Earned Value Management

1
Earned Value Management

• Professor Kim Meyer
• DAU Midwest
• kimberly.meyer_at_dau.mil
• 937-781-1040

2
Workshop Learning Objectives

• EVMS Background and Criteria
• General EVM Terminology
• Standards, Policy, and Guidance
• ANSI Standard and Guideline Approach
• EVM Contract Implementation
• EVMS Analysis
• EVMS Training and References

3
Whats In Your PM Toolkit?
4
EVMS Background and Criteria
5
Definition EV, EVM, and EVMS
Earned Value
usually refers to contractors' internal
EVMS

Management
management control systems that meet the
Systems

guidelines






6
What is Earned Value Management?

• Use of an integrated management system that
  coordinates work scope, schedule, and cost
  objectives and employs earned value methods for
  program planning and control.
• Industry Standard Guidelines for EVMS

7
Integration of Systems for an EVMS
8
Definition EVM System

• An integrated management system and its related
  sub-systems which allow for
• planning all work scope for the program to
  completion
• breaking down program work scope into finite
  pieces that can be assigned to a responsible
  person or organization for control of technical,
  schedule, and cost objectives
• Integrating work scope, schedule, and cost
  objectives into a performance measurement
  baseline plan against which accomplishments may
  be measured
• controlling changes to the baseline
• using actual costs incurred and recorded in
  accomplishing the work performed
• objectively assessing accomplishments at the work
  performance level
• analyzing significant variances from the plan,
  forecasting impacts, and preparing an estimate at
  completion based on performance to date and work
  to be performed and,
• using EVMS information in the companys
  management processes

9
Traditional Measurement
COST 40
BUDGET 50
STATUS Variance Budget - Actual 10
Favorable
10
Earned Value Measurement
STATUS Schedule Variance Earned - Budget -15
Unfavorable Cost Variance Earned
- Actual - 5 Unfavorable
11
Whos Who in EVM Government

• Federal Policy Office of Management and Budget
  (OMB)
• DoD Policy OSD Acquisition, Technology, and
  Logistics
• Executive Agent Defense Contract Management
  Agency (DCMA) (compliance)
• Auditing Defense Contract Audit Agency (DCAA)
• Agency/Service Staff support organizations
• Primary Users Program/Project Managers
• Technical staff and integrated product teams
  (IPT)

12
EVM Standards, Policy, and Guidance
13
Definition Standards, Policy, Guidance,
Contractual Direction

• Standards
• Issued by industrial standards organization
• Establishes a set of guidelines that must be met
  and adhered to
• Policy
• Issued by federal agency
• Mandatory
• Exceptions must have waiver
• Guidance
• Issued by either the Government or industry
• Non mandatory
• Provides additional insight, references, etc.
• Contractual Direction
• Terms and conditions of contract
• Binding on both contractor and government

14
EVM Guidance and Policy
15
Policy

• OSD policy letter, 7 March 05
• Interim policy until formal update of DoD
  Instruction 5000.2
• New thresholds (in then year )
• gt 20M, lt 50M Compliance with EVM standard
• gt 50M Validation against EVM standard

16
Why do we need a standard?

• Government awards contracts that may be
• Very large
• Risky
• Government contracts have special burden
• Funded with taxpayer money
• Government needs assurances that performance
  data
• Indicates work progress
• Properly relates cost, schedule, and technical
  accomplishment
• Provides program managers with information at a
  practical level of summarization
• Is valid, timely, and able to be audited

17
ANSI Standard

• Published by Electronics Industries Alliance
• Reaffirmed in 2002 only minor revisions
• ANSI/EIA-748-A-1998, Earned Value Management
  Systems
• Subsequently referred to as ANSI 748A in this
  course
• Maintained by National Defense Industrial
  Association, Program Management Systems Committee
  (NDIA PMSC)
• NDIA PMSC maintains close coordination with OSD

18
EVMS GuidelinesANSI/EIA 748-98
32 Criteria
19
Guideline Approach

• Government recognizes that it cannot impose a
  single solution
• No single EVMS meets the needs of all companies
• Guidelines define the criteria for system
  adequacy
• Specify desired outcomes
• Not prescriptive
• Broad enough to allow for commonsense application
• Comprehensive enough to result in reliable
  performance data
• Beware of myths, legends, and accepted rules of
  thumb

20
Discussion Point

• Guideline or prescription?

Define the authorized work elements for the
program, using the EZ WBS Maker software tool to
develop and define the WBS structure to Level 6.
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.
21
EVMS CONTRACTIMPLEMENTATION
22
Statutes Related to EVM

• Establish performance Standards for Federal budget

• Government Performance and Results Act of 1993
  GPRA

• Report cost, schedule and performance goals and
  evaluate progress

• Federal Acquisition Streamlining Act of 1994 -
  Title V (FASA V)

• Information Technology Management Reform Act of
  1996 (ITMRA / Clinger-Cohen

• Report performance information systems acquisition

23
Office of Management Budget EVM Policy

• OMB Circular A-11 Part 7 Capital Programming
  Guide

• Unified guidance to support OMB reporting to
  Congress

Circular A-11 Policy

• Capital Programming Guide
• Agencies must establish cost, schedule and
  performance goals for major acquisitions and then
  achieve, on average, 90 of those goals
• Version 2.0 provides guidance on integration of
  EVM, IBRs, and risk management.

