Earned Value Management Center Presented To: NDIA Presented By: Mr. Gordon Kranz Director Engineering and Analysis Directorate February 4, 2010

Organization Chart 2 Engineering & Analysis Directorate (EA) Executive Director (SES) Deputy E&A (Field Resource) Systems Engineering Division Manufacturing Engineering / Supply Chain Predictability Division Program Integration and Analysis Division Management Support Office Earned Value Management Center Industrial Analysis Center Software Engineering Division Process Improvement Policy, Training, and Tools to support Engineering Workforce: -SE Process and products -Engineering Change Proposals -Configuration Mgt -Decision Analysis -Root Cause Analysis -etc Policy, Training, and Tools to support SW workforce: -SW Requirements -SW Design -SW Testing -SW Estimation etc Policy, Training and Tools to support Program Integrator Workforce: -Program Assessment -Integrated Surveillance -Integrated Data analysis -Financial Assessment Policy, Training and Tools to support EV and E workforce: Center Execution Mission: EV Compliance and Surveillance Policy, Training and Tools to support IA mission: Industrial Capability Assessments (ICAs); Analytical Products; Homeland Defense; Economic Analysis Policy, Training, and Tools to support Industrial Engineering and supply chain workforce: Supply Chain Surveillance Manufacturing Engineering Production Planning Advanced Surveillance Techniques Advanced Engineering Methods Six Sigma Improvement Projects Hiring Budgeting IDPs - Training Plans Performance Objectives Monthly Reports

Topics ▫ Authority & Guidance ▫ Vision & Mission ▫ Guiding Principles ▫ Objectives ▫ Organization ▫ Agency EVM Policies and Products ▫ Partnering Opportunities with Industry ▫ State of EVMS ▫ DRAFT Review Schedule 3

▫ December 1995: OUSD(AT&L) Paul G. Kaminski policy memorandum designates the DCMC (DCMA) as the Department of Defense Executive Agent for Earned Value Management System ▫ October 1996: OUSD(AT&L) Paul G. Kaminski policy memorandum gives DCMA responsibility for EVMS compliance reviews ▫ 48 CFR Part › Designates DCMA as the DoD Executive Agent for EVMS compliance › Reviews ▫ DFARS Subpart (41) › Assigns the Contract Administration Office (CAO) function for EVMS to the DCMA, including the responsibility for reviewing EVMS plans and verifying initial and continuing compliance with DoD EVMS criteria ▫ May 2007: OSD(AT&L) Kenneth Krieg policy memorandum reaffirms the DCMA as the Department of Defense Executive Agent for Earned Value Management Systems Authority and Guidance 4

Vision : ▫ Influence the implementation of industry-wide compliant EVMS ▫ Provide program managers, integrated product teams, and other acquisition enterprise customers EVMS that provide immediate access to reliable and accurate data and information on program costs, schedule, and technical performance Mission: ▫ Advocate the Department’s implementation of EVM by executing the role and responsibilities of the Executive Agent for Earned Value Management Systems (EVMS) ▫ Develop and deploy meaningful policies, processes, training, and toolsets that assist with objective assessment of supplier EVMS plans and the verification of initial and continuing compliance with EVMS requirements Vision & Mission Statements 5

Guiding Principles ▫ Timely execution of the mission ▫ Keep a customer focus ▫ Treat others as valued colleagues ▫ Be humble and mindful in actions and words ▫ Be at the forefront of DoD EVM enculturation › Teaching the acquisition enterprise the accepted norms and values of an EVM culture 6

Objectives ▫ Execute the roles and responsibilities of DoD Executive Agent for EVMS in conformance with DoD EVMS policy ▫ Develop, control, and implement the DoD Earned Value Management Implementation Guide (EVMIG) as the central EVMS guidance for DoD personnel ▫ Interpret DoD EVMS criteria, including issues on guideline application and system review requirements ▫ Maintain the EVMS Knowledge Management Community of Practice ▫ Publish a comprehensive annual report on the state of supplier EVMS implementation activities for the Department and Congress 7

Objectives (cont’d) ▫ Develop, institutionalize, and continuously improve Agency EVM policy, standard processes, training, and tools ▫ Coordinate with Chief Operations Officer functional proponents to assess compliance with, efficacy of, and workloads associated with Agency EVM policy, standard processes, training, and tools ▫ Train the EVMS workforce in the use of Agency standard EVMS processes ▫ Delegate resources to review and approve contractor EVMS plans and to lead EVMS compliance reviews in order to determine the adequacy and capability of contractor EVMS in meeting DFARS/contract requirements, including selection of the Review Director, Team Chief, and Team Members and the execution timeline 8

Objectives (cont’d) ▫ Delegate resources to lead customer sponsored reviews of EVMS for potential compliance issues and/or process efficiency improvements ▫ Coordinate and control EVM analyses ▫ Participate in Federal acquisition rulemaking through leadership on DAR Council committees ▫ Appraise and authorize changes to validated contractor EVMS 9

