BASICS OF EARNED VALUE MANAGEMENT National Contract Management Association Colorado Springs Colorado June 19, 2008

Earned Value Management (EVM) Training Objectives Understand basic concepts What EVM is and basic terms How to evaluate performance What does it all mean? How to manage using Earned Value Now that we know what it is and what it means, what do we do with it?

Earned Value Management Systems measure progress Progress = Movement Forward to measure progress, there must be a standard against which the forward movement may be compared EVMS establishes a baseline to measure progress

EVM can provide answers to the following questions: How much have we spent? How much did we get for our money? How much more will be have to spend to complete the tasks we wanted to accomplish? How much longer will it take? How efficiently is the work being done? What has happened? (Why are we off schedule/cost?) What is happening? (What are the impacts?) What is going to happen? (What are we doing to fix it?)

Why use Earned Value Management Systems? “The Bottom Line” EVM can focus program management attention on critical issues and risks during the “project” life cycle How are you doing, and how do you know how you are doing? Early problem identification Completion Estimates How far along are you? (64%, 50%, >40%) What is your productivity/efficiency? Work remaining 4

Earned Value Management Is Not: Guarantee of profit Restricted to projects for the production of a products – EVM can be used in service contracts Solution for a poorly written statement of work Magic Bullet

Five Basic Elements

5 Basic Performance Data Questions & Answers QUESTION ANSWER ACRONYM How much work should Budgeted Cost for BCWS be done? Work Scheduled How much work is done? Budgeted Cost for BCWP Work Performed How much did the is done Actual Cost of ACWP work cost? Work Performed What was the total job Budget at Completion BAC supposed to cost? What do we now expect the Estimate at Completion EAC total job to cost? We have now answered the five basic performance measurement questions. How much work should be done? BCWS How much is done? BCWP How much did the work actually cost? ACWP What was the total job supposed to cost? BAC What do we now expect it to cost? EAC

What do we measure progress against? and Why? Performance measurement baseline Budget that is spread over . . . Time, to accomplish the scope of Work, against which progress can be measured Earned Value is key concept how much progress did I make against my original plan? expressed in dollars or hours Why? – early warning baseline $ earned value time

Why do we need Early Warning? Small course corrections are easier when made early… … If you wait until you reach the Iceberg, its too late!!!

Terms and Definitions associated with EVM: It starts with the Work Breakdown Structure (WBS) Based on the WBS a total budget is assigned Work packages are developed and priced A process to measure the results of those work packages is put into place Work packages are tracked for both the dollars and time spent The result of this effort is developing a Budget at completion (BAC)

Work Breakdown Structure Systematic approach to ensuring all program work is recognized and defined into a viable work plan – should include labor and materials for complete picture 1.0 Project – New Marketing Campaign for Dog Food First Level 1.1 Printed Media 1.2 Electronic Media 1.3 Radio Second Level 1.1.1 Magazines 1.1.2 Newspaper inserts 1.3.1 Local Spots 1.3.2 Regional Spots Third Level 1.2.1 Website 1.2.2 TV

Organizational Breakdown Structure Identifies the functions and/or people that will do the work New Marketing Campaign for Dog Food - assign to the Western Division Admin Asst Chen Chuck’s Design Team Regional Media Support Centralized National Support Sally For message And theme Juan for Customer interface Stan In Accounting Ray Budget John for Computer Graphics Josh Audio Beverly in National Accounts Tanya Print

Responsibility Matrix Assigns WBS work to OBS labor 1.1 1.2 WBS OBS 1.1.1 1.1.2 1.2.1 Admin Asst - - - - - - - - - - - - - - - - - - - - - - - - - - graphics audio - - - - - - - - - - - - - - - design - - - - - - - - - - - - - - - - - - - - - - - - accounting budget - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

CONTRACT BUDGET BASE CONTRACT AUTHORIZED, PRICE UNPRICED PROFITS AND FEES MANAGEMENT RESERVE PERFORMANCE MEASUREMENT BASELINE WITHHELD FOR UNKNOWNS UNDISTRIBUTED BUDGET DISTRIBUTED (control accountS) WITHHELD FOR KNOWN EFFORT AUTHORIZED, UNPRICED

