+---------------------------------+----+----------+-------------+---+---+---+
|                                 |    |          |             |   |   |   |
+---------------------------------+----+----------+-------------+---+---+---+
|                                 |    | ![       |             |   |   |   |
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|                                 |    | height   |             |   |   |   |
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|                                 |    | 5555in"} |             |   |   |   |
+---------------------------------+----+----------+-------------+---+---+---+
|                                 |    |          |             |   |   |   |
+---------------------------------+----+----------+-------------+---+---+---+
| **Office of the Chief           |    |          |             |   |   |   |
| Information Officer**           |    |          |             |   |   |   |
|                                 |    |          |             |   |   |   |
| **Office of the Assistant       |    |          |             |   |   |   |
| Secretary for Budget,           |    |          |             |   |   |   |
| Technology and Finance**        |    |          |             |   |   |   |
|                                 |    |          |             |   |   |   |
| **Department of Health and      |    |          |             |   |   |   |
| Human Services**                |    |          |             |   |   |   |
+---------------------------------+----+----------+-------------+---+---+---+
|                                 |    |          |             |   |   |   |
+---------------------------------+----+----------+-------------+---+---+---+
|                                 |    |          |             |   |   |   |
+---------------------------------+----+----------+-------------+---+---+---+
| CPIC Procedures Appendices      |    |          |             |   |   |   |
+---------------------------------+----+----------+-------------+---+---+---+
|                                 |    |          |             |   |   |   |
+---------------------------------+----+----------+-------------+---+---+---+
|                                 |    |          |             |   |   |   |
+---------------------------------+----+----------+-------------+---+---+---+
| **December 30, 2005**           |    |          |             |   |   |   |
+---------------------------------+----+----------+-------------+---+---+---+
|                                 |    |          |             |   |   |   |
+---------------------------------+----+----------+-------------+---+---+---+
|                                 |    |          |             |   |   |   |
+---------------------------------+----+----------+-------------+---+---+---+
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+---------------------------------+----+----------+-------------+---+---+---+
|                                 |    |          |             |   |   |   |
+---------------------------------+----+----------+-------------+---+---+---+
|                                 |    |          |             |   |   |   |
+---------------------------------+----+----------+-------------+---+---+---+
| **Project:**                    | CP |          |             |   |   |   |
|                                 | IC |          |             |   |   |   |
|                                 | Pr |          |             |   |   |   |
|                                 | oc |          |             |   |   |   |
|                                 | ed |          |             |   |   |   |
|                                 | ur |          |             |   |   |   |
|                                 | es |          |             |   |   |   |
|                                 | Ap |          |             |   |   |   |
|                                 | pe |          |             |   |   |   |
|                                 | nd |          |             |   |   |   |
|                                 | ic |          |             |   |   |   |
|                                 | es |          |             |   |   |   |
+---------------------------------+----+----------+-------------+---+---+---+
|                                 |    |          |             |   |   |   |
+---------------------------------+----+----------+-------------+---+---+---+
| **Document Number:**            | H  |          |             |   |   |   |
|                                 | HS |          |             |   |   |   |
|                                 | -O |          |             |   |   |   |
|                                 | CI |          |             |   |   |   |
|                                 | O- |          |             |   |   |   |
|                                 | 20 |          |             |   |   |   |
|                                 | 05 |          |             |   |   |   |
|                                 | -0 |          |             |   |   |   |
|                                 | 00 |          |             |   |   |   |
|                                 | 5P |          |             |   |   |   |
|                                 | -A |          |             |   |   |   |
+---------------------------------+----+----------+-------------+---+---+---+
|                                 |    |          |             |   |   |   |
+---------------------------------+----+----------+-------------+---+---+---+
|                                 |    |          |             |   |   |   |
+---------------------------------+----+----------+-------------+---+---+---+

**HHS IT CPIC PROCEDURES - APPENDICES**

[**Appendix A: Requirements by Investment CATEGORIES
1**](#appendix-a-requirements-by-investment)

[Appendix B: CPIC Process Checklist
4](#appendix-b-cpic-process-checklist)

[B.1 Select Phase Screening Process
4](#b.1-select-phase-screening-process)

[B.2 Select Phase Pre-Selection Process
4](#b.2-select-phase-pre-selection-process)

[B.3 Select Phase -- Portfolio Prioritization Process
6](#b.3-select-phase-portfolio-prioritization-process)

[B.4 Control Phase -- Periodic and Milestone Review Process
6](#b.4-control-phase-periodic-and-milestone-review-process)

[B.5 Evaluate Phase Post Implementation Review (PIR) for New Investments
7](#b.5-evaluate-phase-post-implementation-review-pir-for-new-investments)

[B.6 Evaluate Phase Annual Evaluation Process for Existing Investments
7](#b.6-evaluate-phase-annual-evaluation-process-for-existing-investments)

[B.7 Process Improvement 7](#b.7-process-improvement)

[B.8 IT Management & Budget Formulation Calendar
8](#b.8-it-management-budget-formulation-calendar)

[Appendix C: Sample Prospectus Summary Form
10](#appendix-c-sample-prospectus-summary-form)

[C.1 Purpose 10](#c.1-purpose)

[C.2 Prospectus Summary Template 10](#c.2-prospectus-summary-template)

[C 3. Sample Prospectus Summary Form -- Major/Tactical
11](#c-3.-sample-prospectus-summary-form-majortactical)

[Appendix D: Risk Management 21](#appendix-d-risk-management)

[D.1 Purpose 21](#d.1-purpose)

[D.2 Process 21](#d.2-process)

[Appendix E: Performance Measurement
24](#appendix-e-performance-measurement)

