***[Program Directive -- Earned Value Management System Requirements for
Projects]{.underline}***

Exploration Systems Mission Directorate

1.  ***Purpose and expectation***

Decisions during the life of each program and project sponsored by the
Exploration Systems Mission Directorate (ESMD) will rely completely on
timely, objective, and accurate information provided to the customer by
the supplier regarding the status and general health of the work. The
information regarding the schedule and cost status of all projects shall
be characterized according to the earned value management (EVM) concepts
described in EIA-748-A, Earned Value Management Systems. The goal is to
achieve timely and accurate quantification of progress that will
facilitate management by exception and allow early visibility into the
nature and the magnitude of technical problems as well as the intended
course and success of corrective actions. EVM concepts also facilitate
meaningful summarization of data.

The purpose of this document is to set broad expectations regarding the
relationship between ESMD (the customer) and project suppliers
(including project managers) regarding earned value management systems.
The following provisions will operate if the project agreement is silent
regarding any management and reporting provisions. To the extent that
the defining project agreement addresses all the following subjects,
these guidelines are non-operative.

2.  ***Applicability***

All ESMD-funded projects will use EVM. The rigor of a given project\'s
EVM system shall be governed by several factors: the more significant
factors are size, duration, and nature of the work. Whatever the rigor
required, the system shall be documented with descriptions of the
processes, the tools, and the roles that comprise the EVM system.

a.  Size

For purposes of describing EVM system requirements, there are three
project size categories.

-   Class 1 projects are each larger than \$50M.

-   Class 2 projects are larger than \$20M and less than or equal to
    \$50M

-   Class 3 projects are smaller than \$20M

    1.  Class 1 or 2 projects shall observe the guidelines of EIA-748-A.

    2.  Class 1 projects shall further demonstrate to ESMD that the
        management system used complies with the guidelines of EIA-748-A
        (validation).

    3.  Class 3 projects shall quantify progress using earned value
        management procedures that, as a minimum, provide for:\
          (1) Establishing the time-phase budgeted cost of work
        scheduled (including work authorization, budgeting, and
        scheduling), the budgeted cost for work performed, the actual
        cost of work performed, the budget at completion, the estimate
        at completion, and provisions for subcontractor performance
        measurement and reporting;\
          (2) Applying all direct and indirect costs and provisions for
        use and control of management reserve and undistributed budget;\
          (3) Incorporating changes to the project budget base for both
        customer directed changes and internal replanning;\
          (4) Establishing constraints to preclude subjective adjustment
        of data to ensure performance measurement remains realistic. The
        total allocated budget may exceed the project budget base only
        after consultation with the customer. The project budget base
        shall exclude changes for cost growth increases, other than for
        authorized changes to the project scope; and\
          (5) Establishing the capability to accurately identify and
        explain significant cost and schedule variances, both on a
        cumulative basis and a projected-at-completion basis.

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    a.  Duration

System validation will generally not be required of projects shorter
than 12 months in duration.

b.  Nature of the work

If a project has no final product or if it is characterized
predominantly by level of effort, category 3 rigor will be required.

c.  Management Interest

Regardless of the above exclusions for duration and nature of the work,
EVM is appropriate for any project regardless of its attributes that has
been determined by ESMD to have a significant performance risk or to
have significant management interest requiring increased visibility.

If a supplier doesn't have a system with appropriate rigor in place when
project work is authorized, the early phases of the project will be
marked by significant efforts to build and prove a system with requisite
rigor.

Each project requiring validation shall demonstrate that the supplier's
documented system complies with the EVMS guidelines. When the supplier
successfully demonstrates system compliance, the supplier and ESMD shall
execute an MOA to signify the accomplishment, to accept the supplier's
system for use on other ESMD programs or projects, and to document the
supplier's intent to continue use of the approved system. In the
remaining phases of the project, compliance with the guidelines and
maintenance of the validation will be a matter of continuing ESMD
management oversight through system surveillance.

3.  ***Defining the Agreement***

    a.  Content of the Agreement \-- Project agreements between ESMD and
        supplier organizations shall be documented. Only the material
        aspects of the work will be documented such as:

        1.  [Scope]{.underline} defined by project functional
            requirements and threshold performance parameters. Objective
            values for performance parameters shall be clearly described
            as such.