ORGANIZATION CONTRACT Control Account WBS ELEMENT ORGANIZATION BUDGET LEDGER MASTER SCHEDULE GENERAL WORK AUTHORIZATION CONTRACT Control Account WBS # ______________ ORG # ______________ TASK DESCRIPTION________________________ SCHEDULE _______________________________ TOTAL BUDGET ________________ WORK PACKAGE WP # ________ ORG # _________ DESCRIPTION ________________ ______________________________ SCHEDULE _________________ BUDGET ___________________ WBS ELEMENT ORGANIZATION WORK AUTHORIZATION SCHEDULE BUDGET COST ACCUMULATION

The Control Account A Key Management Control Point Specific functional responsibility Specific WBS responsibility Work planning and assignment Performance measurement Cost collection Variance analysis Corrective action Basis of data summarization

CONTRACT BUDGET BASE CONTRACT AUTHORIZED, PRICE UNPRICED PROFITS AND FEES MANAGEMENT RESERVE PERFORMANCE MEASUREMENT BASELINE WITHHELD FOR UNKNOWNS UNDISTRIBUTED BUDGET DISTRIBUTED (control accountS) WITHHELD FOR KNOWN EFFORT AUTHORIZED, UNPRICED

PERFORMANCE MEASUREMENT DATA ELEMENTS UNDISTRIBUTED BUDGET (UB) Budget applicable to contract effort which has not yet been identified to CWBS elements at or below the lowest level of reporting to the Government. KEY: Only used for the effort associated with the contractual change.

PERFORMANCE MEASUREMENT DATA ELEMENTS MANAGEMENT RESERVE (MR) An amount of the total allocated budget withheld for management control purposes rather than designated for the accomplishment of a specific task or set of tasks. KEY: There is no scope of work associated with management reserve budget.

PLANNING AND BUDGETING 1. DEFINE THE WORK PLANNING AND BUDGETING ESTABLISH THE BASELINE - AN ITERATIVE, 3-STEP PROCESS 100 40 60 15 25 30 2. SCHEDULE THE WORK 3. ALLOCATE BUDGETS $ CONTRACT BUDGET BASE TIME MR PM BASELINE

Work Budgeted and Earned The value of the budgeted work is called: Budgeted Cost of Work Scheduled (BCWS) The value of work earned is called: Budgeted Cost of Work Performed (BCWP) BCWP is also called Earned Value (EV)

5 Basic Performance Data Questions & Answers QUESTION ANSWER ACRONYM How much work should Budgeted Cost for BCWS be done? Work Scheduled How much work is done? Budgeted Cost for BCWP Work Performed How much did the is done Actual Cost of ACWP work cost? Work Performed What was the total job Budget at Completion BAC supposed to cost? What do we now expect the Estimate at Completion EAC total job to cost? We have now answered the five basic performance measurement questions. How much work should be done? BCWS How much is done? BCWP How much did the work actually cost? ACWP What was the total job supposed to cost? BAC What do we now expect it to cost? EAC

Budgeted Cost of Work Scheduled (BCWS) Total Budget = $5,000 to be spent over 5 months I plan to lay 1 section of track each month at an estimated cost of $1,000. BCWS each month = $1,000 Total BCWS = $5,000 Month 1 BCWS = $1,000 Month 2 BCWS = $1,000 Month 3 BCWS = $1,000 Month 4 BCWS = $1,000 Month 5 BCWS = $1,000 sum of all BCWS = performance baseline

5 Basic Performance Data Questions & Answers QUESTION ANSWER ACRONYM How much work should Budgeted Cost for BCWS be done? Work Scheduled How much work is done? Budgeted Cost for BCWP Work Performed How much did the is done Actual Cost of ACWP work cost? Work Performed What was the total job Budget at Completion BAC supposed to cost? What do we now expect the Estimate at Completion EAC total job to cost? We have now answered the five basic performance measurement questions. How much work should be done? BCWS How much is done? BCWP How much did the work actually cost? ACWP What was the total job supposed to cost? BAC What do we now expect it to cost? EAC

