Presentation - Unanet Technologies
Presentation - Unanet Technologies
Presentation - Unanet Technologies
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Earned Value Management Made Simple<br />
October 28, 2011<br />
Frances B. Craig, Founder and CEO, <strong>Unanet</strong> <strong>Technologies</strong><br />
www.unanet.com<br />
Anthony Bone, Managing Director/Senior Consultant, Lexem Strategy LLC<br />
www.lexemstrategy.com<br />
Copyright © 2008 <strong>Unanet</strong> <strong>Technologies</strong><br />
1
� Objectives<br />
Objectives<br />
� What contractors need to know about EVMS, how to respond to RFPs,<br />
and how to comply with contract requirements<br />
� When EVMS is appropriate to service type contracts<br />
� Earned Value – not just as a Federal contract requirement, but as a<br />
capability for your organization<br />
� New directions in Civilian Agencies such as Agile Development and<br />
EVM<br />
2
� EVM Introduction<br />
� Practical Implementation Scenarios<br />
� Q&A<br />
Agenda<br />
3
Why is Earned Value of interest?<br />
� As a project management “best practice”<br />
� Provide visibility into project status taking both cost &<br />
schedule into account<br />
� Demonstrate value to stakeholders<br />
� Federal Government requires it on an increasing<br />
number of projects<br />
� OMB Circular A-11 Part 7 and FAR updates require its<br />
use on certain system acquisition projects<br />
4
Government Contractors<br />
EVMS requirement<br />
� DoD recommends a project value threshold of $20M below which a full EVMS does not<br />
need to be used. Projects between $20M and $50M must use EVMS and above $50M<br />
the EVMS must be formally validated.<br />
� Office of Management and Budget (OMB) said that EVMS should be used on “All new<br />
major IT projects, ongoing major IT developmental projects, and high risk projects.”<br />
� OMB decided to leave thresholds to the discretion of the agencies<br />
� “EVMS application should be based on the particular agency facts and circumstances rather<br />
than specifying a threshold in the FAR. In accordance with OMB Circular A-11, Part 7, agencies<br />
have the authority to establish dollar thresholds and EVMS applicability criteria.”<br />
� NASA has adopted the same $20M / $50M thresholds as the DoD. Other agencies have<br />
specified the following:<br />
GSA and DOE: $20M<br />
FAA: $10M<br />
EPA: $5M<br />
DoT: $6M<br />
DoEd: $6M with a ‘lighter’ version
What is Earned Value?<br />
� “Earned Value” is the value of completed work<br />
expressed in terms of the budget allocated to<br />
perform that work.<br />
� A management tool to integrate the work scope<br />
of a program with the schedule and cost elements<br />
for optimum program planning and control.<br />
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Introduction to<br />
Earned Value (1)<br />
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� Create time-phased<br />
budgets: Budgeted Cost of<br />
Work Scheduled = PV<br />
� Collect Actuals<br />
� What does the comparison<br />
tell you?<br />
Introduction to<br />
Earned Value (1)<br />
8
Introduction to<br />
Earned Value (1)<br />
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Introduction to<br />
Earned Value (2)<br />
EV = Budgeted Cost of Work Performed<br />
Schedule Variance = EV - PV<br />
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Introduction to<br />
Earned Value (3)<br />
Cost Variance = EV – Actual Cost<br />
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Introduction to<br />
Earned Value (4)<br />
By viewing all three metrics in<br />
together, an integrated view<br />
of cost and schedule<br />
performance is obtained<br />
12
Basic calculations<br />
EVM Element Calculation<br />
Planned Value (PV) (Budgeted Cost) Based on PMB<br />
Earned Value (EV) (Performed Cost) Based on EVMS<br />
Actual Cost of Work Performed (AC) Based on EVMS<br />
Schedule Performance Index (SPI) EV/PV<br />
Schedule Variance (SV) EV-PV<br />
Cost Performance Index (CPI) EV/AC<br />
Cost Variance (CV) EV-AC<br />
Estimate at Completion (EAC) AC/% Complete<br />
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Work Breakdown Structure<br />
Define the work at the level of detail required<br />
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Work Breakdown Structure<br />