EVM Center Director EVM Center Director Deputy Director Compliance Surveillance Analysis Training Staff EVM Center Organization 10 POLICY, PROCESS & METHODOLOGIES TOOLS, TEMPLATES & INSTRUCTIONS EXECUTION ENCULTURATION

Agency EVM Policies ▫ Compliance Review Instruction (CRI) › Internal review Apr-10, Agency review Jun-10, final Oct-10 (est) ▫ Standard Surveillance Instruction (SSI) (previously SSOM) › Internal review completed Aug-09, Agency review Feb-10, final May-10 (est) ▫ Trip Wire Operating Instruction (TWI) › Internal review complete Jan-10, Agency review Feb-10, final May-10 (est) ▫ EVMS Specialist Certification Program (ESCP) › Internal review Feb-10, Agency review May-20, final Aug-10 (est) 11

Product Listing ▫ EVMS Policy Documents (EVMIG) and Operational Instructions ▫ EVMS Manuals, Courseware and Training ▫ DoD EVMS Compliance Review Schedule ▫ Supplier EVMS Compliance Review Determination Reports ▫ EVMS Surveillance Plans and Reports (SSI SSP/SSR) ▫ Standard EVM contract language and contract requirements examples 12

Product Listing (cont’d) ▫ Cost/Schedule Performance Measurement Data Analysis (EVM CPR) › Tripwire Analysis and Charts ▫ Independent Budget/Estimates of Costs at Completion (EVM IEAC) ▫ Network/Critical Path Analysis (EVM IMS) › Schedule Risk Assessments (EVM IMS) ▫ Topical Whitepapers and Presentations 13

Partnering Opportunities with Industry ▫System Surveillance Instruction ▫EVMIG Revision ▫Self Assessment Revision ▫EVM Interpretive Instruction ▫IMS Analysis Guide ▫Compliance Review Instruction 14

▫ EVM implementation governance from government to industry has deteriorated since the 1995 timeframe when: › C/SCSC replaced with EVM (following ANSI-748) › Management utilized EVM as a tool for decision making › Industry self-governance emphasis was part of acquisition reform ▫ Over 40 compliance reviews of industry over the past 2 years › Reviews evaluate the adequacy of supplier implementation of the ANSI-748 (32 guidelines) › Reviews follow the Earned Value Management Implementation Guide (EVMIG) › Only one passed first time – Augusta (Italy) ▫ Of the “big four” compliance reviews: › 3 of the 5 guideline areas were >50% Non-Compliant (NC) › Highest NC: Management Reporting & Analysis (75%) › Lowest NC: Accounting Considerations (29%) › Patterns reflect systemic, OSD/cross-services/cross-industry issues State of EVMS 15

1.PM & CAM ownership, inattention to budgetary responsibilities □ Funds and budget distinction (GLs 8, 9, 10) 2.Supplier processes and toolsets are too cumbersome (GL 3) 3.Work authorization procedures not followed (GLs 9, 10) 4.Lack of integrated management systems (GL 3) □ Budget reconciliation issues 5.Vertical integration of subcontractors (GL 7, 8) 6.Lack of IBR rigor, front loaded baselines, etc. (GL 8) 7.Baseline fluctuations and frequent replanning (GL 8) 8.Current period and retroactive changes (GL 30) 9.Improper use of Management Reserve (GL 14) □ Reserves harvested to improperly cover cost overrun 10.EV techniques not reflecting actual accomplishment (GLs 7, 10, 23) □ Progress not tied to technical accomplishment 11.Untimely, unrealistic Latest Revised Estimates (GL 27) 12.Failure to monitor progress on a regular basis and in an integrated way (GL 23) Common Non-Compliant Findings 16

EVMS Assessment Scorecard (Nov 2008) 17 Guideline Contractor A Contractor B Contractor C Contractor D Contractor E Contractor F Contractor G Contractor H Contractor I Contractor J Contractor K Contractor L Contractor M Contractor N

EVMS Assessment Scorecard (Dec 2009) 18 Guideline Contractor A Contractor B Contractor C Contractor D Contractor E Contractor F Contractor G Contractor H Contractor I Contractor J Contractor K Contractor L Contractor M Contractor N

▫ Industry Concerns: › Erosion of avenues of communication and problem resolution › Conflicting contractual requirements › Proliferation of independent approaches to implementation › Duplicative EVM System reviews (Department Policy Needed) › Declining experience › Reciprocity ▫ Department Concerns: › Maturity of industry infrastructure to support “ownership” of EVM › Lack of institutionalizing EVM as an integral management tool › Varying levels of confidence in reported performance and financial data › Internal oversight lacks sufficient rigor › Consistency of message (Duplicative efforts within the Department) EVM Implementation Concerns 19

DRAFT Review Schedule 20 Review TypePAVValidationInitital VisitRFC / NM Implement ation Follow-On

In Closing ▫EV is not the problem ▫Understanding EV is not the problem ▫Not using EV to manage is the problem ▫EV is integral to program management ▫It is not a secondary assignment ▫Plan – Execute – Measure – Fix 21

Questions?