1. 49th Annual NCMA March Workshop
What Contracting Professionals Need to Know About Earned Value Management
Presenters:
Frank Malsbury, CPCM, NCMA Fellow
Internal IBR Manager
Raytheon
Buddy Everage, PMP
Director Emergent IT Programs
MCR Federal, LLC

2. Agenda Background and Overview of EVMS What is it?
Speaker Introductions
Background and Overview of EVMS
What is it?
ANSI/EIA 748 EVMS Guidelines
Basic Principles
An example of how an EVMS works (EVM Data Analysis)
Information for management decision making
EVM Policies and Directives
OSD / OMB
EVM in Federal Contracting
Where to find EVM requirements in Solicitations
Proper response to EVM requirements
Summary

3. Earned Value Management Definition
Earned Value Management (EVM) is a project management technique that objectively tracks physical accomplishment of work.
EVM provides an early warning of performance problems while there is time for corrective action.
In addition, EVM improves the definition of project scope, prevents scope creep, communicates objective progress to stakeholders, and keeps the project team focused on achieving progress.
Strategic alignment of program objectives with agency mission is essential to obtaining program funding (OMB 300). Once strategic alignment is established, EVM provides the visibility to ensure that the program cost, schedule and technical objectives are met.
A couple of key words in that first statement, technique and objectively. It is a technique like critical path scheduling. How you use it will vary and how much you will get out of it will depend on how you use it. Objectively means that the EV is determined on a pre-established plan, not guessed at after the fact. i.e., metrics tell use quantitative indications
How early can it provide warning? According to Wayne Abba, the analyst in the Under Secretary of the Defense office in the Pentagon in the 1980’s, at 18% complete, he could tell you what a project was going to cost at completion within 10% if nothing changes. Trends can tell us likelihood of performance, but TCPI and EAC are your forward looking metrics; connect the dots
Because it requires more discrete planning of the work, EVM is also a improvement in scope definition and control
My thought on this slide is that the metrics are not targets or goals, i.e, 1.0 or “Green”. The metrics tell us when a variance arises so we can proactively respond to the situation before it becomes a problem or they become problems.
Very Effective When Used in Conjunction with Other Management Techniques

4. Definitions – Clarification of Terms
Earned Value (EV) – The value of completed work expressed in terms of the budget assigned to that work, often referred to as Budgeted Cost of Work Performed (BCWP). It provides an objective measure of the value of completed work expressed in terms of the budget assigned to perform the work.
Earned Value Management (EVM) – A management methodology that integrates a program’s technical scope, schedule and resources with program risk in a baseline plan against which progress is measured to produce metrics that highlight variances and performance trends, thereby providing program managers, as well as high level management, with objective visibility into program progress and enable more effective management.
Earned Value Management Systems (EVMS) – An integrated set of policies, processes, procedures, systems and practices that meets an organization’s implementation of ANSI/EIA-748.
BCWP and EV are also known as “performance”
By the way, BCWS is also known as the Plan or “Planned Value”
The Language of EVM is Unique 4

5. EVM Has Evolved Over Many Years
EVMS History
The first attempts to view the status of major projects was the DOD, PERT/Cost, in the 1960’s
Then came the DOD Cost Specification (CSpec) requirements
In 1967 the DOD Cost/Schedule Control System Criteria (C/SCSC)
In the late 1980’s the Earned Value Management System (EVMS) became a project management methodology
Currently, ownership of EVM criteria is maintained by industry with adoption of ANSI EIA 748-B standard
The derivations of EVMS lie in the weapon systems development during the cold war. Large military project were constantly overrun and behind schedule. There were several iterations as the kinks were worked out of the best practices for both the customer and the contractor. As the military spending decreased, many of these EVM knowledgeable people ended up in commercial environments. They spread the word about EVM. On the government side, many ex-military found themselves in the civilian side of the government and saw a need for better management of projects there. Currently the standards used by government for EVM are maintained by industry. Also, the PMI has included EVM as part of their PMBOK.
EVM Has Evolved Over Many Years