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The EVMS Standard<br />
Often known simply as ANSI 748<br />
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Some Other Relevant<br />
Government References<br />
� NEW: Interim Business Systems Rules DFARS 252.234-7002<br />
� NDIA & PMSC Earned Value Management Intent Guide<br />
� For each of the 32 guidelines, it provides: the value to<br />
management, an intent statement, typical attributes, and examples<br />
of objective evidence.<br />
� Google ‘NDIA EVMS intent guide’<br />
� OMB Circular A-11, Part 7 & OMB Memo M-05-23<br />
� June 28, 2010 – OMB 10-27 – Information for Federal IT dashboard<br />
� Federal Acquisition Regulations<br />
� Part 34.2 – Earned Value Management System<br />
� Part 52.234-4 – EVMS Compliance by CFA<br />
� Defense Acquisition University<br />
� https://acc.dau.mil/evm<br />
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1. Organization (5 criteria)<br />
EVMS Guidelines<br />
32 Criteria - 5 Major Categories<br />
♦ The work to be performed and the organization to do it<br />
2. Planning, Scheduling and Budgeting (10 criteria)<br />
♦ Time-phased, resource-loaded baseline<br />
3. Accounting Considerations (6 criteria)<br />
♦ Recording and accumulation of costs<br />
4. Analysis and Management Reports (6 criteria)<br />
♦ Reports of planned vs. actual costs & schedule<br />
5. Revisions and Data Maintenance (5 criteria)<br />
♦ Control changes to baseline<br />
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EVMS Guidelines<br />
32 Criteria<br />
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Ten ‘Core/Abridged’ Criteria<br />
Treasury & HHS Guidelines<br />
For projects valued at $1 - $10M (HHS) or
EVMS Certification<br />
� Software is not ‘EVMS certified’, much like timekeeping software is not DCAA certified<br />
either.<br />
� When contract size justifies (typically $50M per year) DCMA may evaluate and certify an<br />
organization’s specific EVMS procedures & processes (often called an EVMS Process<br />
Description). The evaluation would include:<br />
� comparison of their formal EVMS Process Description with the ANSI/EIA 748 Guidelines<br />
(identifying which, if any, are not appropriate and why)<br />
� evaluation of training programs for staff in appropriate EVMS knowledge, and<br />
� review of the ongoing internal EVMS Surveillance program to ensure that the EVMS procedures &<br />
processes are adhered to.<br />
� One part of the certification process would look at how software tools are used to<br />
support the formal process in the following areas:<br />
� Estimating<br />
� Scheduling<br />
� Budgeting<br />
� Financial Accounting System<br />
� Cost Management (integration of ACWP, BCWS, BCWP)<br />
� Reporting<br />
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Practical Implementation Scenarios<br />
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Successful Attributes<br />
� EVM provides valuable insight on project performance – whether<br />
for internal or external stakeholders<br />
� EVM is one integrated system<br />
� At project level<br />
� At task level<br />
� Summarized by WBS<br />
� Robust controls over who has access to what data<br />
� Easy to Understand, Use and Maintain by Project Managers<br />
� Can manage large or small project teams and labor contracts<br />
� Complies with ANSI 748<br />
Copyright © 2011 <strong>Unanet</strong> <strong>Technologies</strong><br />
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Core EVM Processes<br />
• Create Project Schedule/Work Breakdown Structure<br />
• Build Budget and establish Baseline<br />
• Perform Work and Collect Actual Costs<br />
• Determine Progress; Track Statuses; Diagnose Issues<br />
• Snapshot Periodic Status<br />
• Measure Performance and Provide EVM Dashboards<br />
and Reports<br />
Copyright © 2011 <strong>Unanet</strong> <strong>Technologies</strong><br />
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EVM Implementation<br />
Create EVM Implementation Plan for RFP Responses<br />
Highlight ANSI Process Areas:<br />
Organization (SOW, WBS, Authorization)<br />
Planning & Budgeting (Schedule, Budget, Measurement)<br />
Accounting Data (Time and Expenses)<br />
Report & Analyze (CPR and Variance Explanations)<br />
Control Baseline Changes<br />