Budgeted Cost of Work Performed (BCWP) aka. Earned Value Track 1 We’re at the end of February, Track 1 is complete and track 2 is ½ done. BCWS = $1,000 Track 2 BCWS = $1,000 Value of work performed = $1,500 50% done

BC WS BC WP Schedule Variance formula: SV $ = BCWP - BCWS of the work I scheduled to have done, how much did I budget for it to cost? BUDGET BASED of the work I actually performed, how much did I budget for it to cost? SCHEDULE VARIANCE is the difference between work scheduled and work performed (expressed in terms of budget dollars) formula: SV $ = BCWP - BCWS example: SV = BCWP - BCWS = $1,500 - $2,000 SV= -$500 (negative = behind schedule)

Schedule Variance $ sv TIME BCWS “the baseline” BCWP “earned value” 5,000 BCWS “the baseline” sv $ BCWP “earned value” TIME

5 Basic Performance Data Questions & Answers QUESTION ANSWER ACRONYM How much work should Budgeted Cost for BCWS be done? Work Scheduled How much work is done? Budgeted Cost for BCWP Work Performed How much did the is done Actual Cost of ACWP work cost? Work Performed What was the total job Budget at Completion BAC supposed to cost? What do we now expect the Estimate at Completion EAC total job to cost? We have now answered the five basic performance measurement questions. How much work should be done? BCWS How much is done? BCWP How much did the work actually cost? ACWP What was the total job supposed to cost? BAC What do we now expect it to cost? EAC

Actual Cost of Work Performed (ACWP) Value is earned as the work is completed and gauged against the schedule proposed for the work When all work is completed it will have earned its full budgeted value but the actual cost of that work may be different that the amount budgeted… this is referred to as Actual Cost of Work Performed (ACWP)

PERFORMANCE MEASUREMENT DATA ELEMENTS ACTUAL COST FOR WORK PERFORMED (ACWP) The costs actually incurred and recorded in accomplishing the work performed (BCWP) within a given time period Labor Material (Subcontractor/vendor) Other, computer costs, etc. Indirect Costs

Actual Cost of Work Performed (ACWP) Track 1 Cost = $1,500! Track 2 Cost = $750 cost to date Total Cost to Date = $2,250

BC WP AC WP Cost Variance example: CV = BCWP - ACWP = $1,500 - $2,250 of the work I actually performed, how much did I budget for it to cost? PERFORMANCE BASED of the work I actually performed, how much did it actually cost? COST VARIANCE is the difference between budgeted cost and actual cost formula: CV $ = BCWP - ACWP example: CV = BCWP - ACWP = $1,500 - $2,250 CV= -$750 (negative = cost overrun)

Cost Variance 5,000 ACWP “actual cost” cv $ BCWP “earned value” TIME

Variance Summary The difference between the BCWP and the ACWP is called a cost variance The difference between the BCWP and BCWS is called schedule variance and is provided in terms of dollars

5 Basic Performance Data Questions & Answers QUESTION ANSWER ACRONYM How much work should Budgeted Cost for BCWS be done? Work Scheduled How much work is done? Budgeted Cost for BCWP Work Performed How much did the is done Actual Cost of ACWP work cost? Work Performed What was the total job Budget at Completion BAC supposed to cost? What do we now expect the Estimate at Completion EAC total job to cost? We have now answered the five basic performance measurement questions. How much work should be done? BCWS How much is done? BCWP How much did the work actually cost? ACWP What was the total job supposed to cost? BAC What do we now expect it to cost? EAC

Budget at Completion (BAC) $ sum of all BCWS = $ $ $ $ $ $ $ time when all work has been phased, cumulative BCWS = BAC

Estimate at Completion (EAC) Just a few little glitches…. We should be able to do the complete job….ack… let’s see, for about $7,000

Variance at Completion (VAC) B AC what the total job is supposed to cost E AC what the total job is expected VARIANCE AT COMPLETION is the difference between what the total job is supposed to cost and what the total job is now expected to cost. FORMULA: VAC = BAC - EAC We know what our cost and schedule variances are now but we would like to know what our Variance at Completion (VAC) will be. To determine this we subtract what we expect it to cost (EAC) from what is supposed to cost (BAC) to arrive at a VAC of $1400 or a 28% overrun. Example: VAC = $5,000 - $7,000 VAC = - $2,000 (negative = overrun)

Earned Value Management (EVM) Training Objectives Understand basic concepts What EVM is and basic terms How to evaluate performance What does it all mean? How to manage using Earned Value Now that we know what it is and what it means, what do we do with it?

