1. September 2016
EVM 202—Lesson 6 Integrated Program Management Analysis Tools and Techniques (Part 1)

2. Integrated Program Management Model

3. Lesson 6 Learning Objectives
Terminal Learning Objective (TLO)
Given an Integrated Analysis Model, assess integrated program management data to make informed recommendations to support program management decisions
Enabling Learning Objectives (ELOs)
Explain key elements of an Integrated Analysis Model
Identify current program technical, cost, and schedule requirements
Assess Integrated Program Management Report (IPMR) data validity
Analyze data to determine technical, schedule, and cost drivers
Construct a realistic estimate at completion (EAC) and appropriate time-phased price at completion (PAC)
Analyze the Integrated Master Schedule (IMS) to determine the ability to meet schedule requirements
Explain the influence of EVM analysis on budget and program documents
Demonstrate if program funding/budget is consistent with the Contract Funds Status Report (CFSR) and the time-phased Government PAC
Justify recommendations for program management decisions

4. Acquisition Contracts and Oversight Reports

5. Integrated Program Management
RISK
Critical Path Schedules
Monte Carlo Schedule Simulations
Program Reviews
System Engineering
Simulation and Test
Design Reviews
TPMs
EVM BCWS
(Time-Phased Budget)
EVM BCWP (Earned Value)
CFSR, CSDR, WBS, Cost Estimates
EVM BAC, ACWP, and EAC (Actuals and Forecast Cost)

6. LAR Vehicle Data Package
Why:
You must have the proper data before you can do analysis.
What You Need:
Initial Capability Document (ICD), Capability Development Document (CDD), and Capability Production Document (CPD)
Acquisition Program Baseline (APB)
Contract
Integrated Program Management Report (IPMR)  Earned Value (EV) and Critical Path
Contract Funds Status Reports (CFSR)
R&P Budget Forms
Defense Finance and Accounting Services (DFAS) Obligation and Expenditure Report
Defense Contract Management Agency (DCMA) Surveillance Reports
Where Can You Get It?
ICD/CDD/CPD  Program Office
APB  Program Office
Contract  Program Office
IPMR  EVM Central Repository
CFSR  EVM Central Repository
R&P Forms 
DFAS Obligation and Expenditure Report  DFAS
DCMA Surveillance Reports  Program Integrator and EVMS Monitor

7. Program Requirements Analysis
Why:
To identify and understand the Key Performance Parameters (KPPs) needed to demonstrate the technical maturity, affordability, and programmatics required to progress to the next acquisition milestone
To identify and ensure that the contract requirements fully support the warfighter’s requirements—the APB parameters
What:
Review the KPPs for technical, cost, and schedule requirements; the Capability Development Document (CDD) and Capability Production Document (CPD) define the KPPs, which are included verbatim in the Acquisition Program Baseline (APB)
Evaluate contract specification and delivery requirements
How:
Review the APB to identify and understand the threshold and objective goals for each performance, cost, and schedule KPP
Identify contract technical requirements
Identify contract delivery requirements

8. Program Requirements Analysis Exercise
Instructions
Using the LAR March 2016 APB, review and identify the LAR Vehicle threshold and objective KPP values required for a production and deployment decision. (See the LAR Data Package.)
Identify any discrepancies of these values with the LAR Vehicle contract requirements.
Team Whiteboard Assignments
Team A—APB Performance KPPs (Survivability and Grade)
Team B—APB Performance KPPs (Turning Radius and Range)
Team C—APB Schedule Parameters
Team D—APB Cost Parameters

9. Integrated Program Analysis Model Contract Level
Analyze Past Performance
1.1 Validate Data
1.2 Analyze PMB
1.3 Analyze Technical Risk Drivers
1.4 Analyze Schedule Drivers
1.5 Analyze Cost Drivers
Predict Future Performance
Formulate a Plan of Action

10. STEP 1 ANALYZE PAST PERFORMANCE
By analyzing past performance, the EVM analyst and the Integrated Product Teams (IPTs) lay the groundwork to help predict future performance. Both of these activities are essential inputs to formulating a plan of action.
Thus, the model can be thought of as an integrated whole, with the three activities occurring in on overlapping manner.

11. STEP 1.1 VALIDATE DATA

12. Step 1.1 Validate Data (Cont.)
Why: To determine if the actual data represents the real program status
What and How:
Earned Value Management System (EVMS) check
IPMR data validity analysis
Schedule validity analysis, i.e., schedule health metrics

13. Step 1.1—EVMS Check EVMS Indicator
Determines if the contractor’s EVMS has been approved and continues to generate reliable information
Contractor’s EVMS approved?
Obtain all open corrective action requests (CARs)?
Impact of outstanding CARs?
System indicator issues: System not approved, no surveillance, and/or Level 3 and 4 CARs
Baseline Indicator
Assesses the risk of the baseline plan and risks identified during the Integrated Baseline Review (IBR) process
IBR conducted within 180 days?
IBR assessed all five IBR risk categories: cost, schedule, technical, resource, and management processes?
Any risk rated high/red at IBR?
High/red risks mitigated or EAC increased to reflect risk as appropriate?
Baseline indicator issues: IBR not conducted, all five risk categories not evaluated, and/or high/red risks not mitigated or accounted for in EAC

14. Step 1.1—IPMR Data Validity Analysis

15. Open Empower Dataset
Open your browser and enter the URL
Select Empower under Data Source.
Enter the user name and the password provided.
Select Dataset.
Select LAR EMD 2016, DEC 16, WBS, and Dollars.
Select OK.
Close the Open Dataset dialog box.