Should Explain:<br />
Processes<br />
Tools<br />
Organizational Responsibility<br />
Copyright © 2011 <strong>Unanet</strong> <strong>Technologies</strong><br />
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� A detailed schedule tied to the SOW, WBS and<br />
major milestones<br />
� Organizational responsibility<br />
� Proper scheduling techniques<br />
� Use of clear relationships/dependencies<br />
� Limited use of constraint dates<br />
Organize & Plan<br />
� Definition of Work Packages and EVM techniques<br />
� Clearly defined budgets by resources at the<br />
work package level<br />
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Create/Import WBS<br />
Define the work at the level of detail required<br />
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Build Budgets<br />
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� Enter budgets at task (or project) level<br />
Assign budgets<br />
� This allows calculation of a time-phased budget<br />
� This is the Budgeted Cost of Work Scheduled (BCWS), or<br />
Planned Value (PV)<br />
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Collect actuals<br />
� Timesheets and Expense Reports collect actual<br />
costs<br />
� Other costs can be imported, as necessary<br />
� Approvals ensure only authorized charges are<br />
made<br />
� Assignments ensure that charges are made only<br />
to the right WBS elements<br />
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Determine progress<br />
� Authorized users determine progress, or what has been<br />
“earned”<br />
� Task Completed Percent could be estimated, or earning<br />
rules such as 0-100, 50-50, 25-75 manually applied.<br />
Should be based on physical performance/milestones.<br />
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� Monthly CPR report at least by WBS<br />
� Good monthly variance explanations<br />
� Use of metrics by project team, PM and upper<br />
management<br />
� Weekly or Monthly Schedule Analysis<br />
EVM Reporting<br />
32
Earned Value Report Criteria<br />
33
Earned Value Report<br />
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Earned Value<br />
by WBS Level<br />
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Threshold Reporting<br />
Highlight Variances to Stakeholders<br />
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Earned Value Chart<br />
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Schedule and Cost<br />
Performance Indices<br />
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� Monthly reconciliation & logs<br />
Control Baseline Changes<br />
� No changes to historical data unless you are<br />
fixing errors or dealing with accounting<br />
adjustments<br />
� Back up detail for baseline changes<br />
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Audit Budget Changes<br />
Project or Task Level<br />
40
Manage Plans, Budgets<br />
and Actuals<br />
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Forecast Staffing<br />
Forecast of labor hours by organization and/or project<br />
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Summary<br />
� EV provides valuable insight on project performance – whether for internal or external<br />
stakeholders<br />
� Systems like <strong>Unanet</strong> supports Earned Value Management in one integrated system<br />
� At project level<br />
� At task level<br />
� Summarized by WBS<br />
� Robust controls over who has access to what data<br />
� Compliance with EVMS takes a combination of procedures & tools<br />
� It is essential for any organization to develop and document their methodology for<br />
use with <strong>Unanet</strong> to best support the EVMS criteria<br />
� Training for staff on process and tools<br />
� Ongoing surveillance that processes are being followed<br />
� <strong>Unanet</strong> features, together with your accounting system, can support an EVMS<br />
program<br />
� There is a <strong>Unanet</strong> White Paper available which discusses how <strong>Unanet</strong> supports the 32<br />
EVMS Criteria.<br />
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Thank You!<br />
Anthony Bone<br />
703-727-2416<br />
arbone@lexemstrategy.com<br />
www.lexemstrategy.com<br />
Copyright © 2006 <strong>Unanet</strong> <strong>Technologies</strong><br />
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