Formulas Cost variance in percentage Cost variance BCWP – ACWP BCWP – ACWP x 100 BCWP Schedule variance in percent BCWP – BCWS x 100 BCWS Cost variance BCWP – ACWP Schedule variance BCWP – BCWS Negative variance = cost overrun or behind schedule Positive variance = cost underrun or ahead of schedule

Trend Analysis Cost Performance Index (CPI) measure of cost efficiency CPI = Value of Work Completed (BCWP) Cost of Work Completed (ACWP) Schedule Performance Index (SPI) measure of schedule efficiency SPI = Value of Work Completed (BCWP) Value of Work Planned (BCWS) Closer to “1” the better Less than 1 = overrun (CPI); behind schedule (SPI) Greater than 1 = underrun (CPI); ahead of schedule (SPI)

Performance Efficiencies DO I THINK THE CONTRACTOR WILL COME IN ON BUDGET? COST PERFORMANCE INDEX: CPI = cost efficiency for work performed to date (The value of work accomplished for each dollar spent) SCHEDULE PERFORMANCE INDEX: SPI = schedule efficiency with which work has been accomplished (The rate at which work is being accomplished) WORK = ACCOMPLISHED ACTUALS WORK BCWP ACCOMPLISHED $1500 = ACWP = ACTUAL = $2250 = .67 COST WORK = ACCOMPLISHED SCHEDULED There are several performance indices that help us to understand the current and future status of the program based on his performance to date. The Cost Performance Index (CPI) shows cost efficiency for work performed to date. In this case for each budget dollar spent only 42 cents of value was received. The “To Complete” Performance Index (TCPI) shows the efficiency necessary to complete on budget. The contractor would have to perform at an efficiency level of 154% or do $1.54 of work for every budget dollar to achieve his BAC. WORK BCWP ACCOMPLISHED $1500 = BCWS = WORK = $2000 = .75 SCHEDULED

EXERCISES Attendees – Go to your Exercise Packet

EVM Exercise BAC = 500 BCWS = 300 BCWP = 320 ACWP = 330 What is the cost variance? What is the Schedule variance? What is the Cost Performance Index? What is the Schedule Performance Index? How would you describe this project?

Solution BAC = 500 What is the cost variance? BCWS = 300 BCWP = 320 ACWP = 330 What is the cost variance? BCWP – ACWP = -10 What is the Schedule variance? BCWP – BCWS = +20

Solution BAC = 500 What is the Cost Performance Index? BCWS = 300 BCWP = 320 ACWP = 330 What is the Cost Performance Index? BCWP/ACWP = .97 What is the Schedule Performance Index? BCWP/BCWS = 1.07

Solution Cost Variance = -10 Schedule Variance = + 20 CPI = .97 SPI = 1.07 How would you describe this project? Over budget, ahead of schedule

Example Of Performance Analysis By WBS Element. The table that follows presents key information for several elements of the contract WBS What can it tell us?

