Unanet & Earned Value Management White Paper

Unanet and
Earned Value Management Systems
(EVMS) Compliance
Version 1.4
October 2010

Unanet Technologies
45240 Business Court, Suite 300, Sterling, VA 20166
P (703) 689-9440 F (703) 689-9450
www.unanet.com
Unanet Overview
Unanet web-based software helps organizations manage people and projects for improved profitability, project
performance, compliance to government regulations and reduced costs. For example, Unanet customers have
reduced timesheet and expense report processing costs by 90%. Beyond tactical improvements in efficiency,
Unanet real time project reporting drives key decisions faster, improving effectiveness. Unanet software is
categorized in the PSA (Professional Services Automation) and PPM (Project Portfolio Management) software
industry.
Unanet and Earned Value Management
Earned Value Management (EVM) is a project management methodology that effectively integrates the project
scope of work with schedule and cost elements for optimum project planning and control. The qualities and
operating characteristics of earned value management systems are described in American National Standards
Institute (ANSI)/Electronic Industries Alliance (EIA) Standard–748, Earned Value Management Systems,
approved May 1998 and reaffirmed in August 2002 and June 2007 (ANSI 748-B).
The key concept in EVM is combining measurement of technical performance (the accomplishment of planned
work) with schedule performance (is the project behind/ahead of schedule), and cost performance (is the
project under/over budget). Without all three data points, it is impossible to tell if a project is on track to deliver
the required scope within the schedule and budget goals.
But adopting EVM in a practical and efficient way presents challenges for many government contractors, as
while earned value management is a well established approach on Department of Defense systems projects
tracing back to 1967, information technology and systems projects of all sizes have much less experience in
adopting formal EVM systems. Consequently, IT professionals and contractors working with Civilian Agencies
are often less familiar with implementation issues than their peers in the defense sector.
The ANSI/EIA 748 Standard identifies 32 criteria that should be complied with, grouped into five major
categories:
• Organization of the project (five criteria)
• Planning, scheduling and budgeting (ten criteria)
• Accounting considerations (six criteria)
• Analysis and Management Reports (six criteria)
• Revisions and Data Maintenance (five criteria)
In meeting these 32 criteria, an Earned Value Management System (EVMS) provides a structured set of
management practices to establish a performance measurement baseline for a project, and then to measure
and analyze achievement. The combination of comprehensive planning, disciplined maintenance of the baseline,
and earned value analysis provides greater visibility into program performance. This not only helps ensure
compliance with contract requirements, but also enables the contractor to have a much improved ability to take
corrective action, and forecast project costs at completion based on performance to date.
A formal EVMS is clearly more than a piece of software, and requires documented procedures, training and
ongoing process surveillance. However, appropriate automation can greatly reduce the effort of complying with
the EVMS criteria and provide real project insight. The challenge is how to implement a system that supports
these criteria with minimum overhead and which is appropriate for small and medium sized IT projects, while
avoiding duplication of data, systems, and existing effort in project reporting and project accounting.
The remainder of this document describes how Unanet, where appropriate, supports the 32 EVMS Criteria and
eliminates the need for additional and costly specialized software.
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Unanet Technologies
45240 Business Court, Suite 300, Sterling, VA 20166
P (703) 689-9440 F (703) 689-9450
www.unanet.com
Organization of the Project
EVMS Criteria 1: Define the authorized work elements for the program. A work breakdown structure (WBS),
tailored for effective internal management control, is commonly used in this process.
Unanet provides for unlimited tasks and subtasks in a hierarchical Work Breakdown Structure under each
project. Task level time or expense reporting can be required if needed.
EVMS Criteria 2: Identify the program organizational structure, including major subcontractors responsible for
accomplishing the authorized work, and define the organizational elements in which work will be planned and
controlled.
Unanet provides organization-level management through Assignments. All tasks associated with a particular
project can be assigned to specific people. Each person in the system is also assigned to particular “Home
Organization.” Expenses can be reported on by project or by person organization. Reports can be generated at
the Project Organization or Person Organization level to track actual versus budget data at both the project and
task level.
EVMS Criteria 3: Provide for the integration of the company’s planning, scheduling, budgeting, work
authorization and cost accumulation processes with each other, and as appropriate, the program WBS and the
program organizational structure.
