Developments, Achievements

1
Earned Value Management

• Developments, Achievements
• and
• Reforms
• Subhash Dang
• Director - EVM
• 16 Sept 1999

2
Background

• EVM used in Australia for the last ten years
• Used on all major capital equipment acquisitions
• Standards and procedures were originally based on
  US DoD
• Number of enhancements and developments
  undertaken to make EVM more effective.
• Acquisition organisation going through major
  reforms

3

Developments and Achievements
4
Recent Innovations

• Integrated Baseline Reviews (IBR)
• Consultants Panel for EV services
• Payment by Earned Value
• Use of earned value data for Corporate level
  reviews of Defence projects (DARB)
• National Standard on EVM
• Review Methodology Reforms

5
Integrated Baseline Review

• Policy promulgated
• IBR Handbook developed and being used by Projects
  and Contractors
• Training by DAMS staff in place
• Proving more ownership by Project Tech Staff
• Replacing old Subsequent Appn Reviews (SAR)
• Applicable to all new projects and existing
  projects

6
Consultants Panel for EV Services

• Professional Service Providers (PSP) Panel fully
  operational since Jul 98
• Used extensively for
• Training
• Studies
• System Development
• Special workshops
• Analysis Support

7
Progress Payment based on EV

• A recent initiative
• link to JPAC recommendations
• EV as the best estimate of progress

8
National Standard on EVM

• Project approved by Standards Australia
• Sub committee established
• Development commenced
• US Industry ANSI-748 would be used as the basis

9
Reporting to DARB

• High-level Project reporting pays a great deal of
  attention to EV reporting formats
• Trend graphs particularly popular
• Raises awareness and profile of EVM within DAO

10
EV Payment Models

• 100 earned value
• mix of EV and milestones

11
Preferred Model

• Mixed milestone / EVP used for all contracts
• Majority of the price (50-90) to EVP
• Remainder on achievement of milestones
• Split varies according to project value, risk,
  complexity, duration
• Offers benefits of both EV and Milestones
• Contractors focus on achieving key milestones

12
Advantages

• Tangible use of EVM System
• Eliminate duplication between companys EVMS and
  invoicing systems
• Satisfies ANAO
• Assist in accurate Cash Flow Forecasting.
• Separate presentation on Cash Flow Forecasting

13
Payment by EV Can Work

• Initial teething problems being resolved
• Mobilisation Payment a key payment milestone
• Verification encourages better analysis
• DAMS-EVM just released a guidance paper on
  payment verification

14
Reforms
15
Review Methodology

• Changed review practices (as used for BAe, RLM
  and Kaman)
• Drivers of reform are
• resource constraints
• increased partnering with contractors
• change of emphasis from strict enforcement to
  working workable management system
• Interactive system development and review

16
Enhancements

• Shorter reviews with smaller teams - helping both
  sides
• Contractors encouraged to have team members on
  the review - for better communication
• Maximise the participation of Project staff,
  particularly resident team
• Just 2 or 3 external experts

17
Enhancements (2)

• Use of in country resources for overseas
  reviews
• resident team
• posted staff
• embassy/high commission personnel
• Reduced reporting
• Providing on-going advice to the Contractor
  towards implementation

18
What Next
19
Defence Standards

• Standards reflect the 1989 policy and procedures
• Need to reflect current and proposed practices
• Opportunity to amalgamate some of the standards

20
Re-engineering EVM Criteria

• Delete supporting functions
• Delete LOE
• Focus on contractual deliverables
• Simplify the reporting elements
• Revise thresholds

21
Re-engineering (continued)

• Leading the way
• Easier to sell to Project Managers
• Satisfies ANAO concerns
• Payment by EV more meaningful

22
EVM and Evolutionary Acquisition Contracts

• EA projects are Software Dev. intensive
• EVM quite appropriate
• Tailored requirements developed and used on one
  Project
• EVM and PSM quite complementary
• Liaison with DSWAR for developing policy and
  procedures.

23
Australian Innovations - Summary

• EVM application continues to evolve
• Directions in harmony with US approach
• Now working top-down to encourage EVM use through
  DARB as well as bottom-up through contractor
  implementation review