1 Cost Benefit EVM at DOT Presented to: Joint Industry – Government NDIA PMSC session Presented by: H. Giovanni Carnaroli Associate CIO, IT Policy Oversight U.S. Department of Transportation May 21, 2009

2 2 DOT EVM Policy and Guidelines - Performance Measurement Baseline - Integrated Baseline Reviews - Reporting (Project-IRB-DOT-OMB) - Issue Resolution - Surveillance Visibility “Early Warning System” Objective: Use a full spectrum of project controls to improve project execution and provide managers the insight they need to make informed decisions. Plan – Monitor - Analyze Report - Control

3 3 EVM is used throughout the Investment Management Process Performance Management Program Management Portfolio Management Prioritize investments according to standard criteria Gather consistent data on all investments Monitor investments to ensure portfolio performance is on track Set goals, priorities, and performance measures for the portfolio Strategic Planning SO Operations Budget Formulation Goals Priorities Vision Priorities Modernization Blueprint Costs, Benefits and Risks Progress Reports Performance Measures Performance Reports Proposed Capital Budget Enterprise Architecture Business Case Analysis Priorities Goals Modernization Blueprint inspired Pro-forma Business Cases TRM Standards SRM Services PRM line of sight Business and IT Architectural Analytics Application Inventory Funded Programs System Engineering Approve the investments that provide the best mix for the portfolio Criteria Capital Budget Formulation Proposed Ops Budgets 4 5 Operations Management Performance Reports Budget Decisions Funded Operational Assets “How-to”

4 4 Tailoring EVM to Meet Your Needs DME life-cycle acquisition costs ANSI/EIA-748 Tier I = > $20 Million 32 Guidelines Tier II = > $8 Million and < $20 Million26 Guidelines Tier III < $8 Million 21 Guidelines Consolidated Investment apply these thresholds to each child- investment (not the consolidated investment level) Also consider size, complexity, priority, level of risk, life cycle phase, and contract type We will be monitoring the approach and make corrections depending on how it is working Pending legislation requiring EVM quarterly reporting to OMB; FAA has been implementing EVM at the program level and DOT is well postured to implement the legislation when it passes

5 ANSI/EIA 748 Requirements by Tier 5 Tier I Tier II Tier III Schedule Work Schedule Milestones Time Phased Budgeting Define/Budget Significant Cost Elements Define/Budget Work and Planning Packages Verify Work Packages Sum to Control Account Define/Budget Level of Effort Activities Define/Budget Overhead Budget Define/Budget Management Reserves Define/Budget Target Costs Goals Organize Plan Define Work Breakdown Structure (WBS) Define Organizational Breakdown Structure (OBS) Integrate Subsystems Define Overhead Controls Integrate WBS and OBS

6 ANSI/EIA 748 Requirements by Tier (continued) 6 Tier I Tier II Tier III Record Direct Costs Summarize direct Costs into WBS Summarize direct Costs into OBS Record Indirect Costs Identify unit, equivalent, or lost costs Material Accounting Incorporate and record scope changes Budget Reconciliation Control Retroactive Changes Budget Revisions Controls Document Performance Measurement Baseline Changes AccountAnalyzeRevise Periodic Cost Account Reporting Determine Variances Identify Budgeted and Applied Indirect Costs Summarize Variances Implement Managerial Action Plans EAC and VAC Revision

7 7 Health of the Investment/Program Management Review Project Management Acquisition Management Performance Management Security/ Privacy Enterprise Architecture Alternative Analysis and Risk Management Program 1 Program 2 Program 3 Program 4 Program 5 GG G G G G G G G GG G G G G G GG Y Y YY Y Y R YY Y YY

8 8 Questions & Answers