When utilizing Unanet Project Portfolio (the full Unanet suite), you have the ability to use the Planning module
to plan and forecast future work, then convert a plan to an assignment (budget) when the project is won.
Reporting at both the Project and Organization level provides a real time view into project performance, at
summary, detailed and on a periodic basis. All data resides in a single database and the data model is
published, so reporting requirements that fall outside the scope of the Unanet-provided reports can be
accomplished with any common database reporting tool.
EVMS Criteria 4: Identify the company organization or function responsible for controlling overhead (indirect
costs).
Unanet allows all indirect (and direct) work to be tracked with associated responsible organizations and
projects. Only approved or authorized personnel can record hours to each project or task.
EVMS Criteria 5: Provide for integration of the program work breakdown structure and the program
organizational structure in a manner that permits cost and schedule performance measurement by elements of
either or both structures as needed.
Unanet provides a detailed Work Breakdown structure with an associated responsible organization for all work,
with comprehensive reporting on budgets, plans and actual hours and costs.
Planning, Scheduling and Budgeting
EVMS Criteria 6: Schedule the authorized work in a manner which describes the sequence of work and identifies
the significant task interdependencies required to meet the requirements of the program.
Task scheduling provides for enforceable beginning and end dates. Unanet allows for an unlimited number of
tasks and subtasks. Unanet allows dependencies between tasks to be defined and thus the logical sequences of
tasks and their associated begin and end dates can be calculated. Unanet also integrates with Microsoft Project
and doing so allows you to use the task dependency and critical path analysis features of Microsoft Project while
maintaining a real time view of project performance in Unanet.
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Unanet Technologies
45240 Business Court, Suite 300, Sterling, VA 20166
P (703) 689-9440 F (703) 689-9450
www.unanet.com
EVMS Criteria 7: Identify physical products, milestones, technical performance goals or other indicators that will
be used to measure progress.
Unanet allows project managers to manually set percent complete figures based on milestones or performance
measures that may be outside the scope of billable hours and expense management. Unanet can also
objectively calculate percent complete based on hours charged or budget consumed to date. Unanet also
provides User Defined Fields which can hold other objective methods for determining project and task status.
EVMS Criteria 8: Establish and maintain a time-phased budget baseline, at the control account level, against
which program performance can be measured.
Initial budgets established for performance measurement will be based on either internal management goals or
the external customer-negotiated target cost, including estimates for authorized but undefinitized work.
Budget for far-term efforts may be held in higher level accounts until an appropriate time for allocation at the
control account level. On government contracts, if an over-target baseline is used for performance
measurement reporting purposes; prior notification must be provided to the customer.
In Unanet, the project manager can set the initial PMB based on project guidelines and budgets. Project
forecasts that served as the basis of the estimate can be easily converted into a project plan with WBS and task
assignments.
Unanet can capture all costs via the Unanet user interface or through automated imports Typically, all direct
labor and direct expense costs are captured via the Unanet user interface. Other Direct Costs (ODC) can be
entered through the Unanet expense report user interface or imported automatically from an accounting
system.
Project Managers can also set up automatic notifications based on a variety of factors related to percent
complete, budget consumption, etc.
EVMS Criteria 9: Establish budgets for authorized work with identification of significant cost elements (labor,
material, etc.) as needed for internal management and for control of subcontractors.
Unanet applies controls so that staff can record effort or expense only against approved items, and separates
labor and other expense costs.
EVMS Criteria 10: To the extent it is practical to identify the authorized work in discrete work packages,
establish budgets for this work in terms of dollars, hours, or other measurable units. Where the entire control
account is not subdivided into work packages, identify the far term effort in larger planning packages for budget
and scheduling purposes.
Unanet allows the creation and authorization of detailed Work Breakdown Structures with budgets in hours or
dollars, supporting the level of detail required for effective management of the project. Both budgeted amounts
and dates can be used to constrain when charges are made against a project or task by an individual.
EVMS Criteria 11: Provide that the sum of all work package budgets plus planning package budgets within a
control account equals the control account budget.
Unanet supports summarization of budget hours and costs from detail levels for comparison with summary or
project-level budgets.