16. Screen Layout
Empower opens in the Standard View in the tri-pane layout based upon the Dataset selections.
The Status Bar indicates the selected contract, month, structure, unit, element, and the sort/filter status.
The Menu Bar provides access to charts, reports, and other features.
The Toolbar provides shortcuts to commonly used features.
Select a row in the Sort Window to update a report/chart to the desired element.

17. Screen Layout—Text Only View
Empower opens in the Standard View in the tri-pane layout based upon the Dataset selections.
The Status Bar indicates the selected contract, month, structure, unit, element, and the sort/filter status.
The Menu Bar provides access to charts, reports, and other features.
The Toolbar provides shortcuts to commonly used features.
Select a row in the Sort Window to update a report/chart to the desired element.

18. WBS Format
The WBS View displays Format 1 (WBS) elements.

19. OBS Format
The OBS View displays Format 2 (OBS) elements.

20. IPT Format
The IPT View displays IPT elements.

21. Lowest Level
Toggle the Lowest button to display alternates between all of the WBS elements and the lowest level WBS elements.
The Layout button is used to return Empower to the tri-pane layout, with the three windows appropriately resized to fill the browser window. In Internet Explorer, you may also press the Refresh button.

22. Sort Column Select a column to sort:
Select a column header to sort descending.
Select the same column again to sort ascending. Note in the sample below it is sorted by CV ascending.
The Status Bar indicates if the sort is ascending or descending.
Important: Return to the original sort by selecting the top of the HIER column (hierarchical sort). After navigating Empower, you may be a little lost and want to return to the original parent-child sort. In this example, the lowest toggle is turned off; it is sorted by WBS hierarchy. The hierarchy values are calculated by Empower.

23. Interactive Filter/Go To Element
Interactive Filter—Enter parameters into the filter boxes of each column.
Use the Clear button to remove all filter parameters.
Note: Filter parameters are executed with an ‘and’ clause. The above sort window shows lowest level elements between 5% and 95% complete with a CV of less than -100, with a CV sort.
Text fields are executed as ‘begins with’ and number fields support the following parameters:
Numbers: Equal to: = N, Greater than: > N, Less than: < N, Less or equal: <= N. Greater or equal: >= N, Range of values: N1 .. N2
Text fields: Execute as a “begins with”
Go to Element—Enter the complete element number in the interactive filter.

24. Empower Standard View
The following shows the contract WBS with SV, CV, and VAC stoplight colors and trends. The cell colors are based upon SV%, CV%, VAC%, and the thresholds shown in item 3 below.
Up Arrow = Improving Down Arrow = Declining Sideways Arrow = No Significant Change
Open Options > Show Thresholds for a key to the colors and arrows. The arrows change for an element if there has been a 10% change in the variance for the previous month.

25. Contractual Thresholds
The VAR (Variance Analysis Reporting Threshold) column indicates what categories have exceeded the reporting thresholds. For the LAR, we have set + or - 10% thresholds. Exceeding triggers normally requires an narrative explanation in Format 5 of the IPMR.
Small letters indicate a current month breach; capital letters indicate a cumulative breach. C/c is for cost, S/s is for schedule, and V is for VAC.

26. LAR EMD December 2016 WBS Dollars [1 : LAR] Validity Report
The Validity Report is an artificial intelligence report that reconciles the different IPMR formats as submitted by the contractor.
This is a good place to begin any analysis; basic checks are already done for you automatically. You must have confidence in the data to draw conclusions about the health of the contract.
▲ WARNING
Formula
EAC is optimistic
CVCUM < VAC
TCPIEAC - CPICUM > 0.10
EAC < CPI Forecast
Format 3 PM EOP does not equal Format 1 BAC subtotal (PMB)
BAC - MR BAC - F3 PM EOP > 0
Format 3 BOP PMB does not equal previous period's F3 EOP PMB
F3 BOP (cp) - F3 EOP (cp-1) > 0
Format 3 BCWSCUM does not equal Format 1 BCWSCUM
F3 BCWSCUM - F1 BCWSCUM > 0
Format 3 BOP (total), plus changes, does not equal F3 EOP (total)
F3 BOP (total) + SUM(BL Changes) - F3 total EOP (total) > 0

27. AI Narrative
To obtain a quick summary, select Reports > AI Narrative.
The AI Narrative is a computer-generated report where numerical data is translated into sentences; rule-based logic is used to generate the words. The report provides analyses in four areas: Summary; Performance to Date, EAC Analysis, and OSD Metrics. Note: Only a subset of the OSD Metrics are checked in the AI Narrative Report.

28. Notional Data Validity Check Exercise
Complete the last two columns of this chart. Put 1 in the third column if the data needs to be corrected. Provide a brief explanation of your answer in the Notes/Actions column.
Validity Check
Checks for 1
Notes/Actions
100% Complete ACWP ≠ EAC
Elements 100% complete, but EAC not equal to cumulative actual cost
ACWP > LRE
Elements with cumulative actual cost greater than LRE
ACWP > BAC
Elements where cumulative actual cost exceeds BAC
ACWP increase without BCWP increase
For the current period, there is ACWP with no BCWP
BCWP increase without ACWP increase
For the current period, there is BCWP with no ACWP
BCWP > BAC
Elements where BCWP exceeds BAC
BCWS > BAC
Elements where BCWS exceeds BAC
CV < VAC
(EAC realism)
Elements where CVCUM is negative, VAC is greater than CVCUM
TCPI-LRE – CPICUM = ±0.10
Elements where TCPI-LRE differs from CPICUM by more than ±.10
1. Need Correction 2. Need Investigation

