Washington is trying to cut billions and trillions of dollars out of government spending. Programs that survive these cuts and those programs yet to be awarded are expected to operate within the established budgetary ceilings. Fixed fee and fixed priced contracts are becoming more common now days. This makes me wonder how this will affect the use of earned value management on government contracts. Will there be more or less contracts requiring contractors to have an ANSI/EIA-748 compliant EVMS?
Earned value management can provide a ton of value if implemented correctly. A properly implemented system can provide transparency, actionable reporting, improved communication, forecast accuracy, etc. With well documented processes, the successes found through utilizing an EVMS allow programs to repeat those successes on other programs effectively and consistently.
But there is a lot of initial overhead required to establish and then implement an EVMS. In the beginning stages a huge amount of effort is required to spin up an EVMS (people, training, tools, etc.). Especially in a brand new environment where EVM or other fundamental practices such as scheduling are foreign concepts.
So is the trend more or less favorable for the government to require EVM on contracts in the near term future? And what are contracting firms doing based on this EVMS outlook trend?
EVM is such a basic philosophy…we can only hope for more widespread deployment.
As an EVM analyst with the Defense Contract Management Agency (DoD’s Executive Agency for EVM implementation), I see it’s value on a daily basis. The criteria a contractor must meet to have a valid EV system is of utmost importance and, in my opinion, is as important as a contractor having a similar higher-level quality management system (ISO9000/AS9100). I hope that EVM continues to be a focus of source selection criteria for future gov’t procurements and that EVM becomes more commonplace in the future.
I believe you will continue to see EV used, but it depends on the trend toward Fixed Price contracts and use of task orders that break up the workload. Federal agencies are often using task order contracts in which the efforts are broken up into annual segments that don’t break the thresholds for the use of EVM. This is often around $10M dollars. They also tend to be Fix Price. If agencies took a more systems view and incrementally funded cost plus contracts, the use of EVM would be very powerful.
It is an interesting discussion on whether several annual Fix Price efforts delivers a better product for a cheaper price than a longer term effort that is managed through an EV baseline.
The other point I would like to make is EVM systems don’t need to be complicated nor drive a lot of costs. EV provides a disciplined project management environment which can, if used by management, save on costs and reduced risks. Implementing such a system these days can be done cheaply, similar to putting in federal compliant accounting systems. The software programs can be hosted by third party vendors that provide an immediate infrastructure that allows smaller vendors with many subcontractors to act as a single integrated vendor with a robust virtual environment. Given managers access to schedules and costs on a daily basis. These approaches work great and are very flexible and affordable.
At the end of the day, the project delivery method and process set the tone of any construction project… and most other projects. Transparency, collaboration, accuracy, process, and enabling technology typically are all present on many/most sucessfull projects.
In the facility construction, repair, renovation, sustainability, operations sector “newer” project delivery methods and cloud computing are already begining to cause positive and requisite disruptive change. Integrated project delivery (IDP) and job order contracting (JOC), also known as “IPD-lite” are taking hold over design-bid-build (DBB) and design-build (DB).
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@John, I agree with you – it depends on what the requirements are, but an EVMS doesn’t necessarily have to be expensive or complicated in many cases. If you fall below that $25MM mark especially, there is a lot you can do with very little overhead as long as your planning and execution practices involve sound project management.
@Travis, I think your comment that ” there is a lot of initial overhead required to establish and then implement an EVMS” requires some elaboration. Would you not agree that most of the activities done in the ‘name of’ EVMS are also required to execute any project, EVMS or not?
Shim,
The quote below is in regard to projects that are substantial in size and yet below the threshold dollar value for a required EVMS. So a purest would say yes the activities involved with establishing and implementing an EVMS are the same for any project EVMS or not. However the context of the quote is focused on the overhead as the issue. Budgets are tight and if there is not a specific requirement for an EVMS, how does a project manager or an organization afford the activities required to execute any project, EVMS or not?
A constrained budget might mean a lower project managment maturity model. Process may be more adhoc and less formal because the resources to develop process are just not affordable. See what I mean?
Josh,
Josh,
When I mention EVMS in this post, I intended to emphasize on the ANSI/EIA-748 compliant EVMS. Look at section 4.3.3 Pre-Systems Acquisition Planning of the Earned Value Management Systems Application Guide, May 4, 2011, Revision 1. http://www.ndia.org/Divisions/Divisions/Procurement/Documents/PMSCommittee/CommitteeDocuments/ComplementsANSI/NDIA_PMSC_Application_Guide_Rev_050411.pdf
Organizations that intend on going down the compliance path will need to perform an internal assessment, produce a NDIA PMSC Intent Guide Compliance Map, conduct a Compliance Evaluation Review (CER), etc… All of this takes time and resources to complete.