24
DoD EVM Implementation Instructions
Purpose
Policy Memo

• Implements OMB Circular A-11

• MAR 7, 2005 ATL Policy Memorandum directs
  changes to DoDI 5000.2 regarding EVM

Table E3.T2 Regulatory Information Requirements

• Applies to cost and incentive contracts,
  subcontracts, and intra-government work
  agreements of 20M and above.
• Formal EVMS Validation is required above 50M
• Discouraged for FFP, LOE, and TM contracts
• Optional for efforts less than 20M
• Implement EVMS guidelines in American National
  Standards Institute (ANSI)/Electronic Industries
  Alliance (EIA) 748-A-1998 (R2002)
• DoDI 5000.2 also directs when EVM required
• Use of a MIL-HDBK-881 Work Breakdown Structure
• Completion of Integrated Baseline Reviews
• Contract Performance Report (DI-MGMT-81466A)
• Integrated Master Schedule (DI-MGMT-81650)

25
DoD EVM Application Thresholds
Thresholds
Contracts
Requirements
26
Decision Process for EVM Application
Cost or Incentive Contract?
Contract Value lt20M

• Contract contracts, subcontracts,
  intra-government work agreements, other
  agreements
• If contract type is mixed, then apply guidance
  separately to different parts of contract
• All thresholds are in TY

27
Decision Process for EVM Application
Contract Type
Y
FFP
NO EVM
N
Y
Nature Of Work
LOE TM
N
Y
Value
lt20M
EVM Required ANSI 32 EVMS Required EVMS Certified
No 7001 RFP 7002 RFP Contract CPR DID
Formats 1 5 Required Formats 2, 3 4
Optional IMS DID Can Be Tailored
EVM Required ANSI 32 EVMS Required EVMS Certified
- Yes 7001 - RFP 7002 RFP Contract CPR DID 5
formats IMS DID No Tailoring
N
N
Y
50 M
Based on the March 7, 2005 Policy
28
Earned Value within the Contracting Process
29
EVM Inputs in the Contracting Process

• Where do you address EVM in the
  Solicitation/Contract
• Section C - Description/Specs/Work Statement
• Section I Contract Clauses
• Section J - Exhibits/Attachments
• Section L - Instructions to Offerors
• Section M- Evaluation Factors for Award
• Note Sections L and M are included in
  Solicitations only

30
Section C - Statement of Work

• The Statement of Work should contain statements
  requiring
• Development of a contract work breakdown
  structure (CWBS) at a level adequate for
  management and contract control
• The contracted technical effort to use a
  guidelines-compliant EVMS that correlates cost
  schedule performance with technical progress
• Designation of critical subcontractors by name
  for EVM compliance and flow down of EVMS
  compliance to subcontractors
• An Integrated Baseline Review (IBR)
• Reference to EVMS data items as part of
  Integrated Program Management reporting and
  Reviews

See EVMIG for Sample SOW Statements
31
Section I - General Provisions

• New FAR Clauses July 2006
• FAR 52.234-2 Notice of EVMS Pre-Award IBR
• FAR 52-234-3 Notice of EVMS Post Award IBR
• FAR 52-234-4 EVMS The Gov will conduct an IBR
  if a pre-award IBR has not been conducted.
• FAR EVM clauses not tied to dollar thresholds
• DoD Interim guidance (new DFARS approved
  4/23/08)
• Apply existing clauses (252.242-7001 and
  252.242-7002) directly on contracts gt 20M
• DoD Policy EVM DFAR clauses are equivalent to
  the EVM FAR clauses and only the EVM DFAR clauses
  will be used on DoD contracts

32
Section J - Exhibits/Attachments

• Work Breakdown Structure - Mil-HDBK-881A
  mandatory common WBS for CPR, IMS CCDRs through
  WBS Level 3
• EVM Related Data Item Descriptions (DIDs)
• Contract Performance Report DI-MGMT-81466A
• Integrated Master Schedule DI-MGMT-81650
• Contract Work Breakdown Structure
  DI-MGMT-81334B
• Contract Funds Status Report DI-MGMT-81468
• Contract Data Requirements List (CDRL) used to
  put CPR and IMS reports on contract
• EVM CDRLs can and should be tailored within
  bounds of policy
• Tailoring options are limited for contracts gt
  50M
• Most aspects are tailorable for contracts lt 50M
• Consider all risk factors when tailoring CPR and
  IMS DIDs
• Type of contract (determined by cost risk)
• Technology
• Schedule
• Past contractor performance

33
Section J CPR DID DI-MGMT-81466A

• The CPR consists of five formats
• Format 1 Work Breakdown Structure
• Format 2 Organizational Categories
• Format 3 Baseline
• Format 4 Staffing
• Format 5 Explanations Problem Analyses
• Uses of CPR Data
• Integrated Cost Schedule EVM Data
• Identify the cost and schedule impact of actual
  and potential problems
• Provide valid, timely program status info for
  higher management
• The CPR provides timely, reliable summary-level
  data with which to access current and projected
  contract performance.