6. ANSI/EIA 748 EVMS Guidelines
32 Guidelines establishes the framework within which an adequate integrated Cost/Schedule/Technical Management System will fit
Organization 5
Define the authorized work and assign responsibility for the work. Integrate planning, scheduling, work authorization and accounting systems.
Planning & Budgeting 10
Plan, schedule, budget and authorize the work. Establish and maintain a time-phased budget baseline.
Accounting 6
Accumulate costs for work and material
Analysis & Management Reports
Compare planned and actual costs, and analyze variances. Identify management actions taken. Horizontal and vertical communications and traceability. Develop revised estimates of costs at completion.
Revisions &
Data Maintenance
Timely incorporation of contractual changes. Maintain traceability from original budgets. Prevent retroactive changes
The
five major Aspects of an Earned Value Management System are required to “play” together
Industry Guidelines 6

7. The Questions that EVM Answers
How can a Program Manager get an early warning of performance problems while there is time for corrective action?
How does a Program Manager improve the definition of project scope & prevent scope creep?
How does a Program Manager communicate objective progress to stakeholders?
How can a Program Manager forecast the cost at completion and the end date for the project?
The questions that a PM wants EVM to answer are; How do I see what is happening in time for corrective action. How do we improve the definition of project scope (equals better planning) How do we communicate objective progress to stakeholders
Three Program Manager EVM questions:
Where Should We Be At This Point In Time? How are y’a doin’? (Baseline Plan Vs. Time Now – Know Your Plan!)
Are We There & How Do We Know?(Claimed Performance vs. Baseline Plan)
Where Are We Going From Here? (If Not On Track, What Are We Doing About It? If On Track, How Will We Stay On Track To Meet Program Goals, Objectives?)
Summary This is a time proven methodology. It has evolved from a detail, hard core expensive process to a reasonable approach with benefits for all.
Used Correctly, EVM Aids Proactive Management 7

8. What is Earned Value Management?
EVM
Plan
Measure
Collect Costs
Analyze
Manage
I like to ask attendees if they have experience with any of the steps – what comments can they offer.

9. What is Earned Value Management?
EVM is a technique that relates resource planning to schedules and to technical performance requirements
EVM integrates project cost, schedule, technical effort and risk in a realistic, executable plan called the Performance Measurement Baseline (PMB)
Tracks performance/progress to the plan
Provides early warning of developing problems/opportunities
Enables early corrective action when deviating from the plan
EVM is a repeatable process
Standard and consistent methods for progress measurement
Consistent use of performance metrics on all projects
Enables management to easily assess health of the enterprise
Provides project past performance data and lessons learned useful for improving performance and in preparing future estimates for similar work
EVM is a repeatable process that works well when we integrate project cost and schedule planning of the technical effort and the associated risk and opportunities in a realistic, executable plan called the Performance Measurement Baseline (PMB). It tracks performance/progress to the plan, provides early warning of developing problems/opportunities and enables early corrective action when deviating from the plan.
A Disciplined Earned Value Management System is Powerful

10. EVM is a Program Management Process
for integrating
Scope
Schedule
Resources
Cost
Technical Requirements
to measure program performance
to determine if cost and schedule
performance are as planned
to determine final program costs
EVM is a key factor in winning and managing federal contracts
Detailed Schedules
Control Account Plans
Subcontract Schedules
Integrating is the key. What does it mean? If we have to transfer data manually to “integrate” (combine) cost with schedule data, we risk errors and that means we will not achieve the needed integration.
The Program Manager Owns Earned Value Management 10

11. What Earned Value Management is Not
It is not a software package
Software vendors that tell you their product is ‘validated’ or ‘certified’, do not understand
It is not a set of reports (although reporting is important)
It is not a financial system, but it is maintained by Finance
It is not funds management (but it is an indicator of funds requirements)
It is not a software package it is a process. Software vendors that tell you their product is ‘validated’ do not understand the concept of EVM. Processes may be validated using a software product but only the process is validated. Anyone that says using their software will give you a certified system, does not understand.
It is not a set of reports (although reporting is important). Most of the time, each organization defines what data they want to see.
It is not a financial system even though it measures work in dollars. But it is maintained by Finance based on the accounting requirement in the 32 Guidelines for EVMS.
EVM is a process that can be supported by software to determine the performance of a project.
Earned Value Management is a Program Management Tool