EVMS Criteria 12: Identify and control level of effort activity by time-phased budgets established for this
purpose. Only that effort which is unmeasurable or for which measurement is impractical may be classified as
level of effort.
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Unanet Technologies
45240 Business Court, Suite 300, Sterling, VA 20166
P (703) 689-9440 F (703) 689-9450
www.unanet.com
Unanet provides a time-phased detailed WBS with associated hours and budgets. Level of effort activities where
budgets are spread across the duration of the project are also supported.
EVMS Criteria 13: Establish overhead budgets for each significant organizational component of the company for
expenses which will become indirect costs. Reflect in the program budgets, at the appropriate level, the
amounts in overhead pools that are planned to be allocated to the program as indirect costs.
Unanet supports burdening of projects costs by applying indirect rates using target, provisional and actual
rates. Multiple costs structures are supported. Various reports are provided, including actuals and forecasting
future costs based on staffing, to show in detail how overhead costs are applied to projects to give total costs.
EVMS Criteria 14: Identify management reserves and undistributed budget.
Unanet provides a number of flexible mechanisms at the project level for recording data such as management
reserve (MR) and undistributed budget (UB), via User Defined Fields and Project Notes.
EVMS Criteria 15: Provide that the program target cost goal is reconciled with the sum of all internal program
budgets and management reserves.
Unanet provides various reports which rollup budget hours and costs from detailed to project and other
summary levels for comparison with target costs.
Accounting Considerations
EVM Intent Guideline 16: Record direct costs in a manner consistent with the budgets in a formal system
controlled by the general books of account.
Unanet will be your system of record for time, and for time adjustments. Your accounting systems remains your
system of record for project accounting data as the time details flow into the accounting system. Unanet
integrates with all leading accounting systems.
EVM Intent Guideline 17: When a work breakdown structure is used, summarize direct costs from control
accounts into the work breakdown structure without allocation of a single control account to two or more work
breakdown structure elements.
Unanet allows budgeting and actual tracking at the lowest level of detail required, so that this issue does not
occur. Information can be rolled up by the WBS for summary reporting.
EVM Intent Guideline 18: Summarize direct costs from the control accounts into the contractor's organizational
elements without allocation of a single control account to two or more organizational elements.
Unanet allows direct costs from the accounting system to be applied at the same level as budgets within
Unanet. Information can be rolled up by the WBS for summary reporting.
EVM Intent Guideline 19: Record all indirect costs which will be allocated to the contract.
Unanet provides a set of summary and detailed project reports which calculate and display indirect costs to be
applied to a project. Indirect costs can be calculated using three different rate types; target, provisional and
actual.
EVM Intent Guideline 20: Identify unit costs, equivalent units costs, or lot costs when needed.
Unanet provides flexible and powerful integration facilities with leading accounting systems. Where unit cost or
lot cost data needs to be stored in Unanet, there are a number of User Defined Fields that can support this.
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Unanet Technologies
45240 Business Court, Suite 300, Sterling, VA 20166
P (703) 689-9440 F (703) 689-9450
www.unanet.com
EVM Intent Guideline 21: For EVMS, the material accounting system will provide for:
21.1: Accurate cost accumulation and assignment of costs to control accounts in a manner consistent with the
budgets using recognized, acceptable, costing techniques.
21.2: Cost performance measurement at the point in time most suitable for the category of material involved,
but no earlier than the time of progress payments or actual receipt of material.
21.3: Full accountability of all material purchased for the program including the residual inventory
This functionality would typically be provided by the accounting system. Material costs recorded in Unanet can
be exported to the accounting system through automated interfaces. Similarly, actual material costs can be
imported into Unanet and applied at the appropriate level for comparison with budget data.
Analysis and Management Reports
EVM Intent Guideline 22: At least on a monthly basis, generate the following information at the control account
and other levels as necessary for management control using actual cost data from, or reconcilable with, the
accounting system:
a) Comparison of the amount of planned budget and the amount of budget earned for work accomplished
– SCHEDULE VARIANCE
b) Comparison of the amount of the budget earned and the actual (applied where appropriate) directs
costs for the same work. – COST VARIANCE
Unanet calculates and reports Budgeted Cost of Work Scheduled, Budgeted Cost of Work Performed, Actual
Cost of Work Performed, Schedule and Cost Variance, Schedule and Cost Variance Percentage, Schedule and
Cost Performance Indices, Budget At Complete, Estimate at Complete and Variance at Complete. This data can
be calculated for a user-specified ‘current period’ and also cumulatively for the life of the project.