29. Step 1.1—Schedule Health Metrics
LAR Schedule
Value
Potential Impact
Missing Logic 3%
Almost every task should have a predecessor and successor
Hard Constraints (Tasks w/ Constrained Dates)
< 1%
Tasks should rarely be artificially tied to dates. Durations combined with schedule logic should determine schedule dates. Use of constraints may result in incorrect calculation of the critical path and near critical paths.
High Float
71%
Large positive or negative slack values may indicate a poorly constructed schedule. Large positive slack may indicate poor or missing logic. Tasks w/ Total Slack > 44 days
High Duration
38%
Industry consensus is that near term tasks should be a week to a month in length. When more than a month, you will not be able to get an accurate estimate of progress and forecasted completion dates. Tasks w/ Duration > 44 days
Baseline Execution Index (BEI)
0.87
This measure the tasks that were completed as a percentage of the tasks that should have been completed per the original (baseline) plan. The goal is to have a BEI of .95 or greater.

30. STEP 1.2 ANALYZE PMB

31. Step 1.2—PMB Analysis
Why: To determine that the PMB is current and that the contractor is “using EVM to manage” and not “managing the earned value (EV) data”
What: Assess the IPMR baseline data to ensure that contract modifications are incorporated, that the PMB is updated to address cost and schedule variances, and that PMB adjustments have not invalidated EVM metrics
How:
IPMR analysis and contract modification and baseline revision metrics
Format 3 Review—Identify PMB Changes
Format 5 Review—Contractor explains PMB changes
Empower Contract Level 1: EAC Chart and Six Period Summary
Empower Undistributed Budget (UB): EAC Chart and Six Period Summary
Empower PMB: EAC Chart and Six Period Summary
Empower Management Reserve (MR): EAC Chart and Six Period Summary
Single Point Adjustments (SPAs) and Over Target Baselines (OTBs)
Has the PMB been maintained and does it accurately reflect program and contract status?

32. Contract Modification and Baseline Revisions
Contract Modification Metric
Highlights changes made to the contract dollar value from the time of award to the present
Identifies when new requirements have been added to the contract or when existing requirements have been modified
Highlights whether or not requirements are clearly understood
A delta ≥ 10% used as an early warning indication that the program’s technical requirements are possibly not entirely understood
Baseline Revisions Metric
Highlights changes made to the time-phased PMB over the past 13-month period using the IPMR Format 3
A delta ≥ 5% used as an early warning indication for volatility in the near-term plan

33. Format 3 Review Format 3 Box 5 Contract Data—IMPORTANT
Lists all negotiated and authorized contract modifications
Lists the value of OTBs
Lists contractor’s estimated completion date
Should correlate contract P0000 status
Format 3 Box 6 Performance Data
Block 15—UB; should be zero
Block 16—Shifts in total budget; can only come from OTB, MR, or new work
Format 3 Box 7—MR

34. Format 5 Explanations and Problem Analyses Review
Contract summary
Formal reprogramming analysis
EAC analysis
UB analysis
MR analysis
IMS discussion:
Critical/driving paths
Baseline schedule variance
Schedule margin changes
Schedule health analysis, if applicable
Format 3 discussion/changes
Format 4 discussion/changes
Cost and schedule variance analysis:
Root cause
Effects on immediate tasks
Impacts on the total contract
Corrective actions
Base labor rate, material price, and overhead rate changes
Supplemental discussion

35. Contract Modification Metric (Format 3)
Contract Mod= IPMR3 5e −IPMR3 5a IPMR3 5a ×100=
647,115−647, ,115 ×100=0%
Contract Modification Metric = 0.0 Percent Warning indicator: Change ≥ 10%

36. Baseline Revisions Metric (Format 3)
Baseline Revisions Metric = Percent Warning indicator: Change ≥ 5%

37. Has the Contract Budget Base (CBB) Changed?
How can you tell if the CBB has changed?
The Empower Level 1 EAC Chart will tell you.
Go to WBS Level 1 and select LAR > Charts > EAC. Make sure that you are at the LAR Vehicle program level; the status bar must read LAR.
Unique to Empower, the BAC at level 1 is the CBB because it includes MR. Empower assumes MR will be consumed in level 1 charts and reports; the EAC calculations (e.g., CPICUM forecast) use CBB instead of PMB.
Small value changes in the charts are not obvious at the contract level.
Example: In MAY 2017, there was a $65.4K contract modification, but it is too small to see on this JUL 2017 EAC chart.

38. LAR Vehicle Level 1 Six Period Summary
LAR EMD July 2017 WBS Dollars [1 : LAR] Six Period Summary (Millions)

39. LAR Vehicle UB EAC Chart
Small contract changes can be very obvious in UB account.
From Sort Window, scroll to the bottom of the Sort Window until you see UNDIST BUDGET.
Select UNDIST BUDGET (Undistributed Budget - UB). Make sure the status bar changes to UB. Now all charts and reports will be for UB. Select Charts > EAC.
Remember that the CBB includes Authorized Unpriced Work (AUW). AUW normally first enters the PMB as UB. As the work is definitized, the UB BAC is allocated to the control accounts (CAs), is lowered as a result of contract negotiations, and/or is added to MR.

40. LAR Vehicle UB Six Period Summary
LAR EMD July 2017 Dollars [UB]: UNDIST BUDGET Six Period Summary (Millions)

41. LAR Vehicle PMB EAC Chart
Continuing to track the May 2017 modification, review the PMB.
From Sort Window, scroll to the bottom of the Sort Window and select PERF MEASURE BL. (Check the status bar.) Now all charts and reports will be for PMB. Select Charts > EAC.
In this chart, BAC represents the PMB for July 2017.
If a contractor is using EVM to manage, we expect the PMB line to change month to month (e.g., rolling wave planning, contract modifications, MR).
The May contract modification does not appear to be reflected in the PMB. Where’s the money?