        2.  [Schedule]{.underline} \-- Significant milestones (not
            inch-stones) per a master schedule or integrated master
            plan.

        3.  [Budget]{.underline} is the project BAC. Because the BAC
            represents the work to be done the BAC will change only when
            the scope changes. Though the BAC is the initial level of
            expected funding needs during the lifecycle of the project,
            all must recognize that while the scope and BAC remain
            constant, the expected funding levels (EAC) will likely
            diverge from the initial values during the performance of
            the project.

        4.  Reporting requirements including

            a.  Thresholds of significant variances that require
                variance analysis

            b.  Frequency

            c.  Granularity (WBS, OBS)

        5.  Signatures of authorized individuals will be included. The
            fewer the better.

            a.  the ESMD individual who can provide funding and

            b.  the supplier individual who can commit the labor,
                contract, facility, etc. resources outlined in the
                budget and phased according to the master schedule.

    b.  Form of the agreement

        1.  For Intramural projects the agreement will be the Project
            Plan. \[An outline should be included as an attachment.\]

        2.  For Extramural projects the agreement will be a NASA
            contract.

    c.  All parties to the agreement must recognize that
        "micromanagement" of projects has detrimental effects and is to
        be avoided: it reduces flexibility to achieve the project goals;
        it can cause spurious variances; and it precludes a "rolling
        wave" approach to planning scope that may not be ready for
        detail planning at project outset. Consistent with that goal,
        planning details shall be recorded and managed by the supplier's
        project manager consistent with the documented system
        description (that is observant of the guidelines of EIA-748-A)
        and used in day-to-day management of the project. While such
        detailed information may be shared with the ESMD customer it
        will not be subject to joint control.

4.  ***Planning the Project***

    a.  Scope of the Baseline

It is essential that the entire scope authorized (via contract, task
order, project plan, etc.) will be scheduled and budgeted without regard
to fiscal year boundaries. If the agreement governing the project is
divided into severable \"phases\", the later phases may be segregated in
planning packages or summary-level planning packages. If the agreement
governing the project addresses only the first of several severable
phases (with authorization for later phases to be contingent on an
event), only the basic period\'s work will be scheduled and budgeted.
The provisions of the supplier's EVM system will govern all other
aspects of project planning.

b.  Reserves

> The supplier may reserve a portion of the project budget value to
> provide for such things as unanticipated work that's part of the SOW
> outlined in the agreement but that isn't initially authorized for
> implementation within the supplier's organization. The common term is
> management reserve (MR). It is not appropriate to reduce the agreement
> value by the amount of the MR or to apply MR to additional scope not
> included in the agreement. MR shall not be used to reduce or eliminate
> existing variances. The supplier's proper control of MR is described
> in EIA-748-A. This budget is to be distinguished from any funding
> reserves that are not typically included in the estimate at completion
> (sometimes known within NASA as Allowance for Program Adjustment or
> APA).

c.  Maintaining the Baseline

> Changes in the project's scope or schedule shall be reflected in
> modifications to the agreement. Changes to project budget value shall
> be limited to the effects of material changes in scope or in schedule.
> The point at which a change is material in scale cannot be universally
> defined and will always be subject to judgment. But when sound
> judgment indicates that a change is material, budgets will change only
> to the extent that scope or schedule are changed -- project budgets
> will not be changed unless the project scope changes.