Cost Performance Report Work Breakdown Structure Budget Baseline Cumulative Cost To Date (in $000) Cost At Completion (in $000) $1.5 mil Budgeted Cost Actual Cost Variance WBS Element Work Scheduled Work Performed Schedule Cost Budgeted Estimated 1.1 250 260 (10) 1.2 90 85 84 (5) 1 100 1.3 130 150 155 20 330 340 1.4 200 185 15 235 1.5 300 310 320 10 400 415 (15) 1.6 120 140 (20) Subtotal 1,090 1,115 1,144 1,450 1,490 (40) Mgt. Reserve 50 Total 1,500 Based on the above report, you could make the following observations: WBS Element 1.1. Comparison of BCWS, BCWP, and the Cost-at-Completion Budgeted reveals that all are equal and the work under WBS Element A is complete. Comparison of BCWP and ACWP reveals that the element experienced a $10,000 cost overrun at completion. Comparison of the Cost-at-Completion Budgeted, Estimated, and Variance columns also reflect the $10,000 cost overrun. WBS Element 1.2. Comparison of BCWS with BCWP reveals that the work is behind schedule. Comparison of BCWP with ACWP shows that the contractor is slightly underrunning budgeted cost. Comparison of the Cost-at-Completion Budgeted, Estimated, and Variance columns indicates that the work is expected to be on budget at completion. WBS Element 1.3. Comparison of BCWS with BCWP reveals that the work is ahead of schedule. Comparison of BCWP with ACWP shows that the contractor is experiencing a slight overrun of $5,000 over budgeted cost. Comparison of the Cost-at-Completion Budgeted, Estimated, and Variance columns indicates that the overrun is expected to grow to $10,000 at completion. WBS Element 1.4. Comparison of BCWS with BCWP reveals that the work is on schedule. Comparison of BCWP with ACWP shows that the contractor is experiencing an underrun of $15,000. Comparison of the Cost-at-Completion Budgeted, Estimated, and Variance columns indicates that the underrun is expected to remain at $15,000 through completion. WBS Element 1.5. Comparison of BCWP with ACWP shows that the contractor is experiencing an overrun of $10,000. Comparison of the Cost-at-Completion Budgeted, Estimated, and Variance columns indicates that the overrun is expected to grow to $15,000 at completion. WBS Element 1.6. Comparison of BCWS, BCWP, and the Cost-at-Completion Budgeted reveals that all equal and the work under Element F is complete. Comparison of BCWP and ACWP reveals that the element experienced a $20,000 overrun at completion. Comparison of the Cost-at-Completion Budgeted, Estimated, and Variance columns also reflect the $20,000 overrun. Subtotal.  Comparison of the Cost-at-Completion Budgeted, Estimated, and Variance Subtotals reveals a projected net overrun of $40,000. Since the contractor had set aside a management reserve of $50,000, the contract is still within the original Budgeted Cost baseline with $10,000 of management reserve remaining. There appears to be little need for in-depth technical analysis at this time because the contractor is still within the original Budget Cost baseline and the contract is 76 percent complete.

Graphical Depictions of EVM

PERFORMANCE MEASUREMENT DATA ELEMENTS Contract Complete BUDGET $ BCWS TIME

PERFORMANCE MEASUREMENT DATA ELEMENTS Contract Complete BUDGET $ BCWS CV ACWP BCWP TIME

BCWP Allows Isolation of Schedule and Cost Variances 5,000 BCWS ACWP cv $ sv BCWP TIME schedule variance = BCWP - BCWS = negative number cost variance = BCWP - ACWP = negative number behind schedule, over cost

Budget at Complete (BAC), Estimate at Complete (EAC) and Variance at Complete (VAC) Schedule Delay BAC = Sum of BCWS (Planned cost of all work) BAC = $5,000 EAC VAC BAC EAC(kr)* = ACWP plus estimated to complete (ETC) (Actual cost to date plus expected cost to finish all work) EAC = $7,000 ETC PM BASELINE $ VAC = BAC-EAC VAC = $5,000-$7,000 VAC = -$2,000 TIME * EAC(kr) = Contractor EAC

PERFORMANCE MEASUREMENT DATA ELEMENTS Contract Complete BUDGET VAC $ ESTIMATE SV BCWS CV ACWP BCWP TIME

Trend Analysis Using Performance Indexes 1.0 CPI SPI Performance SPI 1.0 CPI Time Performance 1.0 SPI Time CPI Performance Time

CPI 1.0 Performance SPI CPI 1.0 SPI Time Performance 1.0 SPI Time Trend Analysis Using Performance Indexes 1.0 CPI SPI Performance CPI 1.0 SPI Time Performance 1.0 SPI Time CPI Performance Time

Earned Value Management Trend Analysis 1.0 CPI SPI Performance CPI 1.0 Time SPI Performance 1.0 SPI Time CPI Performance Time

Sample combined numerical and graphical display

This is a sample of one manner in which present value may be portrayed This is a sample of one manner in which present value may be portrayed. As you see here cost variance is defined in this example as earned value less actual cost or BCWP - ACWP and Schedule Variance Earned Value (BCWP) less Planned Value (BCWS)

Earned Value Management (EVM) Training Objectives Understand basic concepts What EVM is and basic terms How to evaluate performance What does it all mean? How to manage using Earned Value Now that we know what it is and what it means, what do we do with it?