42. LAR Vehicle MR EAC Chart
The Empower MR EAC Chart shows the movement of budget in and out of MR.
From Sort Window, scroll to the bottom of the Sort Window until you see MGT RESERVE. Select MGT RESERVE (Management Reserve - MR). (Check the status bar.) Select Chart > EAC.
In this chart, the BAC represents the remaining MR.
If a contractor is using EVM to manage, we expect the MR line to change month to month, e.g., subcontracts, negotiations, rolling wave planning, and unknown unknowns.
Is the May contract modification in MR?

43. LAR Vehicle PMB SPA and OTB Chart
Review the PMB for possible SPA and OTB.
From Sort Window, scroll to the bottom of the Sort Window and select PERF MEASURE BL. (Check Status Bar.) Now all charts and reports will be for the PMB. Select Charts > EAC.
In this chart, the BAC represents the current PMB.
In June 2018, an OTB is established. BCWP and BCWS are set equal to ACWP. $44.4M is added to the PMB to complete the work. Zeroing the variances results in LRE, BAC, and CPICUM convergence.
If an OTB exists, EVM metrics must be evaluated in the context of the OTB.

44. STEP 1.3 ANALYZE TECHNICAL RISK DRIVERS

45. Step 1.3—Technical Risk Drivers Analysis
Why: To answer the question: Will the program achieve the APB technical requirements, have military utility, and meet the needs of the warfighter?
What: The systems engineering process: Develop and status technical risk metrics needed to quantify technical progress and manage technical risk elements
How:
Review risk assessment
Evaluate technical performance status
Identify technical drivers
Correlate actual performance data with APB performance goals
Correlate actual performance data with contract specification requirements
Review information and analyses presented at status and design reviews
Review IPMR Format 5
Identify technical risk issues

46. LAR Vehicle TPM Status, December 2016
Fuel Consumption: Outside the bound of the development plan, no improvement since June, impacting Range KPP
IR Signature: Analysis value at the upper tolerance level, impacting Survivability KPP

47. LAR Vehicle Technical Performance
KPPs Driving WBS Element Technical Risk
Survivability: Body/Cab, Testing, Power Package (IR Signature), and Communications
Grade and Range: Power Package
Turning Radius: Suspension/Steering and Armament
Gross Vehicle Weight: Power Package, Armament, Body/Cab, and Auxiliary Equipment
Current Performance Status, December 2016
Survivability: 0.97
Grade: 40o
Range: 385 Miles
Turning Radius: 25 Ft
Combat Vehicle Weight: 13,000 KGs

48. STEP 1.4 ANALYZE SCHEDULE DRIVERS

49. Step 1.4—Schedule Drivers Analysis
Why: To answer the question: Will the program be delivered on time to meet the APB schedule requirements, the contractual delivery requirements, and the needs of the warfighter?
What: Determine schedule drivers using IMS analysis and EVM schedule variances.
How:
Analyze IMS
Analyze critical path
Filter MS Project for critical path
Assess slipping tasks
Compare days slipped with total float
Filter MS Project for slipping tasks
Analyze network schedule for milestones
Check against APB and contract requirements
Filter MS Project for milestones
Collect BEI and Hit-Task Percentage metrics (from Step 1.1)
Analyze EVM schedule data at lowest level
Sort by SV$
Sort by SV%
Review IPMR Format 5

50. Identify Critical Path
Add the Predecessor and Successor columns.
Hide Summary Tasks by selecting the corresponding checkbox on the Format tab.
Select Critical from the View tab’s Filter drop-down menu (this filters for tasks with a float value of 0 or less).
Insert Start column and then sort by Start Date (earliest to latest) to find the first task on the critical path.
Any schedule item colored red is critical and has a float value of 0 or less.

51. Identify Critical Path (Cont.)
Review the LAR Vehicle program critical path WBS elements.
What tasks are on the critical path to the next two milestones?
Exhaust to Subsystem CDR
Engine to System CDR

52. Critical Path Discussion
Evaluate the Empower and MS Project schedule data for December 2016 and answer the questions below.
What two tasks are on the critical path?
Has either of these tasks been completed?
Has either of these tasks started?
Does the Empower data correlate with the MS Project data?

53. Slipping Task Filter
From the View drop-down menu, select Filter for > More Filters > Slipping Tasks from the pop-up window.
Identify tasks with projected end dates later than their baseline finish, particularly if they are on the critical path. If they are not on critical path, how much float do they have? Are they close to the critical path?
Review other filters: Completed Tasks, In Progress Tasks, and Incomplete Tasks.

54. Float and Duration Exercise
Compare float, duration, slip, and work progress to identify near critical path tasks and tasks with questionable status.
Float and slip time are work days (five-day weeks).
MS Project selects the longest float of sub-elements for the summary float.

55. Milestone Assessment
From the View drop-down menu, select Filter for > Milestones and find the dates for the remaining milestones.
Compare the milestone dates in the IMS with the information from your network schedule analysis to see if you think these dates might be off.
Compare the IMS and the adjusted milestone dates with the APB schedule parameters. Are there potential issues?
Compare the project milestone dates with the contract delivery requirement dates. Are there potential contract delivery issues?
Milestone
APB Objective
APB Threshold
Contract
Dec 16 IMS
Issue
Subsystem CDR
Jan 17
May 17
Feb 17
31 May 17
APB—No; at threshold
Contract—Yes
System CDR
Sep 17
Dec 17
31 Dec 17
Production Prototype Delivery
Jul 18
Dec 18
Nov 18
14 Nov 18
Contract—No

56. Drill Down Button with Sort
Select the Level 1 element.
Select Drill button.
Note: Drill Up, Down, and Off buttons now displayed on toolbar
The Sort Window displays only level 2 elements (i.e., children of level 1).
Select the Sort column.
Use this feature to drill up and down the tree. Select the Sort column to bring the CV, SV, or VAC drivers to top.