Now if under the threshold contract value for required EVMS, then yes I would agree with your statement. EVM is a great methodology in which encompasses sound project management with very little overhead.
Peter,
“Transparency, collaboration, accuracy, process, and enabling technology”
It seems to me that these are the ingredients for a successful project. If you get these right combined with delivery method and right processes, then you are going to be project manager of the year.
I will look into the IPD-lite subject. We coined a term “EVMS-lite” and Integrated Project Management (IPMS) on previous projects. Some people hear EVMS and they associate that with pain and suffering. Somehow EVMS-lite or IPMS calmed the anxiety.
John,
Well one advantage for the customer (gov’t) using several annual FP efforts is the ability stay below the threshold. Transparency is one of the plus ups of an EVMS. Of course that is a matter of perspective. Gov’t managers get all kinds of oversight poking at their SPI/CPI metrics, which are typically dependent on the contractors’ EVMS.
I agree that EVM combined with integrated project management can be done cheaply. Also there is a cost savings and a reduction of risk through transparency, collaboration, accuracy, process, and enabling technology as mentioned by Peter. Lastly it is important to not only train your CAMs and Controls staff on the EVM fundamental, but to also bring your customers up to speed as well.
Steven,
I cannot agree with you more. EVM has tremendous value. Hopefully the government place continued emphisis on EVMS in the source selection process.
How you afford EVM ? The assessment is one of risk ..which is the primary job of the project manager. Can you afford to take the risk of not manage your project with disciplined fundamentals. EV is a combination of basic PM fundamentals … tracking a baseline of cost, schedule , and performance. How detailed you get and/or how auditable your process is … can push up the costs. But getting more detailed and auditable are saleable and those costs can be expended as needed. Skipping the fundementals is usually not a good idea. Integrating them in a performance measurement schema at some level I believe is always value added. The trick is deciding the level of detail/discipline/auditability you need.
The complexity associated with EVMS is partly due to vendors, “standards groups” such as ANSI, etc.
ISO is a great example. The concept of ISO is great…. document what you do and do it consistently. Vendors/consultants turned it into a paperwork nightmare…where the end result in many cases is…reams of paperwork documenting poor processes, with a focus upon draconiam enforcement of the “paper shuffle.”
EVM is equally simple… document value/$ goals, track variances, and continuously improve.
Any organization would do well to first focus up goals, strategy, and process…. and continuously improve by monitoring results and adjusting process accordingly. Unfortunately it’s way too easy to loose focus, and too many people attempt to “reinvent the wheel”… vs “cut-and-paste”…aka adopt “best practices” that work for them and adjust as needed.
Peter,
I like the way you think. Great advice. I look forward to your comments.
My experience with EVM has been along the lines that @Peter C. commented on in regards to the “paper shuffle.” Although vendors/consultants did turn EVM into a paperwork nightmare, it was primarily driven by customer (e.g. government) requirements.
As “big data”needs continue to increase, so does the wasting of money with charts, presentations, binders, dashboards, etc. that provide deliverables normally destined for dusty shelves or into recycling bins.
Lost on project managers, and consultants who add little value to change an organization (or who simply do not want to shed light on their miserable performance) is what the data is telling us. What do the variances mean? What is Earned Value? More importantly, what do we do in regards to improving performance with the data? The continuous improvement and accountability seems to be lost.
One thing I do not advocate is using EVM techniques with FFP contracts. This is synonymous to managing a FFP contract like a T&M, and it simply creates unnecessary burdens and administrative waste in managing the project. Focus on performance, and thus what EVM is designed for.
Just like a contract type needs to be determined in accordance with risk and the level of requirements definition, so does the use of EVM. EVM needs to help decision makers make decisions, and it normally gets used to answer the mail, kill trees, and put lipstick on a pig.
@Peter nails it and put it the best:
Any organization would do well to first focus up goals, strategy, and process…. and continuously improve by monitoring results and adjusting process accordingly. Unfortunately it’s way too easy to loose focus, and too many people attempt to “reinvent the wheel”… vs “cut-and-paste”…aka adopt “best practices” that work for them and adjust as needed.
Until government demands results and accountability by using, but more importantly understanding EVM, change in performance will be elusive.