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Earned Value

A Managers Tool for Integrated


Cost, Schedule and Technical
Performance Management
Mr. Wayne Abba
OUSD(A&T)API/PM
Earned Value Management:
Origins
Industry Best 1967: DoD Instruction 7000.2
Practices 35 Cost/Schedule Control
CANCELED
Systems Criteria (C/SCSC)
Criterion-based Management
Brief statements of attributes
Not how-to manage
Not a system
Minimum acceptable standard

1997: DoD Regulation 5000.2-R


Government 32 Earned Value Management
Requirements Systems (EVMS) Criteria
EVMS Criteria (1)
u Organize and Identify progress
Integrate indicators
Work (WBS) Dollars, hours, or other
measurable units
People (Organizational
structure) Near term vs. far term
Management systems Management reserves

u Plan, Schedule, Budget u Accounting


Sequence of work Record costs consistent
with budgets
Interdependencies
Measure material

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EVMS Criteria (2)
u Analysis & u Revisions and Data
Management Maintenance
Reporting Incorporate changes
At least every month: in a timely manner
Measure progress Control retroactive
Identify cost and changes
schedule variances
Prevent revisions to
Take corrective action
the budget
Revise estimates and
report to management Document changes to
and to customers the performance
measurement baseline

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The Control Account:
Where the Action is
Plan WBS
Budget
Schedule
Corrective
Action

ORGANIZATION

CAs
CAsunder
underIPTs
IPTsas
asappropriate
appropriate
Earned Value Management =
Basic Management Principles
Earned Value Management:
Implementation Problems

u Financial Management
u Audit-like reviews
u Government-required
reporting
Too many surprises
C/SCSC
u
A-12 (Navy)
AAWS-M (Army)
C-17 (Air Force)
u Challenge: keep good principles, stop bad practices
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The Really Nice Thing About
Not Planning

Failure comes as a complete surprise


and is not preceded by long periods
of worry and depression!*

*Micro Planning International


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Work Breakdown Structure:
The Key to Integration
MIL-HDBK-881

COST SCHEDULE
WBS
TECHNICAL
PERFORMANCE RISK
Progress Plan Risk Profile
100

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Reengineering EVM:
DoD Improvements
u Redefined Earned Value Ownership
EVM
Financial reporting to management
Government to industry
PMs assume data integrity
u Better management tools
u Integrated Baseline Reviews
Improved planning process
Better technical/risk management
u Revised DoD 5000.2-R
Defense Acquisition Deskbook 10
Reengineering EVM:
Integrated Baseline Reviews

u Within 6 months of award


u Mutually understand plan IBR Training
Scope Schedules
Schedule
Resources } Risk
Mgmt. Systems

u Planning process vs. event


u PM leads
EVM staff supports
Management system reviews effectively eliminated
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DoD Since 1993 Results!
u DoD EVM
Value reaffirmed Prof. associations
Shifted to Industry; Adopted by NASA,
DCMC Exec. Agent FAA, NRO, FBI, CoE
OMB policy Enterprise-wide
Trilateral MoU Boeing
Raytheon
Intl. Perf. Mgmt. Council
Lockheed Martin
Commercial and others...
In-house No major surprises
Aggregate overrun 2.5% ($1.2B on $72.8B; 66% comp.)
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Integrated Program Management
IPT + IBR + EVM = IPM
u Involve earned value specialists and
cost estimators on program IPTs--and, when
appropriate, contractors
u Use MIL-HDBK-881 for WBS guidance
u Tailor reports - limit levels and analysis
u Do Integrated Baseline Reviews
u Encourage forward-looking management

IPTs
IPTsmust
mustcontrol
controlall
allthe
theproject,
project,technical
technicaland
and
functional
functionalelements
elementsneeded
neededfor
forthe
theproduct
productor
orprocess.
process.
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WAR (wInsight Analysis &
Review) Room
u 8 Screens u Compare programs
WBS Update in real time
Product Photo/TPM Link performance to
Schedule status budget decisions
Schedule perf. trend u Natl. Reconnaissance
Risk + (Monte Carlo) Office
Cost perf. trend Near Dulles Airport
Est. at complete Visits can be arranged
Funding status

World Class Best Practice in Partnership with DoD


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