12. Earned Value Management System (EVMS) Features
A disciplined approach to work definition, work organization and assignment, planning, performance measurement, monitoring and control
Work is defined, assigned and planned; plans are approved before work is authorized to begin
Changes are incorporated, planned, approved, and authorized before work begins on the change
EV methods or measurement techniques provide objective assessment of program progress
Variance identification and analysis, summarized through the CWBS, provides performance trends as well as the identification of developing problems
Problems are quickly and easily tracked to their source for immediate corrective action
Performance metrics predict where the program is going and are useful in validating independent estimates or assessments; modern EVM adds use of Technical Performance Metrics
Budgets are also agreed before work starts
The appropriate EV method is assigned and for a method called “% complete” we expect quantifiable backup data (QBD) will be used to measure performance each month. There are several EVTs to choose from and the right EVT matches the nature of the work. More on EVTs in a couple more slides . . .
Do not expect EV metrics to tell you what the problem is because that is not how they work. Programs MUST use technical performance metrics in conjunction with EVM. TPMs are essential.
Variance analysis is good, but when we write to explain the variance and our analysis we do not do it well.

13. The Earned Value Management Process
Plan the Work
Work the Plan
External Changes
Collect Results
Define the Work
Analyze Deviations
Take Corrective Action
Measure Performance
Change Control
Define the work – the Contract and all attachments (SOW, CDRLs, DID, and other documents, e.g., GFP list
Plan the work – create Control Accounts based on good planning
Work to the plan – do what you planned
Collect the results – data is the key and data validation is primary
Measure performance – using the right Earned Value Technique and objective criteria / measurements, assess performance
Analyze deviations – a variance that gets large enough breaches a threshold; find what caused you performance to track off the plan
Take corrective action – fix the flaw and get back on plan; occasionally you need to re-plan the work
Change control – maintain a tight baseline and an audit trail to that baseline
External changes – adjust the baseline according to contract modifications
Earned Value Management is an Iterative Process

14. PMB and the Integrated Baseline?
Presentation Title
April 21, 2017
PMB and the Integrated Baseline?
Contract Baseline
Contract/Contract Letter
Statement of Work (SOW) OR of Objectives (SOO)
CDRLs and DIDs
System Specification …
RISK & OPPORTUNITY
Work Authorizations
(planning)
Primary Work Authorization (PWA)
Secondary Work Authorizations (SWA)
Including Subcontracts & IOTs
Work-Breakdown Structure (WBS)
Organizational Breakdown Structure (OBS)
Control Account Structure
Responsibility Assignment Matrix (RAM)
Program Structure
Baseline
Program Plan & Schedule
Baseline
Master Phasing Plan
Integrated Master Plan (IMP)
Integrated Master Schedule (IMS)
The Baseline is central to an effective EVMS and an integrated baseline involves several elements.
PMB
EVMS Baseline
Control Account Plans
Work Packages & EVTs
Time-Phased Resource Spreads / Staffing
Work Authorizations
(execution)
Speaker Name

15. Program Structuring and EVMS Implementation
Presentation Title
Program Structuring and EVMS Implementation
April 21, 2017
Program structuring is critical. With a product-based WBS and a resourced Organizational Breakdown Structure we can determine the Control Accounts. Control Accounts make the work manageable and the CA is what we manage.
RAM Integrates Work Scope, Budgets & Organizational Responsibility at the Control Account Level
Speaker Name

16. IMP/IMS Planning Control Account Planning
Presentation Title
April 21, 2017
IMS/EVMS Planning
Define
Control Accts. (RAM)
Define E/A/C (IMP Product Section)
IMP/IMS
Planning
Define & Plan
Work/ Planning Packages
Define IMS Tasks & Sub-Tasks
Sequence Work / Planning Pkg. Activities
Define Task Relationships
Plan WP & PP Resources & Durations
Plan IMS Task Resources & Durations
This is the same material as the last slide, but with some details about the documents involved
Control Account
Planning
Assess Resource Plan
Assess Critical Path & Schedule Risk
Validate EVMS Baseline
Validate IMS Baseline
Speaker Name