57. Schedule SV$ Analysis Select the Lowest Level button.
Sort for SV$. This identifies the WBS elements with the most unfavorable SV in dollars. Note: Small dollar accounts may not be seen in a SV$ account.
Do the WBS elements with the most unfavorable SV$ correlate with the technical drivers? If not, why not?
Do the WBS elements with the most unfavorable SV$ correlate with the critical path? If not, why not?
Element
Ranking
Technical Drivers
IMS Analysis
SV$
Correlates With 1
Engine
Exhaust to SSCDR
Armament
Technical Driver 2
Cooling
Body/Cab & Engine to Sys CDR
Body/Cab 3
Exhaust
IAT&C, Data, & Spares to PPD
Susp/Str 4
System T&E to DT/OT
System Eng 5
Susp/Str, slipping
Frame 6
Armament, slipping
Project Mgmt

58. Schedule SV% Analysis
Sort for SV%. This identifies the WBS elements with the most unfavorable SV%. Note: Empower treats all accounts equally.
Do the WBS elements with the most unfavorable SV% correlate with the technical drivers? If not, why not?
Do the WBS elements with the most unfavorable SV% correlate with the critical path? If not, why not?
Element
Ranking
Technical Drivers
IMS Analysis
SV%
Correlates With 1
Engine
Exhaust to SSCDR
Integ & Assem 2
Cooling
Body/Cab & Engine to Sys CDR
Aux Auto 3
Exhaust
IAT&C, Data, & Spares to PPD
Electronics 4
Susp/Str
System T&E to DT/OT
Body/Cab
Technical Driver 5
Armament
Susp/Str, slipping 6
Armament, slipping

59. Format 5 Review—Schedule Drivers
Format 5—The IPMR DID requires analyses of cost and schedule variances subject to tailoring:
Nature of problem
Effect on immediate task
Impact on total contract
Corrective actions taken or planned
Format 5 tailoring variance analysis thresholds:
Fixed number of variances
Percent or dollar
Schedule
Specified variances
No thresholds specified

60. Determine Schedule Drivers
There are no absolute ways to identify schedule drivers:
Review the technical drivers
Identify the elements on the critical path
Sort by SV$ and SV%
Compare all elements to identify the schedule drivers
An analyst must be able to explain and defend their selections.
Element Ranking
Technical Drivers
IMS Analysis
SV$
SV%
Schedule Drivers 1
Engine
Exhaust to SSCDR
Armament
Int & Assembly 2
Cooling
Body/Cab & Engine to Sys CDR
Body/Cab
Aux Auto
Exhaust 3
IAT&C, Data, & Spares to PPD
Susp/Str
Electronics 4
System T&E to DT/OT
System Eng 5
Susp/Str, slipping
Frame 6
Armament, slipping PM

61. STEP 1.5 ANALYZE COST DRIVERS

62. Step 1.5—Cost Drivers Analysis
Why: To assess the actual cost performance (e.g., overruns and underruns) and to correlate this data with the network schedule, technical risk issues, and schedule drivers to identify the cost drivers
What: Determine cost variance metrics for all WBS elements; correlate these EVM metrics with the technical drivers, network schedule, and schedule drivers to determine the program cost drivers
How:
Analyze EVM cost data at lowest level
Sort by CV$
Sort by CV%
Correlate EVM cost metrics with technical drivers, critical path tasks, and schedule drivers
Review IPMR Format 5

63. Cost CV$ Analysis
Sort for CV$. This identifies the WBS elements with the most unfavorable CV.
Do the WBS elements with the most unfavorable CV$ correlate with the technical drivers? If not, why not?
Do the WBS elements with the most unfavorable CV$ correlate with the critical path? If not, why not?
Do the WBS elements with the most unfavorable CV$ correlate with the schedule drivers? If not, why not?
Element
Ranking
Technical Drivers
IMS Analysis
Schedule Drivers
CV$
Correlates With 1
Engine
Exhaust to SSCDR
System Eng
SV$ 2
Cooling
Body/Cab & Engine to Sys CDR
Exhaust
Armament
Technical Driver, SV$, SV% 3
IAT&C, Data, & Spares to PPD
Susp/Str 4
System T&E to DT/OT
Int & Assbly
G&A 5
Susp/Str, slipping
Technical Driver, Slipping Task 6
Body/Cab
Armament, slipping
Technical Driver, Critical Path, Schedule Driver

64. Cost CV% Analysis
Sort for CV%. This identifies the WBS elements with the most unfavorable CV%.
Do the WBS elements with the most unfavorable CV% correlate with the technical drivers? If not, why not?
Do the WBS elements with the most unfavorable CV% correlate with the critical path? If not, why not?
Do the WBS elements with the most unfavorable CV% correlate with the schedule drivers? If not, why not?
Element
Ranking
Technical Drivers
IMS Analysis
Schedule Drivers
CV%
Correlates With 1
Engine
Exhaust to SSCDR
Aux Auto
SV% 2
Cooling
Body/Cab & Engine to Sys CDR
Exhaust
Electronics 3
IAT&C, Data, & Spares to PPD
Armament
Technical Driver, Slipping Task, CV$ 4
Susp/Str
System T&E to DT/OT
Int & Assbly
Technical Driver, Critical Path, Schedule Driver, CV$ 5
Susp/Str, slipping
Mgmt Data 6
Body/Cab
Armament, slipping
Technical Driver, Slipping Task, SV$, SV%, Schedule Driver, CV$

