1. 1 ANSI/EIA - 748 - A - 1998 EIA STANDARD Earned Value Management Systems Potential Changes Discussion August 15, 2006 NDIA Program Management Systems Committee Walt Berkey, Work Team Lead Telephone 301.897.6262; Email walt.berkey@lmco.com NDIA ANSI-EIA-748 Revision Aug06

2. 2 PMSC Revisions DateRevisions 7/31/06Work Team recommendations for 13 identified topics

3. 3 AGENDA TOPIC IDENTIFICATION RCOMMENDED REVISONS PATH TO COMPLETION

4. 4 TOPIC IDENTIFICATION - PROBLEM(S) ANSI/EIA-748 Sections Changed TopicProblem Addressed 1. C/SCSC: Contents & 5.2EVMS terminology 2. C/SSR: 3.3.3Policy eliminated C/SSR 3. Summary Level Planning Package: Contents, 2.6, 3.5.9 & 3.5.12 Terminology used inconsistently 4. System Documentation: 4FAR Case; PMSC Intent & Application Guide compatibility 5. System Evaluation: 5.1FAR Case; PMSC Acceptance Guide compatibility 6. System Surveillance: 5.3PMSC Surveillance Guide compatibility 7. Project vs Program & Contract vs Investment usage: Introduction & 2.6 OMB terminology & WBS Handbook

5. 5 TOPIC IDENTIFICATION - PROBLEM(S) ANSI/EIA-748 Sections Changed TopicProblem Addressed 8. Performance measurement flowdown: Contents & 3.3.3 EVM application by inference rather than direct language 9. User friendly terms (ACWP, BCWP, BCWS, etc): 2.6 Terminology used inconsistently 10. Risk(s): 3.4 & 3.5.1 & 3.9.2Integration with EVM 11. Actual Costs/Estimated Cost: 3.6 & 3.6.1 Clarify use in EVM 12. Contractor & Company Term Usage: All sections Ensure Organization view is included 13. Material Receipt & Payment; Performance Based Payments: 2.3 & 3.6.1 Clarify when EV is recorded

6. 6 PMSC Work Team Members Walt Berkey – Past Chair, Lead Jim Gasbarro – Past Chair Joe Houser – Past Chair John Pakis – Past Chair Pete Wynne – Past Chair Debbie Tomsic - OSD Steve Krivkopich - OSD Dave Muzio – Federal Agency, OMB Keith Krazert – Federal Agency, FAA

7. 7 PMSC Work Team Ground rules Sections to be revised by GEIA: Cover Page, Notice, and Foreword EVMS Guidelines (section 2) – NO REVISIONS Clarification revisions applied to sections 1, 3, 4 & 5 Revisions are to be word replacement, deletion or insertion to existing content; not added sentences or paragraphs. New material should append to existing content. Establish a standing 1 hour teleconference starting May 25 at 11 AM Eastern time. Subject of the scheduled calls: May 25 – Discuss first draft of suggested word revisions June 8 - Review second draft; incorporated into ANSI/EIA 748 document June 15 – Review and finalize topic areas 1, 2 and 3 June 22 – Review and finalize topic areas 4, 5, and 6 June 29 – Review and finalize topic areas 7, 9, and 12 July 6 – Review and finalize topic areas 8 & 11 and 10 & 13

8. 8 PATH TO COMPLETION PMSC Kickoff (January 31-February 1, 2006) PMSC inputs (March 31, 2006) PMSC Reaffirm focus areas (May 3, 2006) GEIA Project Notification (MAY 26, 2006) ANSI/EIA 748 revisions drafted (July 31, 2006) PMSC/Stakeholder Distribution (August 5, 2006) PMSC review & baseline (August 15 & 16, 2006) Non-PMSC Stakeholder interaction (AUG – SEP 2006) ANSI/EIA 748 revisions finalized (October 20, 2006) PMSC Final Baseline (NOV 2006) GEIA SSTC review (JAN 2007) GEIA member ballot (FEB 2007) ANSI Review by industry Members (MAY 2007)