34
Section J - CPR Tailoring

• CPRs must be tailored to meet the needs of each
  individual contract
• Tailoring usually involves the following
• Reporting levels, Defining future periods,
  Specific items of interest, Variance reporting
  thresholds
• Reporting Levels
• WBS/OBS reporting levels on Formats 1 2 should
  be defined
• Typically to level 3 of the CWBS
• High risk elements should be identified for
  reporting (below level 3)
• CCDR and CPR should use a common WBS. CPR allows
  for tailoring below the CCDR reporting level
• Future periods
• Formats 3 4 show the PMB and staffing forecast
  respectively
• Periods need to be defined in CDRL, identifying
  months, quarters, years, or combination
• Typically the first 6 columns identify the
  upcoming 6 months

35
Section J - CPR Tailoring (contd)

• Format 5 Narrative Analysis Reporting Thresholds
• Format 1/2 CV, SV, VAC- e.g. top 5 variances that
  exceed a dollar threshold/percentage threshold.
  (i.e. 1M or 5)
• Format 3/4 changes from the previous period that
  exceed specified percentage
• Using condition statements such as and or or
  will affect the number of variances reported to
  the customer (e.g. 1M and 5 vs 1M or 5)
• May identify a fixed number of variances (i.e.
  top 5 variances by WBS Level 2 item)
• Reporting thresholds can vary greatly depending
  on the size, complexity, and risk of the program

36
Section J IMS DID DI-MGMT-81650

• IMS shall include all discrete tasks/activities,
  work packages, and planning packages identified
  in the contract Performance Measurement Baseline
  (PMB)
• IMS shall identify significant external
  dependencies (i.e. GFE, test facilities)
• Suppliers and government playing a bigger role
  in producing products
• IMS shall be statused and submitted prior to or
  concurrently with Contract Performance Report
  (CPR)
• Standard scheduling definitions are to be used

37
Section J - IMS DID DI-MGMT-81650 (cont)

• Critical Path calculated by software
• Total Program Critical Path from beginning to end
• Software can not be specified but must meet
  DI-MGMT-81650 requirements
• Examples of available software tools
• Open Plan Professional
• Primavera
• MS Project
• Schedule Risk Assessments are to be submitted as
  specified in the CDRL and prior to the Integrated
  Baseline Review (IBR)
• Float/Slack is an asset of the program and not
  for the exclusive use or benefit of the
  government
• Monthly analysis is required in order to identify
  potential problems and an assessment of the
  critical path and near-critical paths

38
Section J - IMS Tailoring

• Factors to consider when tailoring requirements
• Program risk should be prime consideration
• Contract type, Size of contract, Technology
  maturity
• Complexity of integration, e.g. multiple
  subcontractors, GFE/GFP
• Reporting Frequency
• Status as of end of calendar/accounting month be
  consistent with CPR
• Cost/Incentive efforts typically reported monthly
  and must be consistent with CPR
• FFP efforts may have less frequent reporting than
  cost/incentive contracts
• Variance Analysis Reporting
• Schedule variance thresholds for task on the
  critical path and near critical paths usually
  expressed in calendar/work days
• Projected Start / Finish variances for major
  milestones
• Narratives discussing next contractual milestone

39
Section J - IMS Tailoring (contd)

• Level of detail of schedule can be tailored based
  on program risk
• Subcontractor IMS deliverable
• Schedule Risk Assessment
• Quarterly, Semi-annually, selected key milestones
  (PDR, CDR, Flight Test)
• LRIP may only warrant at program start
• FFP environment Waive requirement for SRA or
  less frequent than Cost/Incentive efforts
• Electronic Data Interchange
• Delivered in native digital format Contractors
  schedule tool (MS Project, Primavera, Open Plan,
  etc)
• Additional guidance can be found in the EVMIG

40
Section J - Award Fee Plan

• Program managers often wish to tie award fee to
  EVM performance
• Care should be taken not to mis-incentivize the
  supplier
• Award fee criteria should reference effective
  management of cost and schedule with EVM data
• Criteria should not reference specific values for
  CV, SV, CPI, SPI, or VAC
• See EVMIG for additional guidance

41
Section L - Instructions to Offerors

• Guidance to bidders for the assembly of their
  proposals
• Each offerors proposal shall include a
  description of the EVMS to be used in accordance
  with the appropriate RFP DFAR clauses
• Compliance with Validation requires
• Reference to an Advance Agreement or Letter of
  Acceptance and a copy of the approved EVM system
  description or
• A plan to obtain EVM validation to include how
  and when the system will be validated
• Compliance Only requires a written summary of
  the proposed EVMS reference in sufficient detail
  to show how it addresses all ANSI/EIA-748
  guidelines

42
Section M - Evaluation Factors for Award

• Evaluation of the proposed EVMS is normally
  undertaken as part of the proposal evaluation
  process to determine the probability of the
  system meeting the guidelines.
• For Existing Systems - evaluation may consist of
  a confirmation that the referenced validation is
  accurate and current. The system should be
  currently in use, and surveillance should not
  have identified significant, uncorrected
  problems.
• For EVMS (without validation) - the EVM system
  description should be evaluated for completeness
  against the guidelines in ANSI/EIA-748.
• An on-site examination of a proposed EVMS should
  not normally be required during proposal
  evaluation. But if deficiencies are identified,
  written communications or an on-site visit may be
  required when approved by the Source Selection
  Board and Procuring Activity.
• DCMA should be requested to provide insight
  regarding EVMS capability, quality, and past
  performance.