65. Format 5 Review—Cost Drivers
Format 5—The IPMR DID requires analyses of cost and schedule variances subject to tailoring:
Nature of problem
Effect on immediate task
Impact on total contract
Corrective actions taken or planned
Format 5 tailoring variance analysis thresholds:
Fixed number of variances
Percent or dollar
Schedule
Specified variances
No thresholds specified

66. Determine Cost Drivers
There are no absolute ways to identify cost drivers:
Review the technical drivers
Identify risk elements from IMS analysis
Review schedule drivers
Sort by CV$ and CV%
Compare all elements to identify cost drivers
An analyst must be able to explain and defend their selections.
Element
Ranking
Technical Drivers
IMS Analysis
Schedule Drivers
CV$
CV%
Cost Drivers 1
Engine
Exhaust to SSCDR
System Eng
Aux Auto 2
Cooling
Body/Cab & Engine to Sys CDR
Exhaust
Armament
Electronics 3
IAT&C, Data, & Spares to PPD
Susp/Str 4
System T&E to DT/OT
Int & Assbly
G&A 5
Susp/Str, slipping
Mgmt Data 6
Body/Cab
Armament, slipping

67. Step 1—Analyze Past Performance Summary
Step 1: Analyze Past Performance is comprised of five sub-steps:
Step 1.1—Validate data
Step 1.2—Analyze PMB
Step 1.3—Analyze technical risk drivers
Step 1.4—Analyze schedule risk drivers
Step 1.5—Analyze cost risk drivers
Analyzing past performance prepares the EVM analyst and the IPTs for Step 2: Predict Future Performance, and both steps are critical inputs for Step 3: Formulate a Plan of Action.

68. STEP 2 PREDICT FUTURE PERFORMANCE
The EVM analyst and the IPTs focus on predicting the future by looking at:
Trend data
Future tasks
Effort in the Integrated Master Schedule (IMS)
Updated risk assessments
One of the key outputs of the analysis is an update to the program's estimate at completion (EAC). The updated EAC can be compared to the obligation profile to determine if funding is sufficient for the contract effort at any given time.

69. Step 2—Predict Future Performance (Cont.)
Why: To answer the question: Where are we going and when will we be done? After analyzing past performance, future tasks, and risks, CAMs generate EACs. Understanding EAC reasonableness provides for effective program management for overall contract and at different WBS levels.
What: Analyze EAC reasonableness and develop Government independent EAC
How:
Compute EVM performance metrics
Review EAC reasonableness
Test 1: Compare CPICUM to TCPI-EAC
Test 2: Generate “floor” and “ceiling” EACs
Evaluate trends:
Contract Performance Chart
C/S Variance Trends Chart
CPI and SPI Charts
Six Period Summary Report
Determine your performance factors and compute most likely Government independent EAC
Determine the schedule driver SPICUM trends
Determine the cost driver CPICUM trends
Generate price at completion (PAC)

70. Estimate at Completion (EAC)
Generate EACs by:
Analyzing past performance
Estimate future conditions
Incorporate risks and opportunities as appropriate
Government EACs:
Mostly generated using a formula
Subjective assessment with no one “right” formula
Contractor-generated EAC is sometimes called Latest Revised Estimate (LRE):
Bottoms-up Estimate to Complete (ETC)
Frequency and detail per contract requirement and internal system description
Only use formula-based ETC as a sanity check
Regardless of bottoms-up estimate frequency, LREs should always reflect the latest information
Document assumptions and justifications
EAC=ACWP+ETC
EAC=ACWP+[ Remaining Work Performance Factor ]
EAC=ACWP+[ BAC −BCWP Performance Factor ]

71. EVM Performance Metrics
Schedule Performance Index (SPI)
An efficiency factor representing the relationship between the performance achieved and the initial planned schedule
An index of 1.00 or greater indicates that work is being accomplished at a rate on or ahead of what was planned
An index of less than 1.00 suggests work is being accomplished at a rate below the planned schedule
An index of less than .95 is used as an early warning indication of execution and should be explained
Cost Performance Index (CPI)
An efficiency factor representing the relationship between the actual cost expended and the performance accomplished
An index of 1.00 or greater indicates that work is being accomplished at a cost equal to or below what was planned
An index of less than 1.00 suggests work is accomplished at a cost greater than planned
An index of less than .95 is used as an early warning indicator of cost increase and should be explained
SPI Calculation SPI = BCWP BCWS
CPI Calculation CPI= BCWP ACWP

72. Review EAC Reasonableness
There are two ways to test the reasonableness of an EAC:
When comparing CPICUM with TCPI, a difference of greater than 0.10 means that achieving the target is unrealistic.
When comparing CVCUM with VAC, a study has shown that once a program is about 15% to 20% complete and overruns, it is extremely challenging to recover the overrun.
EAC range:
Low bound: Using CPICUM as PF
Upper bound: Using CPICUM * SPICUM as PF
This is valid only when SPI is below 1.0.