17. EVM Data Analysis – An Example

18. Earned Value Analysis % Complete vs. % Spent
Analysis of Variances (SV, CV, VAC)
Schedule Variance (BCWP – BCWS)
Cost Variance (BCWP – ACWP)
Variance At Complete (BAC – EAC)
Graphical Trend Analysis
BCWS/BCWP/ACWP line charts
Cumulative SV and CV line charts
SPi and CPi line charts
To Complete Performance Index (TCPi)
Budget At Complete (BAC)
Estimate At Complete (EAC)
Statistical Forecasting Techniques
Technical Performance Metrics
DCMA Trip Wires (DoD Programs)
DCMA Trip Wires (DOD Programs):
Two Primary Trip Wires:
DCMA EVM Center Contractor EVMS confidence rating
– Corrective Action Requests (CAR Levels 1-4)
Integrated Baseline Review (IBR)
- Initial review conducted within 180 days
Seven Secondary Trip Wires
Baseline Execution Index (BEI) – IMS
Cum index less than .95
Critical Path Length Index (CPLI) – IMS
Schedule Performance Index (SPI) – CPR
Cost Performance Index (CPI) – CPR
To Complete Performance Index (TCPI) – CPR
CPI to TCPI delta of 10%
PMB Revisions (Baseline Stability Index) –CPR, CFSR
Changes to Monthly Time-Phased PMB value of 5%
Contract Mods –ACO, PCO
Contract Mods to Original Base value of 10%
Technical Performance Metrics
Formulas at end of presentation 18

19. Key Data Elements and Variances
Time Now
EAC
ETC
Forecast Variance At Complete
BAC
BCWS
Forecast Schedule Slip
Schedule Variance (BCWP – BCWS)
Value
ACWP
Cost Variance (BCWP – BCWS)
BCWP
Common formula always starts with BCWP. BCWP – ACWP – CV, BCWP – BCWS = SV. That means all the math relates to assessed performance, BCWP.
Time
BCWS – Budgeted Cost for Work Scheduled
BCWP – Budgeted Cost for Work Performed
ACWP – Actual Cost of Work Performed
BAC – Budget at Completion
EAC – Estimate at Completion
ETC – Estimate to Completion 19

20. Project Objectives Scope: 200 Drawings Schedule: 10 Months
Budget: 30 Hours per Drawing
BAC: $300K (6000 hrs x $50/hr)
Plan: 20 Drawings per Month

21. Month 5 Status 100 Drawings Planned 70 Drawings Completed
2450 Hours Spent
$52/Hour Average Cost
So, how are we doing?
Hours
3000
2100
2450
(900)
(350)
6000
Dollars
150.0
105.0
127.4
(45.0)
(22.4)
300.0
BCWS
BCWP
ACWP SV CV
BAC
EAC
VAC

22. Percent Variance: Schedule
SV Hours
X = % SV
BCWS Hours
(900) Hours SV
X = ( 30.0% )
3000 Hours BCWS

23. Schedule Performance Index
Work Completed
BCWP or
= SPI
Work Planned
BCWS
2100 Hours BCWP
= .70 SPI
3000 Hours BCWS
70% Efficiency to Schedule

24. Percentage Variance: Cost
$ Cost Variance
X = % CV
$ BCWP
($ 22.4) CV
X = ( 21.3% )
$ BCWP

25. Cost Performance Index
Work Completed
$ BCWP or
= CPI
Actual Cost
$ ACWP
$105.0 K BCWP
= .82 CPI
$127.4 K ACWP
82% Cost Efficiency

26. Calculated EACs to Assess Realism of Manager’s EAC
IEAC*
= ACWP Calculated ETC
BAC - BCWP =
ACWP +
Performance Factor
*Independent EAC
Analysis is critical, and writing the story of a variance that breaches a threshold comes next. The written VAR is what the PM relies on. The Control Account Manager writes the VAR. Writing VARs well is obviously important, therefore.
Analysis Leads to Thresholds and Breach Thresholds require Variance Analysis Reports

27. Current EVM Policies and Directives

28. Defense Spending Changes
Winners
Losers
Reaper-Class UAV
F-22 Raptor
Nearly 7 in 10 major U.S. arms programs over budget
WASHINGTON (Reuters) – 3/30/09 Nearly 70 percent of the Pentagon's 96 major weapons-buying programs were over budget in 2008 for combined cost growth of $296 billion above original estimates, congressional auditors said in
an annual report released on Monday.
F-35 Joint Strike Fighter
Future Combat Systems
Littoral Combat Ship
Marine 1 Pres. Helicopter
Source: Reuters, Popular Mechanics, CNN.com