43
EV ANALYSIS
44
CLASSIFICATION (When Filled In)
Page 1 of 2
CONTRACT PERFORMANCE REPORT FORMAT 1 WORK
BREAKDOWN STRUCTURE
Form Approved OMB No. 0704-0188
Thousands
DOLLARS IN
The public reporting burden for this collection
of information is estimated to be 3.1 hours per
response, including the time for reviewing
instructions, searching existing data sources,
gathering and maintaining the data needed, and
completing and reviewing the collection of
information. Send comments regarding this burden
or any other aspect of this collection of
information, including suggestions for reducing
the burden, to Department of Defense Washington
Headquarters Services Directorate for Information
Operations and Reports (0704-0188), 1215
Jefferson Davis Highway, Suite 1204, Arlington,
VA 22202-4302. Respondents should be aware that
notwithstanding any other provision of law, no
person shall be subject to any penalty for
failing to comply with a collection of
information if it does not display a currently
valid OMB control number. PLEASE DO NOT RETURN
YOUR FORM TO THIS ADDRESS. SUBMIT COMPLETED
FORMS IN ACCORDANCE WITH CONTRACTUAL REQUIREMENTS.
3. PROGRAM
4. REPORT PERIOD
1. CONTRACTOR
2. CONTRACT
a. NAME
a. NAME
a. FROM
(YYYYMMDD)
a. NAME
FIREBIRD II
CyboRaptor
FIREBIRD II
YYYY0601
(Address and ZIP Code)
b. NUMBER
b. LOCATION
b. PHASE
RDTE
FDS601-20006C-DO23
b. TO
(YYYYMMDD)
1100 Carey Ave
c. EVMS ACCEPTANCE
c. TYPE
d. SHARE RATIO
YYYY0630
Waynesville VA 21345
N / A
70/30
CPIF
5. CONTRACT DATA
f. ESTIMATED PRICE
a. QUANTITY
c. ESTIMATED COST OF AUTHORIZED UNPRICED
WORK
d. TARGET PROFIT/ FEE
e. TARGET PRICE
h. ESTIMATED CONTRACT CEILING
b. NEGOTIATED COST
i. DATE OF OTB/OTS (YYYYMMDD)
N / A
0.00
28,310.70
25,167.20
23,000.00
2,737 / 11.9
25,737 20
6. ESTIMATED COST AT COMPLETION
7. AUTHORIZED CONTRACTOR REPRESENTATIVE
b. TITLE
a. NAME (Last, First, Middle Initial)
VARIANCE (3)
CONTRACT BUDGET BASE (2)
MANAGEMENT ESTIMATE AT COMPLETION (1)