9. 9 PMSC Work Team Ambassadors Responsible for stakeholder interactions July – November 2006 Mike Martin – Tommy Watts, NASA Wayne Abba – International Interfaces, IPMC Keith Krazert – Federal Agencies - Federal Government EVM Community of Interest – OMB, Capital Programming Working Group Debbie Tomsic – DoD EVM Working Group - Fall Conference - GEIA - Intel Agencies

10. 10 ANSI/EIA-748-A-1998 Recommended Changes

11. 11 Cover Page Revisions will be made by GEIA – No PMSC action PINS: Project Initiation Notification System Form dated May 26, 2006 was processed by GEIA to ANSI on May 26, 2006 Project Intent: Revise current standard to updated terms Designation: EIA-748-B

12. 12 NOTICE Revisions will be made by GEIA – No PMSC action Will include a Document Improvement Proposal (current) “If in the review or use of this document, a potential change is made evident for safety, health or technical reasons, please fill in the appropriate information below an mail or FAX to: Electronic Industries Alliance Technology Strategy & Standards Department-Publications Office 2500 Wilson Blvd. Arlington, VA 22201 FAX: (703) 907-7501”

13. 13 CONTENTS Revisions will reflect changes made to the sections of the ANSI/EIA-748 by NDIA PMSC Currently revised to reflect potential changes in the July 31, 2006 work team baseline. Key Changes: 3.3.3 EVM Flow Down (was Subcontract Management) - Topic #8 EVM application by inference; not direct language 5.2 Prior System Acceptance (was Prior C/SCSC Acceptance) – Topic #1 EVMS terminology Discussion Item: Standard indicates contractor (organization) to do something not consistent with customer direction. Example: “Certain customers may include a requirement to provide a system description document. If an organization does not maintain this type of document, a brief general description with a road map to the internal documents that are used is acceptable.”

14. 14 Foreword Recommended changes: Word “organization, organizations, organization’s” replaces the words company, companies, company’s – Topic #12 Ensure ‘organization’ is included No other changes were recommended Changes Legend: word = current wording word = recommended wording

15. 15 1. INTRODUCTION Recommended changes: Word “organization, organizations, organization’s” replaces the words company, companies, company’s – Topic #12 Ensure ‘organization’ is included The intent is to provide management information using the organization’s existing resources and a scaled EVMS application that achieves the program requirements and is compliant with the EVMS principles. EVMS scalability is viewed as spectrum employing the principles of EVMS as fundamental to all programs and the EVMS guidelines (Section 2) as applicable to large complex and/or high risk programs allowing any program regardless of size and complexity to realize the benefits of earned value management. A program is a group of related projects supporting a mission that are managed in a coordinated way to obtain benefits not obtained from managing them individually. As the management principles are the same to achieve success the two terms, program and project, are used interchangeably in this standard. – Topic #7 Project vs Program

16. 16 2.1thru 2.5 EVMS GUIDELINES Recommended changes: Topic #12 changed these existing terms: company & company’s to organization & organization’s in Guidelines 2.1 c) and 2.1 d) Government contracts to certain contracts in Guideline 2.2 c) Unmeasurable to not measurable in Guideline 2.2 g) Deleted ‘of the company’ in Guideline 2.2 h) Deleted ‘contractor’s’ in Guideline 2.3 c) contract with effort in Guideline 2.3 d) Topic #11 Actual Cost/Estimated Cost resulted in a change to Guideline 2.3 f) 2) “Cost recording during the same period that earned value is recorded and at the point in time most suitable for the category of material involved, but no earlier than the time of actual receipt of material.”

