.

* By FAR definition a fixed price (non-incentivized) contract does not require

EVM, but DCMA is requiring on more FFP & LOE contracts.

TIER 3 3 2 1 1

LEVEL 1 2 3 4 5



Accounting X X X X



Process Metrics X X


("


The Infamous ‘32’

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TIER 3 3 2 1 1

LEVEL 1 2 3 4 5



Accounting X X X X



Process Metrics X X


<="


The EVMS Gold Card Don’t Practice EVM Without It.

Earned Value Management ‘Gold Card’

VARIANCES Favorable is Positive, Unfavorable is Negative

Cost Variance CV = BCWP – ACWP CV % = (CV / BCWP) *100 Schedule Variance SV = BCWP – BCWS SV % = (SV / BCWS) * 100 Variance at Completion VAC = BAC – EAC

PERFORMANCE INDICES Favorable is > 1.0, Unfavorable is < 1.0

Cost Efficiency CPI = BCWP / ACWP Schedule Efficiency SPI = BCWP / BCWS

OVERALL STATUS

% Schedule = (BCWSCUM / BAC) * 100 % Complete = (BCWPCUM / BAC) * 100 % Spent = (ACWPCUM / BAC) * 100

ESTIMATE AT COMPLETION #

EAC = Actuals to Date + [(Remaining Work) / (Efficiency Factor)]

EACCPI = ACWPCUM + [(BAC – BCWPCUM) / CPICUM ] = BAC / CPICUM EACComposite = ACWPCUM + [(BAC – BCWPCUM) / (CPICUM * SPICUM)]

TO COMPLETE PERFORMANCE INDEX (TCPI) # §

TCPIEAC = Work Remaining / Cost Remaining = (BAC – BCWPCUM) / (EAC – ACWPCUM)

# To Determine a Contract Level TCPI or EAC; You May Replace BAC with TAB

§ To Determine the TCPI BAC,LRE Replace EAC with either BAC or LRE

Management Reserve

Cost Variance

Schedule Variance

ACWP

BCWP

BCWS

$

EAC

Time Now

Completion Date

PMB

TAB

BAC

time

EVM Home Page = https://acc.dau.mil/evm

Management

Reserve

Work Packages Planning Packages

OVERRUN AUW

Control

Accounts

NCC

Undistributed

Budget

OTB CBB TAB Profit / Fees

PMB Summary Level

Planning Packages

Contract Price

Modified from the Defense Acquisition

University (DAU) Gold Card

<<"


EVMS

Where & Who Uses It The Enforcers

Watch Out for CARs


Industries, Disciplines & Vocations Using EVMS

•! Manufacturing

•! Marketing & Sales

•! New Product Development

•! Oil, Gas & Petrochemical

•! Pharmaceutical

•! Procurement / Supply Chain

•! Program Management Office (PMO)

•! Quality Project Management (QPM)

•! Risk Management

•! Software Development

•! Space / Satellite Systems

•! Systems Engineering

•! Telecommunications

•! Transportation

•! Urban Development & Planning

•! Utilities

•! Web Development

•! Weapon Systems

•! Aerospace & Defense

•! Automation Systems

•! Automotive

•! Biotech

•! CECOM/C4ISR

•! Chemical

•! Configuration Management

•! Construction / Remediation

•! Contract Management

•! Education & Training

•! Energy: Nuclear, Clean

•! Environmental Management

•! Financial Services

•! Government

•! Healthcare / Hospitals

•! Hospitality Management

•! Human Resources

•! Information Systems / Information Technology

<#"


The EVMS Enforcers

•! For State & Federally Funded Programs EVMS is Governed / Guided by:

–! O!ce of Management and Budget (OMB): Circular A-11 Part 7 for Major Investment

•! For non-military Government agencies contracting for a major systems or acquisitions requiring special management focus due to its importance to the mission or function of the agency;

•! For financial management and which obligates more than $500,000 annually;

•! Has significant program or policy implications; has high executive visibility; has high development, operating, or maintenance costs;

•! Is funded through other than direct appropriations; or is defined as major by the agency’s capital planning and investment control process.

