Mod to Order
Earned value management isn’t a new concept to the information technology chiefs at the Naval Air Systems Command. They’ve used it extensively to monitor contractor performance. But turning that lens inward is another matter.
“Few government agencies, including NavAir, have been applying earned value management to a significant proportion of their in-house activity,” says Brenda Bizier, process owner for analysis in NavAir’s Integrated Project Management Division.
But that’s changing, as is the approach that NavAir and other agencies are taking to meet the Office of Management and Budget mandate that agencies use EVM to avert budget- and schedule-busting disasters on IT projects.
For the Navy, the effort entails implementing an enterprise resource planning system with an integrated EVM module customized for the service’s systems, Bizier says. The anticipated April 2008 release of the EVM function will give Navy organizations the means to apply the process to in-house activities. NavAir has developed tools to help with analysis and reporting of EVM information, and the ERP system should make the functionality more user-friendly, Bizier says.
Agencies across government have begun taking an enterprise approach to EVM, says David McClure, vice president for government research at Gartner of Stamford, Conn. The government generally hasn’t been gaining ground in EVM use to track IT projects because most early efforts bubbled up from the project management level, he says. Also feeding this trend are EVM modules and management tools that software makers, such as CA, Microsoft and Primavera Systems, have been tailoring to federal needs.
If agencies want to ramp up their success with EVM, federal and industry officials point to a three-pronged approach: integrate data-monitoring capabilities, establish agencywide ground rules and make sure employees who apply EVM know how to use it to its fullest potential.
Consolidation’s Crest
“I think we’re seeing a second wave of interest in EVM,” says Jose Mora, director of product marketing for CA Clarity, an IT project management application. Why? Because the learning curve for EVM can be steep, Mora says, and agencies’ initial approaches did not fully address the mandates. “We’re in Phase 2 of EVM, in which agencies are asking, ‘How do we do it right?’ ”
OMB put forward EVM requirements three years ago and finalized acquisition regulations for their use in mid-2006 (almost a year after the deadline requiring that agencies apply EVM to IT projects).
This spring, CA unveiled an enhanced project portfolio management application for federal EVM. The module integrates CA Clarity with EVM software from Integrated Management Concepts. Similarly, Microsoft provides a souped-up version of its Microsoft Project scheduling tool for use as part of a comprehensive EVM approach. And Primavera has a suite of EVM tools that mesh with the OMB requirements.
A chief issue for many agencies is integration, says Rob Spanswick, a Microsoft solutions manager. Because agencies began applying EVM on a case-by-case basis when OMB’s mandate first took effect, the result for many has been a hodgepodge of systems rather than an enterprise EVM approach, he says.
“As agencies start to become more experienced in their use of EVM,” Spanswick says, “you’re starting to see them consolidate around one or two standard systems. This makes their systems more consistent and lets them automate transmission of their earned-value data into various reports, such as their Exhibit 300 business case submissions to OMB.”
30% Factor by which EVM, when fully implemented, can improve IT program success rates.
SOURCE: Gartner, 2007
Among the chief challenges is gathering the cost, scheduling and performance data to measure earned value. The EVM process can be extremely complex because information often must be gathered from many programs, applications and systems, and then synthesized.
In theory, the data collection process can be done using existing systems, but in reality, gathering and preparing information from systems not originally designed to produce EVM data can be time consuming and confusing, McClure says. “The strength of these EVM software packages is they establish standardized terminology, standardized calculations and standardized data collection.”
In the CA Clarity tool, for instance, its Project Management Office Accelerator has prepackaged government portlets, reports and configurations that agencies can use to run compliant reports. “It captures all cost, schedule, risk and resource information,” says Gil DiGioia, vice president of federal sales for CA Clarity.
But simply forking over cash for software isn’t going to lead to project nirvana. Agencies must also establish procedures and controls to monitor a project and keep it on track, Microsoft’s Spanswick says.
“The EVM modules are easy to install and use,” he says. “But EVM is really about the project management process and how you treat the data. The tools only work if they are used properly.”
These modules can help agencies make better decisions, but they can’t make the decisions for them, adds William Mathis, senior director of solutions for federal technology programs at Price Systems, which works with agencies to establish baselines when they begin projects and to perform variance analyses when projects diverge from the baselines. “Just like carpenters need tools, EVM software products and services are professional aids for the program manager,” Mathis says.
Prep Work Required
The Government Accountability Office’s Karen Richey agrees and says this is one of the reasons that any large EVM effort also must include time and funds for training. Richey has used EVM and cost analysis for more than 15 years, first with NavAir and now as a senior cost analyst at GAO.
Based on her audits of procurement programs for GAO, she says, many agencies are just learning how to apply EVM to in-house development programs. Program managers need to educate themselves and other users within their agencies about how to apply EVM to get the most far-reaching results, about available tools and about consulting services. “We need EVM training to make sure we get the right help. There’s especially a lack of expertise in the civilian agencies,” Richey says.
EVM requires an up-front investment: People must be trained, processes put in place, EVM tools developed or purchased, and data collected and analyzed. But Richey contends the benefits are worth expending resources on.
“The bottom line is EVM is just good project management,” Richey says. “Planning your work, developing a baseline of schedule and costs, identifying the resources you will need — this is what you should be doing for any project.”
Lawrence Livermore National Laboratory understands how the systematic use of project management best practices and earned value management can result in benefits. The lab’s 8,000 employees, who include more than 2,600 scientists and engineers, work on projects to safeguard U.S. nuclear weapons, thwart the spread of weapons of mass destruction and fortify national security.