73. EVM Performance Metrics (Cont. 1)
CPI to To-Complete Performance Index (TCPI)
TCPI computes the future required cost efficiency needed to achieve a targeted budget, i.e., LRE, EAC, BAC.
CPI to TCPI comparison gauges the realism of the targeted budget.
A delta of ten or more percent is used as an early warning indication that the targeted budget could be unrealistic.
TCPI Calculation TCPI_target= BAC−BCWP 𝐭𝐚𝐫𝐠𝐞𝐭−ACWP
CPI to TCPI Calculation TCPI−CPI ×100

74. EVM Performance Metrics (Format 1)
SPI CUM = BCWP BCWS = 8e.8 8e.7 = =0.89 CPI CUM = BCWP ACWP = 8e.8 8e.9 = =0.92 TCPI= BAC−BCWP EAC−ACWP = 8e.14−8e.8 6c.1−8e.9 = − − =1.02 CPI to TCPI = TCPI−CPI ×100= 1.02−0.92 ×100=10% The contractor’s most likely EAC may be too optimistic.

75. Generate Floor and Ceiling EACs
EVM index-based EACs are essentially all generated from the same formula. The only thing that changes is the performance factor (PF).
We should not expect an exact EAC but a reasonable EAC range.
Research suggests that the CPICUM PF provides the floor (low) of the EAC range and CPICUM * SPICUM composite PF provides the ceiling (high). (This is applicable when SPI is below 1.0.)
EAC=ACWP+[ BAC −BCWP Performance Factor ]
Single Index
CPI CUM
CPI CUR
CPI 3MTH
CPI 6MTH
SPI CUM
SPI CUR
Performance Factor
Composite ( CPI CUM ∗ SPI CUM ) MICOM - ( CPI 6MTH ∗ SPI CUM )
Weighted (0.8 ∗ CPI CUM )+(0.2∗ SPI CUM ) (0.4 ∗ CPI FACTORY )+(0.4∗ CPI TEST )+(0.2∗ CPI QUALITY )

76. Working with Empower Charts
Chart Button
Select Line, Column, or Bar to change the chart type.
Select Show to apply the color background.
Select Hide to suppress the color background.

77. Working with Empower Charts (Cont. 1)
Zoom Button
Pressing Zoom on the toolbar changes charts to display all months of data.
Last Twelve Months—Default
All Months—Zoom Selected
Interactive X/Y Zoom
Left-click, hold, and drag your mouse to zoom in on a specific coordinate.

78. Working with Empower Charts (Cont. 2)
Option Menu—Show/Hide Legend Data
Show includes data values for the most recent period in the legend.
Hide remove the data values from the legend.
Print, Download, or Copy Chart
Select Print Chart to access the Print dialog box.
Download the chart and save/copy as a PDF, PNG, SVG, or EMF file.
Note that IE8, Chrome, Firefox use .PNGs or .EMFs.
If IE9 or higher, use .SVGs.
MS Windows and Mac compliant.
Use a snipping tool as an alternative.

79. Working with Empower Charts (Cont. 3)
Show/Hide Chart Line
Select an item in the data legend to show/hide the line on the chart. Grayed out legend items do not display on the chart.

80. EVM Tools Empower: C/S Variance Trends Chart
wInsight: : C/S Variance Trends Chart

81. Contract Performance Chart
Contract Level—Contract Performance Chart
This chart is Empower’s version of the Gold Card chart.
This chart displays both unfavorable CV and SV.
The contractor’s Estimate at Completion (EAC) appears optimistic.
The PM raised his/her EAC this month.

82. C/S Variance Trends Chart
Contract Level—C/S Variance Trends Chart
The C/S Variance Trends chart is used extensively by USD(AT&L).
This chart displays unfavorable CV and SV for the LAR Vehicle.
This chart displays an unfavorable SV breach of the ±10% BCWPCUM reference bands.
This chart displays a slight use of MR.
The PM’s VAC is reasonable, and the Contractor’s VAC is unreasonable when compared with the CV projection line.

83. CPI/TCPI Chart Contract Level Chart—CPI/TCPI Chart
Compare CPICUM and TCPI-EAC.
When CPICUM and TCPI-EAC are within ± 0.10, the EAC is reasonable.
CPICUM shows a smoothed line, which is useful for trend analysis.
Plotting current period data can help you spot a significant change from the prior month and could be indicative of emerging problems.
Note the large deterioration in current CPI in this chart. You should investigate the causes.
A good trend cannot be determined from only four data points, but the LAR’s current and cumulative CPI trends are unfavorable.
Follow the trend over next few months to see if CPICUM trend continues to decline or bottoms out.

84. CPI/SPI Chart
The CPI/SPI chart measures the accomplishment efficiency of the work being done. Like the SV, an unfavorable SPI metric may or may not indicate a late delivery. That can only be determined by reviewing the network schedule.
The SPICUM is a more valuable EVM metric in early stages of the contract, and it is not unreasonable for the SPICUR data to spike up and down.
Unfavorable SPI trends are a good forecaster of future unfavorable CPI trends.
A good trend cannot be determined from only four data points, but the LAR Vehicle’s SPI trends are currently unfavorable.

85. Six Period Summary Report
The Statistic and Independent Forecasts section of Empower’s Six Period Summary Report uses a variety of PFs to compute the listed EACs.
Shows how EACs change over time, reflecting the trend of PFs used. (e.g., CUM CPI Fcst increased significantly in DEC 16, indicating cost performance got worse.)
The CPICUM usually represents the floor, and the CPICUM * SPICUM represents the ceiling.
Selected Empower PF EAC definitions:
Performance Factor = 1
Cost and Schedule Performance Factor = 0.5 CPICUM SPICUM
MICOM EAC Performance Factor = CPI6MTH * SPICUM
Statistic and Independent Forecasts Section of Six Period Summary

86. Hints for Trend Analysis and Selecting a PF for an EAC
Is the element’s performance steady or improving/declining at an accelerating or slowing rate?
Focus analysis on trends for the past 3-6 months.
Watch out for:
Sudden spikes
Changes in direction (i.e., positive to negative)
Based on knowledge of technical and schedule performance to date, remaining work, and risks ahead:
Is there a correlation between technical performance and earned value performance?
Can poor technical performance be used to predict future schedule and cost problems?
Technical performance and poor schedule performance are often leading indicators. Cost performance is generally a lagging indicator.
Based on analysis, predict the future trend.