EVM Intent Guideline 23: Identify, at least monthly, the significant differences between both planned and actual
schedule performance and planned and actual cost performance, and provide the reasons for the variances in
the detail needed by program management.
Unanet provides reports detailing schedule and cost performance variance and indices, and allows project
managers to document reasons for variances as required, based on needs and thresholds established by
program management. Specific thresholds for cost and schedule variances, and variance at complete, can be
specified in reporting so that those items requiring management attention are easily identified.
EVM Intent Guideline 24: Identify budgeted and applied (or actual) indirect costs at the level and frequency
needed by management for effective control, along with the reasons for any significant variances.
Unanet provides a suite of summary and detailed reports showing budgeted and actual indirect costs. Indirect
costs can be calculated using target, provisional or actual burden rates. Unanet provides facilities for recording
Notes where reasons for variances can be documented.
EVM Intent Guideline 25: Summarize the data elements and associated variances through the program
organization and/or work breakdown structure to support management needs and any customer reporting
specified in the contract.
In Unanet, budget, actual and earned value data are held at the detail level. This information can be
summarized to any level of the WBS, and variances used for analysis and problem resolution.
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Unanet Technologies
45240 Business Court, Suite 300, Sterling, VA 20166
P (703) 689-9440 F (703) 689-9450
www.unanet.com
EVM Intent Guideline 26: Implement managerial actions taken as the result of earned value information.
In Unanet, action items with associated responsibilities can be recorded in the Project Notes facility, and tracked
to completion and adequate resolution. Unanet provides relevant managers with real-time access to project
performance data that allows them to identify variances.
EVM Intent Guideline 27: Develop revised estimates of cost at completion based on performance to date,
commitment values for material, and estimates of future conditions. Compare this information with the
performance measurement baseline to identify variances at completion important to company management and
any applicable customer reporting requirements including statements of funding requirements.
Unanet provides this data in real-time. Projects Managers can see estimates to completion on a constant basis,
and are better able to manage the project to on time / on budget completion because they have access in realtime
to the direct costs related to their projects. Indirect costs can be calculated and displayed as required
based on target, provisional or actual burden rates to provide a complete picture of project status.
Revisions and Data Maintenance
EVM Intent Guideline 28: Incorporate authorized changes in a timely manner, recording the effects in budget
and schedules. In the directed effort prior to negotiation of a change, base such revisions on the amount
estimated and budgeted to the program organizations.
Unanet captures budget and schedule changes in the audit trail and also via a user-generated snapshot with a
specified effective date. Further, the real-time view for project managers provides the earliest possible
recognition of potential problems and thus the best opportunity to mitigate those problems before they threaten
the project schedule.
EVM Intent Guideline 29: Reconcile current budgets to prior budgets in terms of changes to the authorized work
and internal replanning in the detail needed by management for effective control.
Unanet allows ‘snapshots’ to be recorded of both project and task budgets, and percent complete, as required
by the project manager. Unanet’s audit trail capabilities enable management to achieve this level of control.
Furthermore, original plans and budgets can be compared.
EVM Intent Guideline 30: Control retroactive changes to records pertaining to work performed that would
change previously reported amounts for actual costs, earned value, or budgets. Adjustments should be made
only for correction of errors, routine accounting adjustments, effects of customer or management directed
changes, or to improve the baseline integrity and accuracy of performance measurement data.
Unanet provides control over historical adjustments and can enforce recording of reasons for changes made. A
detailed audit trail is recorded of any authorized changes made, in full compliance with DCAA timekeeping
requirements.
EVM Intent Guideline 31: Prevent revisions to the program budget except for authorized changes.
Unanet provides comprehensive security access control including project and organization-level access, roles
that control access, and an audit functionality.
EVM Intent Guideline 32: Document changes to the performance measurement baseline.
Unanet provides facilities for recording Notes against a project to support those changes recorded by the Audit
functionality that require annotation and explanation.
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