Ways of Earning Value Earned Value techniques Discrete physical, tangible end product Apportioned discrete, dependent on another discrete work package example: quality assurance planned as historical estimating factor (e.g., 7%) Level of Effort no tangible end product basis of measurement: time when clock starts ticking, you automatically accumulate earned value no schedule variance example: management personnel Should be a quantitative and discrete way to measure the work May tie in with success criteria or technical measure e.g., successful completion of a specific test, QP’s

Contractor Reports Cost Performance Report (CPR) Format 1: cost and schedule progress by WBS (specified reporting level usually at level 3) Format 2: cost and schedule progress by organization Format 3: changes to performance measurement baseline Format 4: manpower forecast Format 5: variance analysis current and cum data

Format 1 Block Descriptions 1. Contractor Information - Tells you name and address of contractor 2. Contract Information - Tells name, number, type and Share ratio of contract 3. Program Information- Name and Phase of program 4. Report Period - Beginning and end dates of the report data 5. Contract Data - Includes quantities, prices, fee’s, profit, and ceilings 6. Estimated cost - Estimated cost at completion and variance 7. Contractor Representative - Name, Title, Signature, and Date signed 8. Broken in to sections a through g and in 4 groups of data - Current period - BCWP, BCWS, ACWP, Cost and Schedule Variances - Cumulative to date - BCWP, BCWS, ACWP, Cost and Schedule Variances - Reprogramming Adjustments - Cost Variances and Budget - At Completion - Budgeted, Estimated, and Variance 8a WBS cost data 8b Cost of money 8c General and administrative cost 8d Undistributed money 8e Subtotal (Total without Management Reserve) 8f Management Reserve 8g Total 9a Variance adjustments (Cumulative to Date) 9b Total Contract Variance (Cumulative to Date and At Completion)

Format 2: Organizational Categories Used when contractor organizational structure does not mirror the WBS structure Provides CPR data in an organizational format

Format 3: Baseline Used to track changes to the performance baseline and future authorized work Identifies all changes to authorized work during the reporting period Identifies distribution of any undistributed budget during the reporting period

Format 4: Staffing Provides planned staffing Current Period Cumulative to the end of Current Period Staffing forecast's to end of authorized work At Completion Broken down into organizational categories

Format 5: Explanation and Problem Analysis Also called Variance Analysis Report (VAR) Provides explanations, impact, and corrective actions of WBS that exceed thresholds

Variance Explanations Format 5 variance analysis should address: separate discussion of CV, SV (current and cum) and VAC clear description of reason for variance quantity variances (e.g., price vs. usage) be specific, not general corrective action technical, schedule, and cost impacts impact to estimate at completion A big hammer for a big variance!