• BEST CASE
• WORST CASE
• MOST LIKELY

c. SIGNATURE
d. DATE SIGNED (YYYYMMDD)
21,160.00
23,000.00
22,187.10
474.00
23,000.00
7. PERFORMANCE DATA
CUMULATIVE TO DATE
AT COMPLETION
CURRENT PERIOD
REPROGRAMMING ADJUSTMENTS
ITEM (1)
ACTUAL COST WORK PERFORMED (4)
ACTUAL COST WORK PERFORMED (9)
VARIANCE
BUDGETED COST
BUDGETED COST
VARIANCE
BUDGETED (14)
VARIANCE (16)
ESTIMATED (15)
SCHEDULE VARIANCE (12b)
COST VARIANCE (12a)
WORK PERFORMED (3)
BUDGET (13)
WORK SCHEDULED (2)
WORK SCHEDULED (7)
COST (11)
WORK PERFORMED (8)
SCHEDULE (10)
SCHEDULE (5)
COST (6)
1.1 Air Vehicle
2
11,588.10
11,246.80
341.30
3,887.90
-479.90
-382.50
4,270.40
4,367.80
1,423.47
1,295.97
-159.97
-127.50
1,455.93
1.1.1 Weapons Delivery
3
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.1.2 Airframe
3
649.70
634.00
15.70
195.00
2.00
9.00
186.00
193.00
65.00
0.67
3.00
62.00
64.33
1.1.3 Engine
3
5,892.00
5,729.90
162.10
1,673.00
-645.40
-525.50
2,198.50
2,318.40
732.83
557.67
-253.43
-175.17
811.10
1.1.4 C2 System
3
896.20
847.10
49.10
368.90
49.10
34.50
334.40
319.80
124.51
17.91
13.04
111.47
106.60
1.1.4.1 Radio
4
562.80
552.70
10.10
215.00
11.00
5.00
210.00
204.00
73.21
5.21
3.21
70.00
68.00
1.1.4.2 TV Camera
4
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.1.4.3 Avionics
4
333.40
294.40
39.00
153.90
38.10
29.50
124.40
115.80
41.47
51.30
12.70
9.83
38.60
1.1.5 Self Defense
3
4,150.20
4,035.80
114.40
1,651.00
114.40
99.50
1,551.50
1,536.60
550.33
38.13
33.17
517.17
512.20
1.1.5.1 Flares
4
1,482.30
1,425.30
57.00
602.60
57.00
49.50
553.10
545.60
184.37
200.87
19.00
16.50
181.87
1.1.5.2 Flight Control
4
2,267.70
2,218.50
49.20
891.10
48.70
42.50
848.60
842.40
282.87
297.03
16.23
14.17
280.80
1.1.5.3 Sensor
400.20
392.00
8.20
157.30
4
8.70
7.50
149.80
148.60
52.43
2.90
2.50
49.93
49.53
1.2 Grnd Cont. Terminal
2
3,402.50
3,301.00
101.50
1,226.20
43.70
25.70
1,200.50
1,182.50
395.97
408.73
14.57
12.77
394.17
1.2.1 Radio
3
1,660.50
1,561.00
99.50
550.70
0.30
0.20
550.50
550.40
183.50
183.57
0.10
.07
183.47
1.2.2 Control Software
3
1,742.00
1,740.00
2.00
675.50
43.40
25.50
650.00
632.10
216.67
225.17
14.47
8.50
210.70
1.2.3 TV
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
3
0.00
0.00
0.00
0.00
0.00
LOCAL REPRODUCTION AUTHORIZED.
DD FORM 2734 /1, MAR 05
CLASSIFICATION (When filled in)
45
CLASSIFICATION (When Filled In)
CONTRACT PERFORMANCE REPORT
DOLLARS IN
Page 2 of 2
Thousands
The public reporting burden for this collection
of information is estimated to be 3.1 hours per
response, including the time for reviewing
instructions, searching existing data sources,
gathering and maintaining the data needed, and
completing and reviewing the collection of
information. Send comments regarding this burden
or any other aspect of this collection of
information, including suggestions for reducing
the burden, to Department of Defense Washington
Headquarters Services Directorate for Information
Operations and Reports (0704-0188), 1215
Jefferson Davis Highway, Suite 1204, Arlington,
VA 22202-4302. Respondents should be aware that
notwithstanding any other provision of law, no
person shall be subject to any penalty for
failing to comply with a collection of
information if it does not display a currently
valid OMB control number. PLEASE DO NOT RETURN
YOUR FORM TO THIS ADDRESS. SUBMIT COMPLETED
FORMS IN ACCORDANCE WITH CONTRACTUAL REQUIREMENTS.
7. PERFORMANCE DATA
AT COMPLETION
CUMULATIVE TO DATE
CURRENT PERIOD
REPROGRAMMING ADJUSTMENTS
ITEM (1)
ACTUAL COST WORK PERFORMED (9)
ACTUAL COST WORK PERFORMED (4)
VARIANCE
BUDGETED COST
VARIANCE
BUDGETED COST
VARIANCE (16)
BUDGETED (14)
ESTIMATED (15)
WORK PERFORMED (3)
COST VARIANCE (12a)
WORK SCHEDULED (2)
WORK SCHEDULED (7)
COST (11)
BUDGET (13)
SCHEDULE VARIANCE (12b)
SCHEDULE (10)
WORK PERFORMED (8)
SCHEDULE (5)
COST (6)
a.
WORK BREAKDOWN STRUCTURE ELEMENT (continued)
0.00
1.3 Launcher
2
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.4 Sys Program Mgmt
2
1,294.40
1,185.70
1,330.30
-108.30
-144.60
5,178.60
395.23
431.47
-67.10
443.43
-36.23
1.4.1 Project Mgmt
3
408.20
408.20
427.00
0.00
-18.80
1,473.00
136.07
136.07
-6.27
142.33
0.00
1.4.2 Sys Engineering
3
886.20
777.50
903.30
-108.70
-125.80
3,705.60
259.17
295.40
-60.83
320.00
-36.23
1.5 Sys Test Evaluation
2
265.10
224.00
253.20
-41.10
-29.20
863.30
74.67
88.37
-6.17
84.84
-13.70
1.5.1
Dev Test Evaluation
3
144.10
122.20
132.90
-21.90
-10.70
489.70
40.73
48.03
-3.57
44.30
-7.30
1.5.2
Oper TE Support
3
55.30
52.80
55.10
-2.50
-2.30
144.00
17.60
18.43
-0.77
18.37
-0.83
1.5.3 Mock-Ups
3
65.70
49.00
65.20
-16.70
-16.20
229.60
21.90
21.90
0.17
21.73
0.00
1.6 Sys Data
2
88.20
84.10
87.80
-4.10
-3.70
296.70
28.03
29.40
-1.23
29.27
-1.36
1.6.1
Eng Data
3
40.70
39.90
28.20
-0.80
11.70
202.50
13.30
13.57
3.90
9.40
-0.27
1.6.2 Mgmt Data
3
47.50
44.20
59.60
-3.30
-15.40
94.20
14.73
15.83
-5.13
19.87
-1.10
1.7
Pec Support Equip
2
167.10
157.70
187.20
-9.40
-29.50
498.60
52.57
55.70
-9.83
62.40
-3.13
1.7.1 Test Measure
3
68.50
71.90
96.90
3.40
-25.00
279.40
23.97
22.83
-8.33
32.30
1.13
1.7.2 Support Handling
3
98.60
85.80
90.30
-12.80
-4.50
219.20
28.60
32.87
-1.50
30.10
-4.27
1.8 Common Supt Equip
2
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.9 Spares Rep
2
10.70
9.90
9.10
-0.80
0.80
642.20
3.30
3.57
0.27
3.03
-0.27
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
b. COST OF MONEY
2953.90
-32.10
-72.50
920.60
888.50
961.00
2916.71
37.19
c. G A (Non- Add)
-10.70
-24.17
306.87
296.17
320.33
d. UNDISTRIBUTED BUDGET
0.00
0.00
0.00
e. SUBTOTAL (Performance Measurement Baseline)
7,296.40
-520.50
7,417.90
6,775.50
22,187.10
282.90
22,470.00
-642.40
2,427.93
-169.43
2,469.07
2,258.50
-210.57
530.00
f. MANAGEMENT RESERVE
22,187.10
812.90
g. TOTAL
23,000.00
-642.40
-520.50
2,427.93
2,258.50
7,296.40
7,417.90
6,775.50
-169.43
2,469.07
-210.57
9. RECONCILIATION TO CONTRACT BUDGET BASE
a. VARIANCE ADJUSTMENT
0.00
0.00
0.00
812.90
-642.40
-520.50
b. TOTAL CONTRACT VARIANCE
DD FORM 2734/1 MAR 05
LOCAL REPRODUCTION AUTHORIZED.
6
CLASSIFICATION
(When filled in)
46
Relationship of the Contract Price to the Earned
Value Management System (EVMS)
Contract Price
Equals Total Allocated Budget (TAB) if no
contract mods
Profit / Fee
Negotiated Contract Cost
Management Reserve
- Withheld for Unknowns - No Scope or Schedule
PMB
Undistributed Budget
Summary Level Planning Packages
Control Accounts
- Temporary Holding - Work Authorized but no
detailed Budget or Schedule
- Specific Scope _at_ higher WBS level - Time-phased
budget - Strict Controls
Work Packages
Planning Packages
- Integrated Scope, Schedule Budget - No
Detailed Plans
- Integrated Scope, Schedule Budget - Detailed
Plans
47
Time-Phased Performance Measurement Baseline (PMB)
Management Reserve
PMB
Completion Date
48
Assessing Contractor Performance

