1 Program Management Systems Committee Joint Industry/Government Meeting May 21, 2009 EVM for Service Contracts Working Group

2 Subcommittee Charter Problem Statement EVMS is being applied to a variety of services type work scenarios and there is no consistent guidance or policy on how EVMS should be implemented Charter for Subcommittee: To develop and recommend policy, process guidance, and/or training to support the implementation of EVMS on services type work Targeted Exit Criteria: White Paper - “Guidance for Implementing EVMS on Services Work

3 Earlier Conclusions EVM is useful for managing services work; however its application should be scaled to balance the benefits of EVM with program risks and the cost of EVM implementation EVM is compatible with performance based services acquisition, It’s important to seek ways to define objective methods for measuring earned value of services Over-reliance on LOE for services can mask progress on other work Recommend separate analysis of performance data for development and service work It may be more appropriate and beneficial to implement EVM at the program level rather than at the individual contract level, e.g., staff augmentation (personal services) work More flexibility in EVM Systems may be required to enable optimal application of EVM to services contracts, e.g., Summary-level planning/shorter planning horizons Allowances in the process for more frequent re time-phasing of budgets

4 Contract Element Required for EVM A discrete SOW, from which an end product-oriented work breakdown structure can be defined, and a schedule. From these, a time-phased, resource loaded plan for executing the required work within the timeframe specified in the contract can be developed. As stated in the NDIA PMSC EVMS Application Guide: “Where work is discrete, EVM can be effectively employed. Where work is T&M/LOE, performance must be evaluated using other means that are not related to schedule milestones or measurement of progress.” “For contracts issued in support of a program where the supplier does not control and manage the work scope and schedule (such as a staff augmentation contract), EVMS requirements should not be applied to the contract itself but at the program level where scope, schedule and cost are present.” (Source: NDIA PMSC EVMS Application Guide).

5 PBSA - Contracting PBSA is a very disciplined way to write and manage service contracts Performance standards (SLAs) that define the performance level required to meet contract requirement, are measurable and permit assessment of supplier’s performance. Allow contractor maximum flexibility without government interference – Primarily FP Contracts Quality Assurance Surveillance Plan to measure each service Service measured during the payment period. Service requirement starts over each payment period.

6 PBSA Measurement of Performance (ITIL)

7 EVM and PBSA May Apply on One Contract EVM and PBSA are management frameworks. Both use the WBS process to define the work Work is of two types Project, the work is done over a period of time with the benefit realized either at major milestone points during project execution or at the end of the project when the finished product is delivered. Use EVMS In service efforts, the work is done in a continuous, often repetitive manner and the benefit is realized as the service is performed. Use PBSA Projects can have a significant amount of service work. Service programs can have significant project work.

8 Original Scope Has Evolved Original – How can EVM be made to fit the management of service contracts. New – Select the management technique(s) best suited to the effort based on the characteristics of the work and the contractual elements present. Paper will contain recommendations for FAR Part 7, Acquisition Planning, changes. Government use WBS to define the work and to identify the appropriate project management method. Contracts can specify more than one management method Contracts must indicate what areas require EVM and what areas require PBSA. Proper use of EVM and PBSA will reduce LOE

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10 Outline for Guidance Document Define, compare and contrast products vs. services Provide guidance for selecting appropriate management methods applicable to the contract scope of work Many contracts are hybrids – both EVM and PBM could be used on different WBS elements within a single contract Methods may also vary by contract type Collect and describe characteristics of various types of services Provide WBS examples for service work Write guidance for each, e.g., IT, logistics, depot maintenance, program management, etc. Provide guidance for contracting, i.e., to put management requirements on contract correctly