87. Generating Government EAC
May generate at the contract level for quick turn exercises
Pros: Already provided on 6 Period Summary Report
Cons: Variances tend to cancel out and all elements are treated the same
Assumptions:
PF used: (0.5*CPI + 0.5*SPI)
No additional risks or opportunities
MR of $12.7M will be fully spent at the end (subtract BCWPCUM from BAC with MR included)
EAC=ACWP+ BAC − BCWP Performance Factor = $712M
BAC+MR
Low EAC
High EAC
CPI
TCPI CV
VAC
$647M
$700M
$775M
0.924
0.906
($8.2M)
($65.3M)

88. Generating Government EAC (Cont.)
Better to generate at the lower level WBS, IPT, or OBS level
Pros: Each element can use its performance and is fairly quick using EXCEL
Cons: Need to assess each level so will take longer
Assumptions:
PFs used: (0.5*CPI + 0.5*SPI)
When indices are not available, used the contract level indices
For LOE elements with positive CPI, used budget values
No additional risks or opportunities
MR will be fully spent at the end
Format 2, OBS
ACWP
BAC
BCWP
CPI
SPI
EAC
Program Office
9,010
50,094
10,905
1.210
1.000
Program Control
4,832
21,916
6,458
1.337
Support Service -
12,523
0.000
13,830
Manufacturing
13,786
187,852
13,513
0.980
189,886 QA
1,403
18,785
1,351
0.963
19,166
Procurement
18,767
118,973
18,947
1.010
118,295
Engineering
59,458
216,030
47,984
0.807
0.789
270,042
COM
1,622
8,218
1,490
0.919
0.987
8,943
G&A
15,584
14,377
0.923
0.991 MR
12,723
TOTAL
124,462
647,114
115,025
704,895
BAC+MR
Low EAC
High EAC
CPI
TCPI CV
VAC
$647M
$700M
$775M
0.924
0.917
($8.2M)
($57.8M)

89. EVM CHART ANALYSIS EXERCISE

90. Price at Completion (PAC)
From Empower Executive Summary DEC 2016
CONTRACT TYPE: CPIF CONTRACT PERIOD: 10 JUN 2016 to 30 May 2019 NEGOTIATED COST: 647,115,000 EST AUTH UNPRICED: 0.0 CONTR BUDGET BASE: 647,115,000 TOTAL ALLOC BUDGET: 647,115,000 PERF MEASUREMENT BL: 634,392,000 MANAGEMENT RESERVE: 12,723,000
TARGET FEE $: 77,007,000 TARGET FEE %: TARGET PRICE: 724,122,000 SHARE RATIO ABOVE: 50/50 SHARE RATIO BELOW: 30/70 MIN FEE: 32,356,000 MAX FEE: 97,067,000
Contract Budget Base
$647,115,000
Most Likely EAC
$704,895,000
(Govt Contract Level)
Forecast Overrun/Underrun CBB – EAC
= -$57,780,000
Target Fee
$77,007,000
Share Ratio
50/50
Fee Adjustment (Over or Under* Share Ratio)
- $28,890,000
Adjusted Fee Target Fee + (Fee Adjustment)
$48,117,000
Check against min and max fees
Price at Completion (PAC) EAC + Adjusted Fee*
= $753,012,000
Do we have adequate funding?

91. PAC Exercise
Use the Dec 16 Empower Executive Summary contract data and Six Period Summary EAC forecasts to compute a LAR Dec16 PAC.
From Empower Executive Summary DEC 2016
CONTRACT TYPE: CPIF CONTRACT PERIOD: 10 JUN 2016 to 30 May 2019 NEGOTIATED COST: 647,115,000 EST AUTH UNPRICED: 0.0 CONTR BUDGET BASE: 647,115,000 TOTAL ALLOC BUDGET: 647,115,000 PERF MEASUREMENT BL: 634,392,000 MANAGEMENT RESERVE: 12,723,000
TARGET FEE $: 77,007,000 TARGET FEE %: TARGET PRICE: 724,122,000 SHARE RATIO ABOVE: 50/50 SHARE RATIO BELOW: 30/70 MIN FEE: 32,356,000 MAX FEE: 97,067,000
From Empower Six Period Summary DEC 2016
Statistical and Independent Forecasts
SEPT 16
OCT 16
NOV 16
DEC 16
CUR CPI
695,263,116
627,188,503
632,012,885
837,762,144
3 PER AVG
647,115,000
629,718,175
704,648,242
6 PER AVG
CUM CPI
679,023,301
669,234,539
700,023,774
CPI * SPI
734,461,584
721,124,185
726,155,131
775,298,246
MICOM EAC
665,692,475
682,771,842
780,511,577
COST & SCH
691,410,872
684,774,365
686,606,598
712,219,541 PF
EAC
Over/ Under
Fee Adjustment
Adjusted Fee
Applied Fee
PAC
Do we have enough funds?

92. Step 2—Predict Future Performance Summary
Step 2: Predict Future Performance involves:
Analyzing EAC reasonableness
Developing an independent Government EAC
The EVM analyst and the IPTs consider trend data, future tasks, efforts in the IMS, and updated risk assessments.
A key output of this analysis is an updated program EAC, which can be compared to projected obligations to determine if sufficient funding is available for the contract effort at any given time.