17. 17 2.6 Common Terminology Recommended changes: Topic #3 Summary Level Planning Package: higher level accounts (e.g. summary level planning packages) add in the PMB definition Topic #9 BCWS, BCWP & ACWP: added ACWP to Actual Cost; BCWP to Earned Value; and BCWS into Planned Value Topic #7 Project vs Program: Capital Programming Guide Glossary contains Integrated Project Team (IPT) – not included or added to ANSI Program Risk-Adjusted Budget (PRB) – not added to ANSI Project – see next chart

18. 18 2.6 Common Terminology Recommended for PROGRAM and PROJECT in ANSI: PROGRAM – A project; A collection of related projects and the infrastructure that supports them, including objectives, methods, activities, plans, and success measures (Source: CMMI). A program may include related work outside the scope of related projects. As the management principles are the same to achieve successs the two terms, program and project, are used interchangeably PROJECT – A managed set of interrelated resources that deliver one or more products to a customer or end user. This set of resources has a definite beginning and end and typically operates according to a plan. Such a plan is frequently documented and specifies the product to be delivered or implemented, the resources and funds used, the work to be done, and a schedule for doing the work (Source: CMMI). As the management principles are the same to achieve success the two terms, program and project, are used interchangeably

19. 19 2.6 Common Terminology Recommended changes for PROJECT in ANSI: PROJECT – A managed set of interrelated resources that deliver one or more products to a customer or end user. This set of resources has a definite beginning and end and typically operates according to a plan. Such a plan is frequently documented and specifies the product to be delivered or implemented, the resources and funds used, the work to be done, and a schedule for doing the work (Source: CMMI). As the management principles are the same to achieve success the two terms, program and project, are used interchangeably Capital Programming Guide: Project – ANSI/PMI04-D1 Defines a project as a temporary (generally several years) endeavor undertaken to create a unique product or service, and a program as a group of projects managed in a coordinated way to obtain benefits not obtained from managing them individually. As the management principals are the same to achieve success that the two terms are used interchangeably

20. 20 3. EVMS PROCESS DISCUSSION Organization replaces company – Topic #12 include organization 3.3.3 – Topic #2 C/SSR and #8 Performance Measurement flow down 3.5.9 & 3.5.12 – Topic #3 Summary Level Planning Package 3.4 & 3.5.1& 3.9.2 – Topic #10 Risks (Schedule, Budget & EAC) 3.6 & 3.6.1 – Topic #11 Actual Costs/Estimated Costs 3.6.2 – Flow Down Costs (new)

21. 21 3.3.3 EVM Flow Down Topic #2 C/SSR and Topic #8 Performance Measurement flow down An organization will apply its own established process to ensure flow down of earned value management to interorganizations and subcontracted work. Major or critical organizations with flow down work should be required to comply either with the provisions of this standard or other appropriate requirements. Reporting requirements should be consistent with program risk, size, complexity, and other factors including contract clauses and provisions. Major or critical organizations performing fixed price flow down work should have minimum cost reporting obligations, but should be required to provide schedule and technical plans and progress reports as needed by the prime organization for overall program management. Subcontracts and inter organization agreements should not restrict an organization from applying its EVMS to internally managed effort. Flow down work earned value management data can be integrated with prime organization data for total program performance analysis and reporting.

22. 22 3.4 Program Schedule – Topic #10 Risks The program schedule and budget are an integrated time-oriented plan for accomplishment of work scope requirements on a program. Schedule planning and control, budget planning and control, work scope definition, and program risk handling are necessary prerequisites for basic and effective program management control. The scheduling process begins during original program definition and overall schedule plans are typically established during the preplanning for a program. The time-phased budgeting process occurs subsequent to the schedule planning phase with budgets being time-phased consistent with the scheduled program work scope. The integrated schedule and budget plans should take into account schedule and cost risk mitigations. These plans are sometimes referred to as risk adjusted schedule and budget. Supporting plans, including detail schedules and budgets, are subsequently developed, maintained and statused as necessary during the performance phase of the program. The continuing planning process must support integration of the risk adjusted cost and schedule objectives of the program to provide for resource planning, performance measurement and other program management requirements. Network schedules, schedule risk assessment, and critical path analysis are proven scheduling techniques that are preferred for some purposes. While these methods are quite capable, the application of basic earned value management techniques does not require the use of any particular scheduling methods. The selection of scheduling techniques and the levels at which they are applied depend on the affected organization and its program management needs.

