Presented to: PMI-WDC Skyline Luncheon By: Wayne Abba Date: June 15, 2006 Federal Aviation Administration Improving Program Performance at FAA

2 Federal Aviation Administration Improving Program Performance at FAA June 15, EVM Transformation Overview Objectives of the EVM Transformation Effort –Meet commitments to OMB, GAO –Improve FAA’s Business Cases –Improve Program Management and Reduce Variances Progress in FY 05 –Adopted EVM Policy and assessed programs against ANSI Standard –The “FAA Flag”

3 Federal Aviation Administration Improving Program Performance at FAA June 15, EVM at FAA Background –FAA has used DoD approach (EVM for contractors only) on some programs and decided it’s not sufficient –Will manage entire program using EVMS in accordance with ANSI/EIA 748 Manage/measure all resources Requires changes in behavior by all parties

4 Federal Aviation Administration Improving Program Performance at FAA June 15, Improving EVM at FAA

5 Federal Aviation Administration Improving Program Performance at FAA June 15, FAST Home Page:

6 Federal Aviation Administration Improving Program Performance at FAA June 15, EVM Transformation at FAA Holistic Approach Goals –Adopting FAA and industry Program Management "Best Practices" –Strengthening and integrating technical, schedule, and cost performance management of programs by implementing earned value management techniques –Positioning programs to be better able to anticipate, forecast, and communicate future performance based on objective performance metrics and risk assessments as well as proven engineering judgments

7 Federal Aviation Administration Improving Program Performance at FAA June 15, EVM Transformation Overview “Flag”

8 Federal Aviation Administration Improving Program Performance at FAA June 15, EVM Transformation Overview EVM Transformation Initiative August 05- Present –Accomplishments to-Date Agency wide EVM Working Group/Council Holistic approach – Policy & Guidance, Training, Program Reviews Plans of Action with Milestones submitted to OMB Commitments made to OMB/GAO which are on track Executive Briefings used to maintained visibility & support EVM “Bubble Chart” used to report progress and status Met with Major Prime and Support Contractors – follow-up meetings focus on sharing best practices FAA’s Acquisition Management Policy updated with EVM policy and guidance and changes in acquisition processes Prepared a paper on the costs and benefits of EVM.

9 Federal Aviation Administration Improving Program Performance at FAA June 15, Assessment Themes - Issues PM Commitment Cross Cutting Themes –Multiple Baselines –Gov’t FTE’s & Effort –Program Support LOE –Choosing the Correct Contract Type –Including Sufficient EVM Language in Contracts –Comprehensive Program-Level WBS FAA Best Practices –Performance-based Payments –Mature Estimating Techniques –Alignment of Program WBS with Contract CLINS and OMB 300 Useful Segments –GCAMS & CCAMS –Program Level EVM Tools Application –Risk Adjusted Schedule & Cost Applications

10 Federal Aviation Administration Improving Program Performance at FAA June 15, EVM Transformation Overview FAA Major Programs - Cost & Schedule Variance Program Name Color Code - EVMS Quality: Green: Meets Yellow: Partially Meets Red: Does Not Meet Cost Variance % Schedule Variance % -5% -10% 5% 10% DDD AAA MMM Over Spent Ahead of Schedule Under Spent Ahead of Schedule Over Spent Behind Schedule Under Spent Behind Schedule -5%-10%5%10% TTT SSS >-15% >15% EEE PPP QQQ RRR NNN BBB LLL GGG FFF HHH III JJJ KKK OOO

11 Federal Aviation Administration Improving Program Performance at FAA June 15, EVM Transformation Summary The FAA has committed to OMB and GAO that we will implement full EVM – prime contracts, support contracts, and government FTE’s - by the end of FY 07 and is on schedule to do so. The FAA sees EVM as a major tool to help meet its goals to manage its acquisitions against cost and schedule and performance targets. EVM Transformation will be measurable and transparent – we expect to “get worse” before we get better. EVM Transformation is a major evolution of the Acquisition Management System, in the areas of procurement, risk, cost estimation, work breakdown structure, and system engineering, and affects program planning through execution EVM data and analysis will be built into the reporting systems used to brief key executives on the planning, progress, and evaluation of programs FAA’s Contractors are essential to FAA’s success in implementing EVM on all its programs – we want them to share their best practices and advice with us Existing contracts will most likely not be modified but data from contractors will be used to build EVM in at the program level. EVM will be used for Screening Information Requests (SIRs) and New Contracts EVM will be a discriminator in contract awards and past performance evaluations The use – benefits and costs - of EVM will be tracked as evidence of excellent good contract management and not as an add-on cost to the government FAA has set the goal to be the government leader in implementing EVM

12 Federal Aviation Administration Improving Program Performance at FAA June 15, EVM Council Formed as a continuation of the management processes effort Co-Chaired by ATO-A and AIO Membership includes: –ATO Service Unit representatives –Other Lines of Business implementing EVM –AIO representatives –CFO representatives

13 Federal Aviation Administration Improving Program Performance at FAA June 15, EVM Transformation – Goals for 2006 EVM Council tracking POA&M status – most targets due in 2006 – if achieved, flag will turn to mostly yellow and green. FAA to assess its financial processes against the ANSI standard & update its flag FAA to issue a Layperson’s guide to EVM FAA to issue a manager’s guide to using EVM Technical Training to continue and be supplemented by awareness training EVM toolkit to be selected. Our goal is that 50% of our “EVM” scores on our exhibit 300s be “4” or “5” and the rest “3”.