29. GAO: Hundreds of federal IT projects are poorly planned and underperforming
NextGov.com – 7/31/08 - More than 400 federal information technology projects valued at $25 billion have been poorly planned or performing under expectations — or both, the Government Accountability Office planned to tell a Senate hearing on Thursday
352 projects valued at about $23.4 billion on the management watch list to be poorly planned
87 of their high-risk projects valued at about $4.8 billion were poorly performing
26 projects, valued at about $3 billion, were both poorly planned and poorly performing
Earned Value Management is Expected to Help Programs Deliver on Time and Within Cost

30. Resulting Defense Spending Reform
WEAPON SYSTEMS ACQUISTION REFORM ACT OF S A bill to improve the organization and procedures of the Department of Defense for the acquisition of major weapon systems…
May 22, 2009: Became Public Law No:
Section 207 -
Directs the Under Secretary to review existing (and if necessary, prescribe additional) guidance governing implementation of the Earned Value Management requirements and reporting for DOD contracts.
Data Quality
EVM Education
Contract Execution

31. OSD EVM Policy/Guidance
Contracts
Thresholds
Requirements
> $50M
Cost or
Incentive
Equal to
Or Above Threshold
- Compliance with industry EVM standard
Formal validation of contractor’s EVM system
Contract Performance Report
Integrated Master Schedule
Integrated Baseline Review
Ongoing surveillance
Cost or
Incentive Less Than Upper Threshold but
Equal to
Or Above Lower
Threshold
< $50M
but
> $20M
Compliance with industry EVM standard
Formal system validation not required
Contract Performance Report (tailored)
Integrated Master Schedule (tailored)
Integrated Baseline Review (tailored)
Ongoing surveillance
EVM Contract Requirements Checklist is on line, April 2008 is current
Earned Value Management System (EVMS) in compliance with guidelines in ANSI/EIA-748* is required on all cost or incentive contracts equal to or greater than $20M.
A formally validated and accepted EVMS is required for cost or incentive contracts equal to or greater than $50M.
EVM is discouraged for Firm-Fixed Price (FFP) contracts, except when a FFP contract equal to or greater than $20M is used for development work. Exception requires business case and Milestone Decision Authority waiver.
EVM may be imposed on contracts less than $20M as a risk-based decision of the program manager based on a cost/benefit analysis.
Checklist provides an example SOW para, DID reference, Section M – Evaluation factors for Award of the solicitation, and the DFARS and references. Also tells you about Integrated Baseline Reviews (IBRs).
More on this a few slides later
< $20M
- EVM optional (risk-based decision)
Cost-benefit analysis required
Cost or
Incentive
Less Than
Threshold 31

32. OMB EVM Policy/Guidance
Capital Programming Guide v 2.0
Expands the explanation of concepts in the original guide that was not fully developed, e.g., EVMS
EVMS requirements in contracts or agency in-house project charter
Compliance reviews of agency and contractor EVM Systems
Periodic system surveillance reviews to ensure the EVMS continues to meet the guidelines in ANSI 748 and
Integrated Baseline Reviews (IBRs) to finalize the cost, schedule and performance goals.
NDIA Guides identified as the primary references for information
EVM Federal Acquisition Regulation (FAR)
EVMS identified and formerly linked with ANSI/EIA Standard 748 and OMB Circular A-11, Part 7
Identifies EVM’s role in the acquisition roadmap
EVMS required for major acquisitions for development in accordance with OMB Circular A-11 32

33. EVM in Federal Contracting

34. Fundamental Elements of Contracting for EVM
Identify application of Earned Value Management System in solicitations and contracts
Define reporting requirements and
electronic submission
Define evaluation criteria for source
selections
Evaluate EVMS
Integration with Award/Incentive plans
EVMS implementation plan for new contracts
Evaluate for compliance with the standard
Support conduct of an Integrated Baseline Review
Contractor’s proposed EVMS
Too often I find the parties do not read the Request for Proposal (solicitation) to accurately locate all EVMS requirements.. And use of the old fashioned RFP Matrix or “shalls” Burn Down spreadsheet / “Closure Matrix” is essential to identifying all requirements.
Carefully Read the Solicitation (RFP) and Every Attachment (the SOW, CDRLs, DID); Reconcile w/ Contract Awarded