• Gather the vital signs
• Usually given in a cost report
• Terms such as BCWP, BCWS, ACWP, EAC, LRE, BAC
• Process the vital signs
• Calculate variances, indices, percents, forecasts
• A thorough analysis will use each category
• Determine what the vital signs mean
• Based on the goodness or badness of the vital
  signs, what does that tell you?

16
49
Step-By-Step Analysis Process

• Gather earned value data
• BCWS, BCWP, ACWP, BAC (from CPR Format 1)
• Calculate point-in-time performance
• Cost Variance (CV) and Schedule Variance (SV)
• Can find on CPR Format 1
• Calculate trend indicators
• Cost Performance Index (CPI) and Schedule
  Performance Index (SPI)
• Calculate performance against the budget
• Complete, Spent, Scheduled

50
Step-By-Step Analysis Process(contd)

• Forecast the cost to complete
• Estimate at Completion (EAC) (govt estimate)
• Calculate efficiency necessary to achieve EAC (or
  LRE or BAC)
• To-Complete Performance Index (TCPI)
• Analyze performance
• Evaluate and discuss variances, trend indicators,
  progress against budget, forecasted cost to
  complete, efficiency needed to complete
• What is the status of our program?

51
EV Key Variables
BCWS BCWP ACWP
A actual B budgeted or planned C cost W
work P performed S scheduled
BCWS This is what the plan called for BCWP
This is what the actual work done should have
cost ACWP This is what the actual work actually
costs
52
EV Metrics
CV SV
C cost S schedule V variance
CV Difference between the budgeted cost and
actual cost of work performed (negative is
unfavorable) SV Difference between the work we
planned to accomplish and the work that was
performed (negative is unfavorable)
?
?
53
EV Metrics
CPI SPI
C cost S schedule P performance I index
CPI How much actual work are we getting for
each dollar spent SPI How efficient is the
contractor in terms of schedule
54
Earned Value Measurement