EVM Home Page = https://acc.dau.mil/evm eMail Address: EVM.dau@dau.mil DAU POC: (703) 805-5259 (DSN 655) Revised April 2008 TERMINOLOGY NCC Negotiated Contract Cost Contract price less profit / fee(s) AUW Authorized Unpriced Work Work contractually approved, but not yet negotiated / definitized CBB Contract Budget Base Sum of NCC and AUW OTB Over Target Baseline Sum of CBB and recognized overrun TAB Total Allocated Budget Sum of all budgets for work on contract = NCC, CBB, or OTB BAC Budget At Completion Total budget for total contract thru any given level PMB Performance Measurement Baseline Contract time-phased budget plan MR Management Reserve Budget withheld by Ktr PM for unknowns / risk management UB Undistributed Budget Broadly defined activities not yet distributed to CAs CA Control Account Lowest CWBS element assigned to a single focal point to plan & control scope / schedule / budget WP Work Package Near-term, detail-planned activities within a CA PP Planning Package Far-term CA activities not yet defined into WPs BCWS Budgeted Cost for Work Scheduled Value of work planned to be accomplished = PLANNED VALUE BCWP Budgeted Cost for Work Performed Value of work accomplished = EARNED VALUE ACWP Actual Cost of Work Performed Cost of work accomplished = ACTUAL COST EAC Estimate At Completion Estimate of total cost for total contract thru any given level; may be generated by Ktr, PMO, DCMA, etc. = EACKtr / PMO / DCMA LRE Latest Revised Estimate Ktr’s EAC or EACKtr SLPP Summary Level Planning Package Far-term activities not yet defined into CAs TCPI To Complete Performance Index Efficiency needed from ‘time now’ to achieve an EAC EVM POLICY: DoDI 5000.2, Table E3.T2 . EVMS in accordance with ANSI/EIA-748 is required for cost or incentive contracts, subcontracts, intra-government work agreements, & other agreements valued > $20M (Then-Yr $). EVMS contracts > $50M (TY $) require that the EVM system be formally validated by the cognizant contracting officer. Additional Guidance in Defense Acquisition Guidebook and the Earned Value Management Implementation Guide (EVMIG). EVMS is discouraged on Firm-Fixed Price, Level of Effort, & Time & Material efforts regardless of cost. EVM CONTRACTING REQUIREMENTS: Non-DoD FAR Clauses – Solicitation – 52.234-2 (Pre-Award IBR) or 52.234-3 (Post Award IBR) – Solicitation & Contract – 52.234-4 DoD( ≥ $20M) DFAR Clauses - 252.234-7001 for solicitations and 252.234-7002 for solicitations & contracts Contract Performance Report – DI-MGMT-81466A * 5 Formats (WBS, Organization, Baseline, Staffing & Explanation) Integrated Master Schedule – DI-MGMT-81650 * (Mandatory for DoD EVMS contracts) Integrated Baseline Review (IBR) - Mandatory for all EVMS contracts * See the EVMIG for CPR and IMS tailoring guidance. Management Reserve Work Packages Planning Packages OVERRUN AUW Control Accounts NCC Undistributed Budget OTB CBB TAB Profit / Fees PMB Summary Level Contract Price Earned Value Management ‘Gold Card’ Management Reserve Cost Variance Schedule Variance ACWP BCWP BCWS $ EAC Time Now Completion Date PMB TAB BAC time VARIANCES Favorable is Positive, Unfavorable is Negative Cost Variance CV = BCWP – ACWP CV % = (CV / BCWP) *100 Schedule Variance SV = BCWP – BCWS SV % = (SV / BCWS) * 100 Variance at Completion VAC = BAC – EAC OVERALL STATUS % Schedule = (BCWSCUM / BAC) * 100 % Complete = (BCWPCUM / BAC) * 100 % Spent = (ACWPCUM / BAC) * 100 DoD TRIPWIRE METRICS Favorable is > 1.0, Unfavorable is < 1.0 Cost Efficiency CPI = BCWP / ACWP Schedule Efficiency SPI = BCWP / BCWS BASELINE EXECUTION INDEX (BEI) (Schedule Metric) BEI = # of Baseline Tasks Actually Completed / # of Baseline Tasks Scheduled for Completion CRITICAL PATH LENGTH INDEX (CPLI) (Schedule Metric) CPLI = (Critical Path Duration + Float Duration (to baseline finish)) / Critical Path Duration TO COMPLETE PERFORMANCE INDEX (TCPI) # § TCPIEAC = Work Remaining / Cost Remaining = (BAC – BCWPCUM) / (EAC – ACWPCUM) ESTIMATE AT COMPLETION # EAC = Actuals to Date + [(Remaining Work) / (Efficiency Factor)] EACCPI = ACWPCUM + [(BAC – BCWPCUM) / CPICUM ] = BAC / CPICUM EACComposite = ACWPCUM + [(BAC – BCWPCUM) / (CPICUM * SPICUM)] # To Determine a Contract Level TCPI or EAC; You May Replace BAC with TAB § To Determine the TCPI BAC or LRE Replace EAC with either BAC or LRE