As part of the Energy Department’s National Nuclear Security Administration, the lab has a $1.6 billion annual budget that covers stockpile stewardship, nonproliferation, intelligence and homeland security, as well as applied and basic research.
Anita Zenger, project controls manager for the Plant Engineering Department at Lawrence Livermore, has become an EVM advocate. She used it during the successful construction of the lab’s Terascale Simulation Facility, a $91 million laboratory that houses two supercomputers. The facility was completed a year ahead of schedule. Riding on the heels of that success, Zenger then oversaw preparations for a Defense Contract Management Agency certification review of the lab’s EVM System (EVMS). The Plant Engineering Department handles construction-related projects at the lab and created EVMS for Lawrence Livermore. Ultimately, EVMS received certification.
The certification validates the tool for use across the lab. For certification, EVMS had to adhere to ANSI 748 on EVM. Some of the essential criteria the certifying team reviewed were how the system handles the outlining of project scope, planning and scheduling, and how it estimates resources.
“Terascale and our EVMS succeeded because we managed risks,” Zenger says. “Earned value in itself is a way of risk mitigation, and tools like these are a high priority.”
To meet the ANSI 748 criteria for the lab’s EVMS, Zenger used a software tool that calculated earned value and integrated cost management functionality with scheduling and budgeting information. This formula lets Zenger perform monthly checks comparing actual costs and completion percentages with projected costs. For the Terascale project, Lawrence Livermore also used EVMS to distinguish between direct and indirect costs, to build in controls and to delineate a work breakdown structure.
“IT can approach my group and make use of a system that meets compliance requirements,” Zenger says. “EVM really makes project management sing.”
Online Exclusive: EVM Fact Versus Fiction
To get the most from earned value management, separate myth from reality.
Earned value management can be an effective forecasting tool, but its assimilation and adoption by agencies remains slow. There is a disconnect between the value placed on EVM by the federal information technology community and the steps taken by agencies to implement it.
The Office of Management and Budget has a clear position: EVM — a methodology to integrate cost, schedule and technical performance with the goal of improving an organization’s ability to predict project outcome — must become an integral part of every agency’s project management process.
By monitoring planned value, earned value and actual costs, EVM can help predict project outcome and even avert project failure. Even so, it’s not an instant panacea. Without a thorough, well-planned implementation and a solid project management foundation, EVM can become an effective power tool wielded in the hands of an amateur.
To help use EVM to their advantage, agency IT chiefs need to get beyond the chatter about the program and look at how the methodology plays out in real-world use. FedTech takes aim at five commonly held beliefs about this management tool:
Myth 1: Implementing EVM means that a project will be on time and on track, 100 percent of the time.
Fact: There’s no doubt that EVM tips the scales toward success by letting managers pinpoint cost and schedule woes early and make appropriate adjustments. Nevertheless, myriad other factors such as funding, regulatory requirements and even unpredictable weather emergencies can get in the way. In the end, the IT team will also want to maintain focus, stay organized and establish a well-thought-out contingency plan.
Myth 2: EVM practices are distinct from project management practices, so successful EVM implementation requires no prior project management knowledge.
Fact: EVM and project management processes must go hand in hand. To succeed at EVM, agencies need to implement project management best practices. For example, creating a work breakdown structure (WBS) for EVM is closely related to the project management process of scope management. Similarly, program scheduling — an EVM process — is contingent upon skilled time, cost and resource management, which are all ingredients in sound project oversight.
Myth 3: Through the use of EVM, project cost overruns can always be recuperated.
Fact: Although EVM can pinpoint problems and indications of potential problems, there’s a limit to its recuperative powers. Ultimately, the result is information that the project team can use to get its efforts back on track. Dollars and other resources could still be lost.
Early knowledge of possible hiccups is crucial. EVM experts typically use a 15 percent hurdle: If a project is 15 percent complete, the project cannot make up significant cost overruns or deliver the original scope of work within budget. That’s why early knowledge of possible hiccups is so crucial. After that 15 percent point, project managers must decide whether it is worthwhile to devote additional resources to the project or whether it makes more sense to cut their losses, reduce scope and allocate resources elsewhere.
Myth 4: The project’s not big enough for EVM.
Fact: EVM is scalable. All projects, regardless of size, can benefit from its effective use. When implementing EVM, project managers should define the scope of their projects and then scale the detail of each WBS to match project complexity.
Additionally, providing detailed plan and scheduling information can establish outcome expectations across a project’s life cycle. As agencies have to justify every dollar they spend (even outside the administration’s specified parameters for EVM use), managing expected and unexpected changes that can alter the baseline would be compelling for the $1 million data center consolidation and the $1 billion systems rollout. With this data for a portfolio of projects, the IT team can set a well-defined risk management strategy.
Myth 5: Automated EVM reports will deliver 100 percent accuracy and 100 percent reliability.
Fact: Automated reports can help project managers be more organized and track indicators of their projects’ health. But these reports are only as accurate as the data on which they are based. An agency needs to apply tested, accurate procedures to its data collection and reporting. The quality of the EVM information hinges on setting and enforcing data-gathering policies, and training staff about their use.
EVM is not foolproof, but it can be a critical tool for gauging and forecasting project health. Its dedicated use — coupled with project management best practices — can give project managers a chance of estimating future variances in cost and effort.