–! Federal Acquisition Regulation (FAR)

•! Subpart#34.2—Earned Value Management System

–! Defense Federal Acquisition Regulation Supplement (DFARS)

•! Notice of Earned Value Management System (MAR 2005), DFARS 252.242-7001 & 252.242-7002

–! Defense Contract Management Agency (DCMA):

•! The Department of Defense (DoD) component that works directly with Defense suppliers to help ensure that DoD, Federal, and allied government supplies and services are delivered on time, at projected cost, and meet all performance requirements.

<>"


Watch Out for CARs

•! Corrective Action Requests (CAR) are issued by DCMA due to contractual requirement infractions impacting cost, schedule & delivery of item being produced for Government; on-time delivery is <90%, Contractor is non-responsive

•! Contractual Noncompliance: Uncovered via an Integrated Baseline Review (IBR), Joint Surveillance (JV) or Integrated Validation Review (IVR)

!! CAR Level 1 (minor items to fix):

!! Contractual noncompliance

!! Requires no special attention

!! Directed to working level personnel

!! May be verbal or written

!! CAR Level 2 (not good, but recoverable):

!! Written request

!! Systemic non-compliances

!! Directed to contractor management responsible for the process

!! Inform CAT of issuance

!! CAR Level 3 (this is bad):

!! Serious non-compliances to contractor top management

!! Government may pursue contractual remedies (i.e. reductions of progress payments, cost disallowances, cure notices, show cause letters, or business management systems disapprovals, etc)

!! Coordination with DCMA Commanding Officer prior to issuance

!! Issued by team leader or above

!! Copy buying activity & cognizant Government office at prime as applicable

!! Contractor immediately placed on the Contractor Alert List (CAL) until CARs are verified and officially closed out

Uhhh, no.

!! CAR Level 4 (this is really bad):

!! Involve contractual remedies (i.e. suspension of progress payments or product acceptance activities, termination for default, and suspension or debarment, in accordance with applicable FAR/DFARS policies and procedures)

!! Must be issued by ACO, countersigned by team chief or above

!! Copy of CAR and all correspondence to buying activities

!! Proper coordination between CAOs, Districts, HQ, customers and other affected Government activities before issuance

!! Assure all resolution efforts are in concert

!! Contractor immediately placed on the CAL until CARs are verified & officially closed

<$"


EVMS

What’s All the Hubbub About? What’s Really Being Provided?

What Other Enterprise Organizations Benefit from EVMS? Putting it All Together


What’s All the Hubbub About?

•! December 2010: OMB ordered Pentagon to cut its budget by $90 billion over the next five years, beginning with a $12 billion cut in fiscal 2012

•! Pentagon's fiscal 2011 budget plan called for a spending of $549 billion in 2011, growing to $566 billion in 2012, excluding war spending

•! Major Programs: Slashed or Chopped

–! Large, Highly Visible Programs Not Achieving Cost & Schedule Control

•! U.S. Customs and Border Protection (CBP) Secure Border Initiative Network (SBInet) •! Expeditionary Fighting Vehicle (EFV) •! Joint Strike Fighter (JSF) program

•! Shipbuilding Yard - Newport News VA •! Surface-launched advanced medium-range air-to-air missile (SLAMRAAM ) and Non-Line of Sight (NLOS)

•! Major Contracts Awarded and Soon Awarded

–! FAA: Se2020 –! DHS: EAGLE II

–! NIH: CIO-SP3 –! ARMY CECOM / C4ISR: WEBS

•! EVMS Has Something in Common With Everything on This Page

–! Cost & Schedule Control (or in some cases - the lack thereof)

<&"


What’s Really Being Provided?

Audience Participation Time…

Question: Assuming EVMS is implemented correctly, what things are really being provided or being facilitated when we talk about major government programs, EVMS and the control of programs?

<'"



•! A Common Language for All Stakeholders

–! From the IMS Scheduler to Pentagon / POTUS’s Desk

•! Direct Correlation to:

–! Capability Maturity Model Integration (CMMI)

–! Systems Engineering

–! R&D

–! Supply Chain & Procurement

–! Sarbanes-Oxley (SOX) Compliance

•! Capability to Manage Business & Programs

–! Tools for Proactive Decision-Making

–! Sta!ng & Materials Level

–! Development of New Programs

–! Deletion of Redundant Ones

•! Result: Tremendous Business & Program Management Value

<("



•! Considering the High Value of EVMS Practice

–! Deem EVMS as a Business Development & Marketing ‘Practice’

•! Consider:

–! How Many Program Budgets & Programs Could Have Been Saved If EVMS Best Practices Were In Place from the Start or Adhered To?