35. Addressing EVM in the Solicitation
Section C – Performance Work Statement/ Statement of Work
CWBS/EVMS/IBR/EVMS Flowdown
Section I – General Provisions
Contract Clauses
Section J – Exhibits and Attachments
Section L - Instructions for Offerors*
Section M- Evaluation Factors for Award*
* Note: Sections L and M are included in Solicitations only
Please take note – I find Contracting Officers omitting required clauses, CDRLs, DIDs, and SOW tasking.
Carefully Read Everything in the RFP, and Create Spreadsheets and Matrices to Trace Every Requirement

36. The SOW is the Tasking Document – Know the Tasks
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 contract management and control
The contracted technical effort to use an ANSI/EIA-748 compliant EVMS that correlates cost and schedule performance with technical progress
The 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
The SOW is the Tasking Document – Know the Tasks

37. Section I - General Provisions
New FAR Clauses – July 2006
FAR – Notice of EVMS – Pre-Award IBR
FAR – Notice of EVMS – Post Award IBR
FAR – EVMS – The Government will conduct an IBR if a pre-award IBR has not been conducted
FAR EVM clauses not tied to dollar thresholds
DFARS Clauses
Solicitation Provision: – Notice of Earned Value Management System (Apr 2008)
Contract Clause: – Earned Value Management System (Apr 2008)
Para “e” in the DFARS requires an IBR at 180 days after contract award. Do the parties know about para “e”
Contracting Officers and Contractors Must Know Everything in Every Clause

38. Section J - Exhibits and Attachments
Work Breakdown Structure - MIL-HDBK-881A common WBS for CPRs and IMS 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 agency policy
Consider all risk factors when tailoring CPR and IMS DIDs
Type of contract (determined by cost risk)
Technology
Schedule
Past contractor performance
Product based WBS is required; Contractors: do not base the WBS on required reports formats. Let the SW do that for you. Create the product-based WBS and let the SOW pull the data to create the report formats.
Government Contracting Officers: require a product-based WBS and do not allow the WBS to be altered so it is no longer product-based. There should be SW that can pull the data from the WBS to create any report format you want.

39. 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.
Government: tailor if you do not want to pay for all the DID requirements.
Contractor: read the DID and know what is required to be delivered!

40. 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 (e.g., 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
Government: tailor if you do not want to pay for all the DID requirements.
Contractor: read the DID and know what is required to be delivered!
Both parties: know if you truly need a Schedule Risk Analysis (SRA).

41. Section J - Award Fee Plan
Government Program managers often wish to tie Contractor award fee to EVM performance
Looks like a score and is advertized as an “objective” measure
But...
Data can be manipulated and may only be discerned by experienced practitioners
If you reward good data, you will get good data
Care should be taken not to mis-incentivize the supplier (Contractor)
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
You will get the behavior you incentivize.
“Gaming” – a Program Manager’s “death wish.” Mistakes, errors are one thing, but gaming. Donald Trumped – “Your fired!”
Award Fee is for Results / Deliveries, not for EVM Scores

42. Section L - Instructions for Offerors
Guidance to bidders for the assembly of their proposals
Each offeror’s proposal shall include a description of the EVMS to be used in accordance with the appropriate RFP FAR clauses
Compliance with Validation requires:
Reference to an Advance Agreement, Letter of Acceptance, etc. 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

43. Contractor’s Proposed EVMS - Addressing the EVMS RFP Requirement
Describes system in sufficient detail to determine compliance
Includes prior Certification/Acceptance
If no EVMS in place, the Contactor must submit a comprehensive plan for Compliance in accordance with FAR/DFARS
Describe the EVMS the offeror intends to use in performance of the contract, and how the proposed EVMS complies with ANSI/EIA 748
Distinguish between the offeror’s existing management system and modifications proposed to meet the EVMS guidelines
Describe the management system and its application in terms of the EVMS guidelines
Describe the proposed procedure for administration of the EVMS as applied to subcontractors
Describe the process the offeror will use to determine subcontractor compliance with ANSI/EIA 748
Identify major subcontracts for application of criteria
Verify baseline integrity is maintained
Contractors who include EVMS as a way of doing business usually do not separately bid the cost of EVMS. The cost of EVMS like all other program management tools is in overhead.
Subcontract flow-down is a weak point. The Prime’s EVMS is faulty if it is reliant on a Subcontractor that is responsible for 40% of the program under a FFP contract providing no EV data. Negotiate EV data, e.g., SPI, Performance Based Payments, key TPMs.

