1. OMB’s Management Watch List (MWL) & High Risk Projects List How to More Effectively Track, Analyze and Evaluate Your Agency IT Investments October 9, 2007 Room: 4830

2. Agenda MWL & High Risk Projects List Policy Difference Between High Risk List & MWL How Investments Move From MWL to the High Risk List OMB’s IT Budget Review Responsibilities Relationship Between 300’s and Scorecard Overview of the President’s FY08 IT Request Objective of the High Risk List Changes to 53 Related to the High Risk List Improving Project Performance with High-Risk List Groups Reviewing/Using Exhibit 300s Role of Oversight Authorities Additional Ways to Improve Project Performance Questions

3. MWL & High Risk Projects List Policy MWL –Clinger-Cohen Act requires agencies to submit IT business plans to OMB. –Plans containing one or more planning weaknesses, are placed on OMB’s MWL. –Plans are then targeted for follow-up action to correct potential problems prior to execution. High Risk Projects List –OMB Memorandum M-05-23*, Improving IT Project Planning and Execution, specifically the requirement to work with OMB to identify “high risk” investments. –OMB Circular A-11 defines high risk projects as those requiring special attention from oversight authorities and the highest levels of agency management. –Tim Young’s note to the CIO Council on August 24, 2005 added clarity regarding the inclusion of E-Gov Managing Partner projects and E-Gov migration investments *http://www.whitehouse.gov/omb/memoranda/fy2005/m05-23.pdfhttp://www.whitehouse.gov/omb/memoranda/fy2005/m05-23.pdf

4. Difference Between High Risk List & MWL The High Risk List approach is separate and distinct from the MWL since it presents oversight authorities with information differing in focus, timing, and expected results. The MWL is based on a planning document whereas the high risk list is focused on actual execution. They are not designed to replace pre-existing oversight and internal agency processes, but rather to supplement and complement them.

5. How Investments Move From MWL to the High Risk List If an investment ends the fiscal year still on the MWL, those projects associated with the investments will be added to agency High Risk List. Agencies should then include these projects on their subsequent high risk reports.

6. OMB’s IT Budget Review Responsibilities Reviewing agencies’ annual budget submissions Engaging agencies throughout the year on such issues as the Expanding E-Gov President’s Management Agenda (PMA) Scorecard Monitoring specific projects of interest to OMB

7. Relationship Between 300’s and Scorecard OMB included criterion for “acceptable business cases” to emphasize its importance in effective IT investment management. “Acceptable Business Cases” is one of a number of components agencies must satisfy to get to green (or yellow) for the scorecard. Agency E-Gov scores are posted quarterly at: http://results.gov/agenda/scorecard.html http://results.gov/agenda/scorecard.html

8. Overview of the President’s FY08 IT Request The President’s Budget BY08 Budget Request is for $66 billion Upon initial submission in September 2006: –346 business cases, valuing at least $14.4 billion, did not meet the criteria for acceptable business cases* and were placed on the MWL After agency remediation, as of August 2007: –136 business cases, valuing at least $8.6 billion, still did not meet the criteria for acceptable business cases* and remained on the MWL –Reduction in list published in February 2007 represented a decrease of $5.8 billion in investments *as defined in the PMA Scorecard

9. Objective of the High Risk List The objective of our analysis is to manage the risk associated with the IT project each quarter to achieve the intended outcomes. Each quarter agencies evaluate and report to OMB on the performance of high risk projects. These projects are considered high-risk, requiring special attention from the highest level of agency management and oversight authorities due to the size, complexity, and/or nature of the risk of the project, but are not necessarily at-risk. A successfully performing project may still be classified as high-risk due to exceptionally high costs and or complexity. –For example, all e-government initiatives have been determined to be “high risk” and therefore are reported on agency quarterly reports.

10. Changes to 53 Related to the High Risk List For the FY 09 Budget Cycle to Exhibit 53: Added “High Risk Project designations” as a new investment category for projects that are only portions of a larger consolidated investment. Added requirement for agencies to identify whether or not each individual investment in their exhibit 53 is included on their quarterly High Risk List report.

11. Improving Project Performance with High-Risk List Over the past several years, agencies have striven to improve the quality of their IT project planning and justification, but the realization that it is important to continue this improvement during the execution phase of the IT project is a more recent development. OMB guidance now describes specific procedures to assist agencies’ improvement of project planning and implementation of earned value management. It is available at: http://www.whitehouse.gov/omb/memoranda/2005.html http://www.whitehouse.gov/omb/memoranda/2005.html

12. Groups Reviewing/Using Exhibit 300s OMB Agency Officials Investment Review Boards Agency Officials should use the business cases to effectively manage their own IT portfolios and prepare for submission to OMB

13. Role of Oversight Authorities Oversight authorities and agency management have tangible data on the performance of projects at least quarterly to better ensure improved execution and performance. Agency managers and oversight authorities should know within 90 days if a project is not performing well. OMB then works in partnership with agencies and GAO to address deficiencies in GAO high-risk programs. It is therefore a collaborative effort to manage project risk and avoid problems should they occur or catch them early before taxpayers’ dollars are wasted.

14. Additional Ways to Improve Project Performance Projects on the Management Watch List often suffer from inadequate or inaccurate program baselines. Establishing high level goals for a new investment’s overall cost, schedule and performance is necessary for investment review boards to make informed decisions and for program managers to gauge their overall alignment with and progress against the investment’s stated goals. Once an investment enters the development stage of the lifecycle and more specific requirements are known (usually at the point of contract award), the discipline of ANSI standard Earned Value Management (EVM) becomes appropriate for the discrete components of the system’s development, including a more detailed baseline with a formal Work Breakdown Structure, time line and costs. By fully understanding the activities and costs associated with the project, and tracking progress against the baseline on a routine basis, project managers have clearer visibility into problems early on, thus reducing the overall risk of project failure.

15. QUESTIONS??? Kimberly Nelson KNelson@omb.eop.gov 202.395.3787