1. EVM 202—Lesson 3 EVMS Guidelines and Compliance
September 2016
EVM 202—Lesson 3 EVMS Guidelines and Compliance

2. Lesson 3 Learning Objectives
Terminal Learning Objective (TLO)
Explain the importance of the formal Earned Value Management System (EVMS) approval process
Enabling Learning Objectives (ELOs)
Describe the 32 Electronic Industries Alliance-748 (EIA-748) EVMS guidelines
Describe the DoD EVMS compliance review (CR) process

3. The Earned Value Management Process: A Circular Relationship
From total to detail
From detail to total
Organization
Define the work
Assign responsibilities
Define indirect procedures
Establish proper management controls
Assignments made to responsible organizations
Do not modify past budget or actuals (w/o permission)
Planning and Budgeting
Schedule all work
Authorize all work
Time-phase the work
Develop control accounts
Revisions and Data Maintenance
Analysis and Management Reports
Understand contract status
Use data for decision-making
Maintenance of budget, work, and schedule relationships
All documents properly maintained
Accounting Considerations
Material costs
Unit/lot costs
Cost summarization

4. EVMS Standard Area 1: Organization—5 Guidelines
Define the Work Breakdown Structure (WBS)
Define program Organizational Breakdown Structure (OBS)
Integrate subsidiary management processes
Identify overhead management
Integrate WBS/OBS to create control accounts (CAs)

5. EVMS Standard Area 2: Planning and Budgeting—10 Guidelines
Schedule work
Identify products and milestones for progress assessment
Establish the performance measurement baseline (PMB)
Authorize and budget by cost elements
Determine discrete work and objective measures
Sum work package (WP) and planning package (PP) budgets to the CA budget
Level of effort (LOE) planning and control
Establish overhead budgets
Identify management reserve (MR) and undistributed budget (UB)
Reconcile to target costs

6. EVMS Standard Area 3: Accounting Considerations—6 Guidelines
Record direct costs
Summarize direct costs by WBS elements
Summarize direct costs by OBS elements
Record/allocate indirect costs
Identify unit and lot costs
Track and report material costs/quantities

7. EVMS Standard Area 4: Analysis and Management Reports—6 Guidelines
Calculate schedule variance (SV) and cost variance (CV)
Analyze significant variances
Analyze indirect CVs
Summarize performance data and variances for management reporting
Implement corrective actions
Maintain estimate at completion (EAC)

8. EVMS Standard Area 5: Revisions and Data Maintenance—5 Guidelines
Incorporate changes in a timely manner
Maintain baseline and reconcile budgets
Control retroactive changes
Prevent unauthorized revisions
Document PMB changes

9. Guideline Intent

10. Guideline Intent (Cont.)

11. DoDI 5000.02 EVM Application Requirements Enclosure 1 Table 8
Table 8 summarizes EVM application requirements. EVM is applied to cost reimbursable or incentive contracts, inclusive of options, with 18 months or greater period of performance and based on the nature of the work scope.

12. EVMS Compliance versus Approval
Compliance—The continuing operation of contractor’s EVMS in accordance with the 32 EIA-748 EVMS guidelines
Approval—A formal recognition of certification by an independent party that contractor’s EVMS meets the 32 EIA-748 EVMS guidelines
DoD: Conducted by Defense Contract Management Agency (DCMA)
Intelligence and other agencies: Recognize DCMA EVMS approvals or may conduct own approvals
DoD Tri-Lateral Memorandum of Understanding (MOU): Recognizes EVMS approvals performed by Canada and Australia

13. Limited DoD Alternatives for EVMS Acceptance
DoD does not recognize:
EIA-748 third-party and self approval options
Other U.S. agency approvals (e.g., FAA, DOE, IRS, etc.)
Foreign government approvals—DoD has formally entered into a tri-lateral MOU with Canada and Australia regarding EVMS approvals
DoD-conducted approval

14. Compliance Review (CR) Process
Formal review conducted to evaluate EVMS processes and implementation compliance with the 32 guidelines
DCMA has overall compliance determination responsibility
Documented system implemented on the reviewed program(s)
Valid, timely, and auditable program information is consistently generated

15. CR Team CR Director—Director, EVM Implementation Division (EVMID)
CR Chief—Assigned by CR Director
CR Team Members
Formally assigned to CR Team
Knowledge of both program and contract is desirable
Skills should include formal training and experience in implementing, maintaining, and operating EVMSs
PMO SMEs can be used on the teams

16. Activity before the CR Initial Visit (IV)
Should be accomplished three to six months after contract award
Provides an opportunity for early dialogue between DCMA and the contractor on the CR process
Sets review expectations among the stakeholders
Identifies areas of noncompliance and potential problems with the EVMS processes and procedures
Establishes a notional CR schedule

17. Compliance Review (CR)
CR Activities
Overview briefing to familiarize review team with proposed EVMS
Review of EVMS-generated documents and reports not already provided to team
Interviews with CAMs, functional staff, and program managers to assure that EVM is being used (sample basis)
Exit briefing covering team findings and documenting open system discrepancies
Track Corrective Action Plans to completion
Provide functional expertise to the Administrative Contracting Officer (ACO)
ACO will issue a Contracting Officer Final Determination (COFD) Letter

18. Proof of EVMS Approval COFD Letter
Formal acknowledgement that the contractor has successfully demonstrated EVMS compliance with applicable guidelines
Based on recommendation from Review Director to the ACO
Only valid for the sites included in the CR
Divisional ACO (DACO) sends COFD to Contractor

19. EVMS Approval of Subcontractors
Subcontracted Effort (≥ $100M TY)
Subcontractor EVMS approval should be specified in Government’s prime contract
Subcontractor approval options and processes are the same as the prime contractor’s
Subcontractor must request a Government-led CR through the prime contractor
Subcontractor Flow Down (< $100M TY)
Government approval is not required
Prime reviews subcontractor’s EVMS for compliance
Prime contractor is responsible for EVMS surveillance

20. Lesson 3 Summary Terminal Learning Objective (TLO)
Explain the importance of the formal EVMS approval process
Enabling Learning Objective (ELO)
Explain the intent of the 32 EIA-748 EVMS guidelines
Describe the DoD EVMS CR process