• SPI schedule efficiency
• SPIProgram lt 1.0, program is currently behind
  schedule
• SPITask lt 1.0, task is currently behind
  schedule
• Program is only behind schedule if task is on the
  critical path
• CPI cost efficiency (how much work is done per
  dollar spent)
• CPIProgram lt 1.0, program is currently over
  budget
• CPITask lt 1.0, task is currently over budget
• Program may or may not be over budget

If either CPI or SPI lt 0.70, then may have to
re-baseline
55
Variances vs. Performance Indices
BCWP 600K ACWP 700K
BCWP 50K BCWS 150K
CV BCWP - ACWP CV 600K- 700K CV (100K)
SV BCWP BCWS SV 50K- 150K SV (100K)
BCWP 600K ACWP 700K
BCWP 50K BCWS 150K
SPI SPI 0.33
CPI CPI 0.86

• Variances measure magnitude, indices measure
  efficiency

56
Earned Value Measurement
ACWP BAC

• Spent
• Complete
• If spent gt complete, unfavorable
• If spent lt complete, favorable

BCWP BAC
16
57
EV Key Variables
BAC EAC
B budgeted or planned E estimate A at C
completion
BAC What the entire program is supposed to
cost EAC What we now think the entire program
will actually cost
58
Mathematical Approach to EAC Concept

• EAC Actuals to Date Work Remaining
• 
  Efficiency Factor
• Actuals to Date ACWPCUM
• Work Remaining BAC BCWPCUM
• Efficiency (Performance) Factors Various
• - CPICUM
• Composite (CPICUM x SPICUM)
• 3-Period (month)CPI
• 6-Period (month)CPI
• Weighted (.8CPICUM .2SPICUM)

59
Representative EAC Formulas
Method
Formula 1. EAC (Cum CPI) ACWPCUM
2. EAC (Composite)
ACWPCUM 3. EAC (3/6 Month CPI)
ACWPCUM 4. EAC (Weighted)
ACWPCUM
BAC
BAC - BCWPCUM CPICUM

CPICUM
BAC - BCWPCUM CPICUM X SPICUM
BAC - BCWPCUM (BCWP) (ACWP) 3 MO/6MO
BAC - BCWPCUM .8 CPICUM .2 SPICUM

60
Estimate at Completion (EAC)

• (Estimate of Total Cost Thru any Given Level)

Alternative Approach for Computing EAC
If assumption is made that contractor will not
use available MRto complete contract, use
following standard formula
61
Earned Value Data Interpretation

• EVMS Analysis Which EAC to use? (that is, EAC
  based on which efficiency factor?) Should you
  use BAC or TAB to compute EAC? (Consider
  Management Reserve)
• Efficiency Factors
• Cumulative CPI tends to be the most optimistic
  estimate
• Composite (CPICUM x SPICUM) tends to be the
  most pessimistic estimate weights cost and
  schedule equally
• Three period (month) CPI shows most current
  cost performance
• Six period (month) CPI shows longer timeframe
  for cost performance may be more accurate (or
  less accurate) regarding true trends
• Weighted (.8 CPICUM x .2 SPICUM) weights cost
  more than schedule

62
EV Metrics
TCPI
T to C complete P performance I index
TCPI How efficient do I have to be to finish on
budget
CPI measures past efficiency TCPI measures
future efficiency
13
63
To Complete Performance Index (TCPI)

• (Cost Efficiency Needed from Now to Achieve
  a Specific Target Cost)

Alternative Approach for Computing TCPI
If assumption is made that contractor will not
use available MRto complete contract, use
following standard formula
64
Earned Value Data Interpretation

• What Do the Vital Signs Mean? Questions to Ask
• Is the contractors current performance favorable
  or unfavorable?
• Evaluate CV, SV, CPI, SPI, spent, complete
• What are the cost/schedule drivers on our
  program? What actions need to be taken to improve
  performance?
• Is the contractors EAC (LRE) realistic? Is the
  Governments?
• Compare TCPI to CPIcum
• Is the price to complete the program forecasted
  to exceed the contract ceiling price? Exceed the
  budget?
• If significant unfavorable variances, is the
  baseline still valid? Is re-baselining
  necessary?

65
DoD TripWire Metrics

• Primary Trip Wires
• - System Indicator EVM System Certification
• - Integrated Baseline Development Indictor
  IBR within 6 months of contract award cost,
  schedule, technical risk identified and
  quantified at IBR
• Secondary Trip Wires
• - CPI and SPI cum index lt .95
• - Baseline Execution Index (BEI) baseline
  tasks actually completed/baseline tasks
  scheduled for completion cum index lt .95
• - Critical Path Length Index (CPLI) of PMB
  (critical path duration float duration (to
  baseline finish) )/critical path duration cum
  index lt .95
• - To Complete Performance Index (TCPI) Work
  Remaining/Cost Remaining CPI to TCPI delta of
  gt10
• - PMB Revisions compared to monthly PMB
  value delta of gt5
• - Contract Mods compared to original base
  value delta of gt10