14 Federal Aviation Administration Improving Program Performance at FAA June 15, EVM Transformation – Goals for 2007 Full EVM implementation by end of FY 07. EVM part of Program Managers toolkit. Full EVM reporting for all major investments. EVM scores on Exhibit 300s are all “4” or “5”. Use of EVM makes a major difference in ability of FAA programs to stay on track and within budget. Use of EVM contributes to FAA “NAS Modernization Program” being removed from the GAO High Risk List.

15 Federal Aviation Administration Improving Program Performance at FAA June 15, EVM Transformation - Challenges Financial systems may need modification Budgets are tight and this affects new initiatives. The Acquisition Management System will need to be updated several more times. We must reduce the burden on program managers. We must show the impact on bottom line results. We must meet our aggressive targets. Awareness and Acceptance of EVM is lumpy. We must continue to keep all senior executives involved and engaged especially in the areas of contracts, budget, and program management.

16 Federal Aviation Administration Improving Program Performance at FAA June 15, EVM Transformation Progress "It takes focus on performance and efficiency measures, dedication, candor, accountability, and these are all things I see exhibited at the FAA. You basically are there. You are where I would like the Federal Government to be on all 1,200 of its programs, and you run an operation that is more measurable than others." Clay Johnson III Deputy Director for Management, OMB At the FAA-wide meeting that unveiled the FAA’s FY 06 Strategic Plan 11/15/2005

17 Federal Aviation Administration Improving Program Performance at FAA June 15, FAA Contractor Meeting Feb 6, 2006 Participants –Lockheed Martin –Raytheon –Harris –Parsons Infrastructure and Technology Group –Northrop Grumman –Mitre –Computer Sciences Corporation –Advanced Management Technology Inc. –BAE Systems

18 Federal Aviation Administration Improving Program Performance at FAA June 15, FAA Procurement Comments Top contractors – suppliers, support contractors, FFRDC –Purpose – cooperation with industry to achieve mutual success in performing FAA mission –FAA EVM differs from legacy approach Program level, not just contractors Will not change existing contracts

19 Federal Aviation Administration Improving Program Performance at FAA June 15, Expectations from Contractors Manage using ANSI/EIA 748 –Existing contracts will not be modified to require EVM –For new contracts, contractors are responsible for Contract performance (scope, schedule, delivery) Excellent management –Contractors may leverage existing EVM acceptance from other agencies or work with FAA to develop new plan

20 Federal Aviation Administration Improving Program Performance at FAA June 15, Follow-up Meeting Guidelines Attendees requested to return for individual meetings over next three months with EVM team and selected Program Managers and Contracting Officers –Present Management Overview Company response to FAA initiative EVM System acceptance applicability to FAA or Plan to achieve acceptance (ref. NDIA Systems Acceptance Guide) How EVM is used on current FAA contracts Best practices (e.g., subcontract management) Improvement opportunities

21 Federal Aviation Administration Improving Program Performance at FAA June 15, FAA Contractor Meeting Follow-up Participants –Lockheed Martin* –Raytheon* –Harris –Parsons Infrastructure and Technology Group* –Northrop Grumman* –Mitre –Computer Sciences Corporation* –Advanced Management Technology Inc. –BAE Systems * Follow-up meeting already held

22 Federal Aviation Administration Improving Program Performance at FAA June 15, Summary-FAA EVM Approach Overview FAA programs are implementing EVM at the program level and requiring contractor EVM reporting in an effective and efficient manner Prime ContractorsSupport Contractors Program Effort Cost ReimbursableFixed PriceCost Reimbursable Fixed Price Measurable EVM reporting and certification Performance based payments, or Status reporting and invoices EVM reporting and certification, or Status reporting and invoices (1) (2) Performance based payments (1), or Status reporting and invoices (1) (2) LOE (1) Status reporting and invoices 1) EVM implemented by the FAA PO 2) Includes production and sustaining support, such as, engineering and program management

23 Federal Aviation Administration Improving Program Performance at FAA June 15, Management Transformation in Civilian Agencies FAA Transformation more than “just EVM” –Setting an example for public administration A project-managed agency Measuring objectively and reporting honestly Accountable for results –Improving the practice of EVM Managing all program resources Effective and efficient implementation Consistent among business units and programs

24 Federal Aviation Administration Improving Program Performance at FAA June 15, Management Transformation in Civilian Agencies Considerations for civilian agencies –Signs of ad hoc EVM implementation Wide variance in application thresholds Lack of coordination among agencies –Does the DoD legacy approach fit? Contract-based $ thresholds are high Inconsistent/ineffective application Disinterest in civilian agency management

25 Federal Aviation Administration Improving Program Performance at FAA June 15, Recommendations Form interagency working group –Coordinate with DoD, Intel Community and National Defense Industrial Association Compare implementation policy and guidance –Reconcile any glaring differences –Discuss possible areas for common policy –Deal with program and contractor validation issue