23. 23 3.5.1 Program Budget Topic #10 Risks (Schedule, Budget & EAC) The program budget is maintained as a working management tool for the life of the program, which reflects remaining program cost risks. The initial program budget is normally tied directly to the initial program cost estimates, the negotiated contract cost, or internal management goals. Management reserve may be withheld before the budget is distributed to lower accounts. The budget will change as changes are authorized and incorporated or as internal replanning actions are taken. Rate changes and economic price adjustments may also be made as appropriate. The program budget, at any level and for any organization or task, will only contain budget for specific authorized work. If a customer authorizes additional work and the value of the added work is still to be negotiated, the organization may increase the program budget as needed for the newly authorized work. The budget applied may be adjusted when the authorized change is finalized. For management reasons, an organization may elect to establish a program budget that exceeds the program target cost. If customer performance reporting is required on the program, the customer must be consulted prior to implementation of the changes. must was will: changed to reflect guideline 2.2 c) last line

24. 24 3.9.2 Estimates at Completion Content Topic #10 Risks (Schedule, Budget & EAC) The EAC should be the most likely estimate of the total costs for all authorized program efforts, taking into account remaining program risks and opportunities, and should be time-phased in accordance with the expected completion dates on program schedules. The basis for the EAC and the reasons for changes from the last estimate should be identified.

25. 25 4. SYSTEM DOCUMENTATION Topic #4 System Documentation EVMS documentation should be established in the standard form or forms used by the affected organization for systems documentation and communication of policies and procedures. This EVMS standard does not require or suggest an organization should create a descriptive document that is outside of normal requirements or restrict an organization’s ability to effectively implement desired system changes. At the same time, it is duly noted that it is good business practice to provide adequate policies and procedures where the subject processes are expected to be implemented and applied effectively enterprise wide. An organization may use materials from this standard, in whole or part including the guidance, definitions and discussions, in their system documentation consistent with permission obtained by the organization through GEIA. Certain customers may include a requirement to provide a system description document. If an organization does not maintain this type of document, a brief general description with a road map to the internal documents that are used is acceptable.

26. 26 5. SYSTEM EVALUATION Organization replaces company – Topic #12 include organization 5.1 – Evaluation Process - Topic #5 System Evaluation The evaluation process for customer requirements provides for documented corporate assurance that the organization program management system meets the full intentions of the guidelines presented in this EVMS industry standard. The organization is responsible for the evaluation of its system. The process includes self-evaluation of the system, documentation of conformity with this standard, and notification of any significant system changes. Once done, the self-evaluation may be cited on additional efforts or contracts as appropriate. 5.2 – Prior System Acceptance - Topic #1 C/SCSC When an organization has an appropriate prior system acceptance, the organization may elect to provide that acceptance documentation in lieu of providing an EVMS compliance plan in proposals requiring EVMS compliance with this standard.

27. 27 WE HAVE A BASELINE!

28. 28 Back Up Information

29. 29 PMSC Work Team Assignments TopicAssigned to

30. 30 PMSC Work Team Assignments TopicAssigned to 1. C/SCSCSteve Krivkopich 2. C/SSRDebbie Tomsic 3. Summary Level Planning Package John Pakis 4. System DocumentationWalt Berkey 5. System EvaluationPete Wynne 6. System SurveillancePete Wynne 7. Project vs Program vs Contract vs Investment usage Dave Muzio

31. 31 PMSC Work Team Assignments TopicAssigned to 8. Performance measurement flowdown Jim Gasbarro 9. User friendly terms (ACWP, BCWP, BCWS, etc) Keith Kratzert 10. Risk(s)Joe Houser 11. Actual Costs/Estimated Cost Jim Gasbarro 12. Contractor & Company Term Usage Keith Kratzert 13. Material Receipt & Payment; Performance Based Payments Joe Houser