5.  ***Project Reporting Requirements***

    a.  Content -- Cost Performance Report (DI-MGMT-81466)

        1.  Format 1 -- S, P, A, BAC, EAC at WBS the level specified in
            the agreement

        2.  Format 2 \-- S, P, A, BAC, EAC by OBS specified in the
            agreement

        3.  Format 3 -- Changes (BCWS)

        4.  Format 4 -- Manpower by OBS through remainder of project

        5.  Format 5 --

            a.  Variance Analysis -- Cause, impact, corrective action
                for significant variances

            b.  Sources and uses of MR

            c.  Content of UB

            d.  Shifts of funding by center between FYs \>\$100K

            e.  Analysis of the effect of changes in indirect costs
                (includes NASA service pools and G&A)

    b.  Thresholds for variance analysis at reporting level specified in
        the agreement

        1.  Current period -- No analysis required

        2.  Cumulative to date -- 10% and \$100K

        3.  At completion \-- \$100K

> The project agreement may specify different thresholds.

c.  Frequency of reporting -- Monthly, unless specified in the
    agreement. Frequency of reporting is not to be confused with
    supplier analysis of project performance. Internal needs for
    analysis of project performance shall be controlled by the
    supplier's internal management system requirements.

d.  Timeliness -- Project status information must be timely if it is to
    be of value. The goal of ESMD is to complete the reporting cycle
    within 20 business days following the close of the period.

e.  Format -- Options include

    1.  Paper

    2.  Electronic - preferred

        a.  ANSI X12, 839 transaction set including narrative

        b.  wInsight .XML

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6.  ***Integrated Baseline Review***

    a.  Process -- The IBR process is described in the documents of
        various DoD and NASA entities.

    b.  Timing -- The IBR is to be conducted within 6 months of
        authority to proceed. Supporting data items are to be submitted
        to ESMD according to the following schedule.

+----------------------------------------------------+-----------------+
| # Item Description                                 | ## Timin        |
|                                                    | g of Submission |
+----------------------------------------------------+-----------------+
| 1.  EVM System Description and relevant management | 45 days prior   |
|     procedures (as applicable), if different from  | to IBR          |
|     EV-001 submission.                             |                 |
+----------------------------------------------------+-----------------+
| 2.  Current contract SOW                           | 30 days prior   |
|                                                    | to IBR          |
+----------------------------------------------------+-----------------+
| 3.  Current WBS and WBS Dictionary                 | 30 days prior   |
|                                                    | to IBR          |
+----------------------------------------------------+-----------------+
| 4.  Responsibility Assignment Matrix (RAM)         | 30 days prior   |
|     identifying all Control Accounts and           | to IBR          |
|     applicable managers                            |                 |
+----------------------------------------------------+-----------------+
| 5.  Control Account Plans (including staffing      | 30 days prior   |
|     profile)                                       | to IBR          |
+----------------------------------------------------+-----------------+
| 6.  Skills profile of the staff allocated to       | 30 days prior   |
|     Control Accounts                               | to IBR          |
+----------------------------------------------------+-----------------+
| 7.  Estimating methodology and documentation to    | 30 days prior   |
|     enable assessment of the basis of the          | to IBR          |
|     estimates                                      |                 |
+----------------------------------------------------+-----------------+
| 8.  Master, intermediate and detail schedules, and |                 |
|     contractor format demonstrating horizontal and |                 |
|     vertical traceability.                         |                 |
+----------------------------------------------------+-----------------+
| a.  Prior two months                               | 30 days prior   |
|                                                    | to IBR          |
+----------------------------------------------------+-----------------+
| b.  Previous month (totaling 3 months of data)     | At IBR          |
+----------------------------------------------------+-----------------+
| 9.  CPRs or CSSRs                                  |                 |
+----------------------------------------------------+-----------------+
| a.  Prior two months                               | 30 days prior   |
|                                                    | to IBR          |
+----------------------------------------------------+-----------------+
| b.  Previous month (totaling 3 months of data)     | At IBR          |
+----------------------------------------------------+-----------------+
| 10. NASA Form 553's                                |                 |
+----------------------------------------------------+-----------------+
| a.  Prior two months                               | 30 days prior   |
|                                                    | to IBR          |
+----------------------------------------------------+-----------------+
| b.  Previous month (totaling 3 months of data)     | At IBR          |
+----------------------------------------------------+-----------------+
| 11. Work Authorization Documents for authorized    | 30 days prior   |
|     control accounts.                              | to IBR          |
+----------------------------------------------------+-----------------+
| 12. Estimate to Complete/EAC data (if the data has | 30 days prior   |
|     changed since the subcontract was baselined)   | to IBR          |
+----------------------------------------------------+-----------------+