44. 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.
The Cognizant Federal Agency should be requested to provide insight regarding EVMS capability, quality, and past performance.

45. Post Award Responsibilities
Assess System Surveillance
Contractor surveillance plan in place
Contractor surveillance is being periodically conducted
Monitor planned activities vs actual activities
Ensure that program office is conducting program analysis on a periodic basis
Schedule, conduct and support
periodic Integrated Baseline Reviews
Take corrective action when variances exist
I conduct Internal Integrated Baseline Reviews (IBRs) for all Raytheon Integrated Defense Programs (IDS). Internal IBRs:
prepare programs for IBRs
are CAM “School” - indoctrination, organization, discipline
assist in implementing EVMS procedures at program Start-up, ensuring correct and timely Work Authorization, proper program structuring, Schedule & Budget Integration (tools are key here), Baseline Control, EV Analysis, Risk & Opportunity
Program and CAMs are scored to assess probable effectiveness; “Green” means no Action Items or fixed in real-time; “Yellow” means Action Items assigned, fixable
IIBR process continues until program and CAMs achieve "Green”, all Action Items closed and effectiveness improved
We review at a 90, 120, 150 and 180 days timeline

46. EVM and Fixed Price Contracts
OMB Circular A-11 and the FAR do not exempt specific types of contracts from the EVM requirement
Applies to fixed-price, time and material, as well as cost plus
Fixed-price contracts are not a barrier to EVM
Certain guidelines may be not applicable
Indirect costs and material
Actual Costs for fixed-price contracts are simply the prices the customer pays for the work.
Contractor should develop and coordinate a schedule of values that relate performance to progress payments
Will not have a cost variance because ACWP = BCWP
Primes need to manage Subcontractors and Suppliers so the deliver on time, i.e., so the Subcontractor and Supplier is successful!
Subcontractors and Suppliers Must be Managed so they are Successful

47. EVM is a Key Factor in Winning and Managing Federal Contracts
Summary
EVM considerations must begin in the early stages of solicitation planning.
Should be addressed in the acquisition strategy and acquisition plan
Post award activities (IBRs and EVMS certification) are especially critical and directly impact the effectiveness of EVM throughout the program lifecycle
EVM is a Key Factor in Winning and Managing Federal Contracts

48. Questions?

49. BACKUP INFORMATION

50. EVM Analysis Formulas & Metrics
Presentation Title
EVM Analysis Formulas & Metrics
April 21, 2017
Metric
Formula
Purpose
Cost Performance Index
CPI = BCWP
ACWP
Measurement of cost efficiency of the work
accomplished (Cumulative, Average or Current
Period). DCMA expectation is => .95
Schedule Performance Index
SPI = BCWP
BCWS
Measurement of work accomplished to the plan
(Cumulative, Average or Current Period). DCMA
expectation is => .95
Cost Variance
CV = BCWP –
Work accomplished cost more or less to complete
than planned.
Schedule Variance
SV = BCWP -
Indication of more or less work accomplished than
planned.
Variance at Completion
VAC = BAC
EAC
The difference between what the job is planned to
cost versus the estimated cost at completion.
Percent Complete
% Comp = BCWP (cum)
Provides percentage of the estimate at completion
that has been accomplished
% Comp = BCWP (
cum )
BAC
Provides percentage of the budget at completion
Percent Spent
% Spent = ACWP
that has been spent to date
Baseline Execution Index
BEI = Total Tasks/Activities Completed
Total Tasks/Activities Planned
Measurement indicating efficiency of work
accomplished against the baseline plan. DCMA
Critical Path Length Index
CPLI = Critical Path Length + or
Total Float
Critical Path Length
Calculation that indicates the realism of the
program’s ability to complete the program (or major
milestones) on time. DCMA expectation is => .95
The next three pages provide assessment criteria for Work Documentation compliance by Raytheon guideline.
Speaker Name

51. EVM Analysis Formulas & Metrics
Presentation Title
April 21, 2017
EVM Analysis Formulas & Metrics
The next three pages provide assessment criteria for Work Documentation compliance by Raytheon guideline.
Speaker Name