Reference EVM Government-Industry Working Group
brief, 21 Feb 2007
66

• EVMS Training and References

67
DAU Acquisition Community Connection
https//acc.dau.mil/evm
68
ACC Included References

• https//acc.dau.mil/evm
• DoD Policy
• OMB Recommended References

EVMIG
69
EVMS TrainingACC EVMS CoP
70
EVMS TrainingDAU Continuous Learning Modules
https//learn.dau.mil/html/clc/Clc1.jsp?cl
71
EVMS Tailored Training

• DAU can provide targeted training
• Tailored to specific organization needs
• Part of our Consulting/Performance Support
  efforts
• Potential Topics
• Integrated Baseline Review Workshop
• Program Startup Workshop
• EVMS Basics/Intermediate
• Scheduling Basics/Intermediate
• Source Selection
• For More Info, Contact Professor Kim Meyer
• 937-781-1040, kimberly.meyer_at_dau.mil

72

• Backups

73
Three Minute Acquisition Strategy Exercise
Earned Value Management Required - Yes or No EVM
System Validation Required Yes or No DFARS
Contract Clause Names Numbers to be used in the
RFP EVM Data Item Description (DID) Numbers
Names to be used in the RFP What formats of the
CPR DID (if any) would you tailor out with the
CDRL.
74
Example 1
75
Example 2
76
Example 3
77
Example 4
78
CONTRACT
Pop I Smith
79
CONTRACT
80
CONTRACT
81
CONTRACT
JAN
FEB
MAR
APR
MAY
JUN
82
CONTRACT
FY04
FY06
83
CONTRACT
FY04
FY06
84
UNCLASSIFIED
CLASSIFICATION
Form Approved
CONTRACT FUNDS STATUS REPORT
(Dollars in
000
)
OMB No. 0704-0188
The public reporting burden for this collection
of information is estimated to average 8 hours
per response, including the time for reviewing
instructions, searching existing data sources,
gathering and maintaining the data needed, and
completing and
reviewing the collection of information. Send
comments regarding this burden estimate or any
other aspect of this collection of information,
including suggestions for reducing the burden, to
Department of Defense, Washington Headquarters
Services,
Directorate for Information Operations and
Reports (0704-0188), 1215 Jefferson Davis
Highway, Suite 1204, Arlington, VA 22202-4302.
Respondents should be aware that notwithstanding
any other provision of law, no person shall be
subject to any
penalty for failing to comply with a collection
of information if it does not display a currently
valid OMB control number. PLEASE DO NOT RETURN
YOUR COMPLETED FORM TO THE ABOVE ADDRESS.
1. CONTRACT NUMBER
3. CONTRACT FUNDING FOR
5. PREVIOUS REPORT DATE
7. CONTRACTOR
(Name, address and zip code)
Increda Corporation 1100 W. Hollymolly St Los
Angeles, CA 90293
9. INITIAL CONTRACT PRICE
INC
03-09-30
DAAH01-03-C-0076
a. TARGET 72,412.2
FOR FY 03 - 06
b. CEILING 75,475.7
2. CONTRACT TYPE
4. APPROPRIATION
6. CURRENT REPORT DATE
8. PROGRAM
10. ADJUSTED CONTRACT PRICE
CPIF
RDTE
03-12-31
LAR SDD 2003
a. TARGET 72,412.2
b. CEILING 75,475.7
FUNDING INFORMATION
11.
CONTRACT WORK AUTHORIZED
FORECAST
ACCRUED
NET
APPRO-
FUNDING
TOTAL
FUNDS
EXPENDITURES
FUNDS
LINE ITEM/WBS
PRIATION
AUTHORIZED
REQUIRE-
CARRY-
OPEN
ALL
DEFINITIZED
NOT
SUBTOTAL
NOT YET
SUBTOTAL
REQUIRED
ELEMENT
IDENTI-
TO
MENTS
OVER
OTHER
COMMITMENTS
DEFINITIZED
AUTHORIZED
FICATION
DATE
TOTAL
WORK
e
f
g
h
j
i
m
a
b
c
d
k
l
LAR SDD
2040
20473
13548
72412
0
72412
0
0
0
72412
0
72412
CONTRACT WORK AUTHORIZED
(With Fee/Profit)
- ACTUAL OR PROJECTED
12.
04-03-26
04-01-30
ACTUAL
AT
04-07-02
04-09-30
05-09-30
04-02-27
TO DATE
COMPLETION
2825
0
1320
1295
1365
1223
1263
0
a. OPEN COMMITMENTS
60942
12183
27519
72413
19141
34738
15422
17668
b. ACCRUED EXPENDITURES
13548
30344
72413
18963
16742
20364
60942
36001
c. TOTAL
(12a 12b)
7870
8756
72413
13. FORECAST OF BILLINGS
2513
18237
3240
2384
6820
TO THE GOVERNMENT
10942
0
11367
9906
14. ESTIMATED TERMINATION
13211
11846
13961
12196
COSTS
15. REMARKS
UNCLASSIFIED
DD FORM 1586, AUG 96 (EG)
PREVIOUS EDITION MAY BE USED.
of
Pages
Page
CLASSIFICATION