–! Is Your EVMS ‘Practice’ Sound & Reliable?

–! If You Could Furnish Value-Added Performance Data without Overburdening Yourself – Do You Think Your Customer Appreciate it?

–! Can You Assert EVMS Competency to Internal & External Customers?

•! Business & Program Control REGARLESS of Size

•! Businesses with No EVMS Practice or Requirement:

–! Start Now with 3 to 10 Criteria Depending on Complexity of Deliverable

!="


Putting it All Together

RFP / Program / Product Development

Synergy.

!<"


Business Development

Program Management

EVM / PP&C / S

EMP

EVM / PP&C / S

EMP

EVM / PP&C / S

EMP

Engineering



Putting All Together

•! Consider Stakeholder Keywords

–! Trust, Competent/Competency, Reliable, Consistent, Organized, Proactive, Cost E"ective, Repeatable, Traceable, Transparent

–! Consider the Opposites …

•! Develop EVMS Practice;

–! Regardless of Project or Program Size: (Appropriately Proportionate)

–! Training: Administrative Assts to Plasma Engineer to CEO

–! Be the ‘Bad Guy’ in a Good Way

•! Stay on the Right Side of the Issue or Program Goal

•! Measure & Balance Risks

•! Consider: If Your Practice Provided Sound Proactive EVMS Data…

!!"



•! Project What Your Customer’s & Stakeholder's Confidence in… –! Information Provided

–! Ability to Execute Technical Deliveries

–! Ability to Plan & Control Cost & Schedule

–! Develop Achievable Work Around Plans

–! Agile Ebb, Flow & Adjustment to Known Unknowns •! 50,000 Foot View:

–! Your Company Known as Reliable Trusted Ally

–! Tackle Tough Problems Head-On

–! Ward O" Potential Program Budget Cuts or Worse

–! Avoiding CAR’s: •! Lost Productivity, Labor Hours, Legal Costs

•! Potentially High Fines & Loss of Program

•! If All this (and more) Is Good; Why Isn’t EVM Implemented or Practiced…?

!#"


Program Management

EVM / PP&C / S

EMP

EVM / PP&C / S

EMP

EVM / PP&C / S

EMP

Engineering





•! If All this (and more) Is Good; Why Isn’t EVM Implemented or Practiced…?

–! Common Answers: •! Cost: Too Expensive to Implement and Administer

–! Tools, Personnel, Training

•! Too Complicated: Don’t Know Where to Start

•! Not Required;

–! Doesn’t Meet Funding Thresholds

–! Contract Type: FFP, Labor-Hour, LOE

•! Company is Too Small to Worry About it

•! We’re Professional Services Firm – Don’t Need It

•! We’re a Non-Profit Firm – Don’t Need It

•! We’re Research & Development Firm – Don’t Need It

•! About 100 More…

–! Consider This: •! Doesn’t Have To Be Expensive or Overly Complicated

•! Your Company Provides Solutions – Doesn’t EVMS Provide a Fundamental Solution?

•! EVMS is Di"erentiator Over Your Competition

•! Get Better Control Over Your Own Projects, Cost, Schedule and Profit & Loss

•! Outsource EVMS Competency to Build/Mentor Internal Team

!>"


Program Management

EVM / PP&C / S

EMP

EVM / PP&C / S

EMP

EVM / PP&C / S

EMP

Engineering




EVMS

Q&A


fire

fighting fire with

EVMS: Look at It as More Than Just a Requirement

!"#$%#&'()*+,)

Thank You For Your Time

&

Consideration =/%2):&/>?0$@A)=/%2'&A)

3$2#$)502>;'..4)B5B)

B&'%0('$2)

!!!"#$%&$$%'"($)*

+,)-.#$%&$$%'"($)*

/0112*33145675*

Documents

ﬁghting ﬁre - PMI Baltimore Chapterpmibaltimore.org/pmi/events/attachments/20110210-Aberdeen... · Sam Phillips Devised the Minuteman Contractor Performance Measurement System