[E.1 Purpose 24](#e.1-purpose)

[E.2 Process 25](#e.2-process)

[Appendix F: Project Management 33](#appendix-f-project-management)

[F.1 Purpose 33](#f.1-purpose)

[F.1 Relationship of Project Management to Investment Management
34](#f.1-relationship-of-project-management-to-investment-management)

[F.2 Components 35](#f.2-components)

[Appendix G: Earned Value Management
39](#appendix-g-earned-value-management)

[G.1 Purpose 39](#g.1-purpose)

[G.2 Process 41](#g.2-process)

[Appendix H: Post-Implementation Reviews
44](#appendix-h-post-implementation-reviews)

[H.1 Purpose 44](#h.1-purpose)

[H.2 Process 45](#h.2-process)

[H.3 Sample Initiative Evaluation Sheet
46](#h.3-sample-initiative-evaluation-sheet)

[H.4 Investment Management Report 47](#h.4-investment-management-report)

[H.5 IT Initiative Evaluation Data Sheet
48](#h.5-it-initiative-evaluation-data-sheet)

[Appendix I: Operational Analysis 49](#appendix-i-operational-analysis)

[I.1 Purpose 49](#i.1-purpose)

[I.2 Management Objectives 49](#i.2-management-objectives)

[I.3 Roles and Responsibilities 49](#i.3-roles-and-responsibilities)

[I.4 Process 50](#i.4-process)

[Appendix J: IT Investment Rating and Ranking Criteria- HHS Priority and
Quality Scoring
59](#appendix-j-it-investment-rating-and-ranking-criteria--hhs-priority-and-quality-scoring)

[J.1 Purpose 59](#j.1-purpose)

[J.2 Background 59](#j.2-background)

[J.3 Scoring Methodology 59](#j.3-scoring-methodology)

[J.4 Prioritization Criteria 61](#j.4-prioritization-criteria)

[Appendix K: References 66](#appendix-k-references)

# Appendix A: Requirements by Investment

#  Categories

IT investment managers shall enter and maintain data in the HHS
Portfolio Management Tool as necessary to allow adequate CPIC review of
individual IT investments and management of the overall IT investment
portfolio. The extent and level of detail of reporting required shall
vary depending on the IT Investment Category and the particular nature
of each IT investment**.**

**Major IT investments** shall be subject to the following requirements:

-   Designation within the IT portfolio management application as a
    "major" investment.

-   Documentation that the investment is appropriately aligned with HHS
    strategic goals and objectives, architectural and security
    principles and practices, and follows sound IT investment planning
    and management practices (including full implementation of earned
    value management).

-   Compliance with all capital planning, FISMA, A-11, A-130, IT
    investment management and EVM requirements identified for major IT
    investments. Examples of those requirements include:

    -   Preparation and submission of sufficient to allow generation of
        a Capital Asset Plan and Business Case (OMB Exhibit 300) and OMB
        Exhibit 53 line item.

    -   Inclusion of each major IT investment and related IT investments
        in the HHS FISMA review process, as appropriate.

    -   Application of the full ANSI-EIA 748 Earned Value Management
        Standards for DME [\>]{.underline} \$10 million during the DME
        phases of the investment life cycle.

    -   Use of operational analysis during the steady-state phases of
        the investment to ensure that sound investment management
        practices are in place, to determine how close the investment is
        to meeting its operational cost, schedule and performance goals,
        and that appropriate decisions are made regarding investment
        maintenance, upgrade, modernization and enhancement.

    -   Assignment of a qualified investment manager, or the equivalent,
        as determined by the HHS CIO.

**Tactical IT investments** shall be subject to the following
requirements:

-   Designation within the IT portfolio management application as a
    "tactical" investment.

-   Documentation that the investment is appropriately aligned with HHS
    strategic goals and objectives, architectural and security
    principles and practices, and follows sound IT investment planning
    and management practices (including appropriate implementation of
    earned value management).

-   Compliance with all appropriate capital planning, FISMA, A-11,
    A-130, IT investment management and EVM requirements. Examples of
    those requirements include:

    -   Preparation and submission of sufficient investment data to
        generate an HHS OMB Exhibit 53 line item.

    -   Inclusion of each tactical IT investment and related IT
        investment in the HHS FISMA review process, as appropriate.

    -   Application of an abbreviated ANSI-EIA 748 Earned Value
        Management Standards (i.e., 10 of the 32 ANSI standard criteria)
        during the DME phases of the investment life cycle. The
        abbreviated EVM standards shall be identified in the HHS Earned
        Value Management Plan and in IT Capital Planning procedures as
        designated by the HHS CIO.

```{=html}
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```
-   Use of operational analysis for the steady-state phases of the
    investment to ensure that sound IT investment management practices
    are in place, to determine how close the investment is to meeting
    its operational cost, schedule and performance goals, and that
    appropriate decisions are made regarding investment maintenance,
    upgrade, modernization and enhancement.

-   Assignment of at least a qualified investment manager, or the
    equivalent, as determined by the HHS CIO.

**Supporting IT investments** shall be subject to the following
requirements:

-   Identification within the HHS Portfolio Management Tool as a
    "supporting" investment.

-   Documentation that the investment is appropriately aligned with HHS
    strategic goals and objectives, architectural and security
    principles and practices, and follows sound project planning and
    management practices (including appropriate implementation of earned
    value management).

-   Compliance with all appropriate capital planning, FISMA, A-11,
    A-130, project management and EVM requirements. Examples of those
    requirements include:

    -   Preparation and submission of sufficient investment data to
        generate an HHS OMB Exhibit 53 line item.

    -   Inclusion of each supporting IT investment and related IT
        investments in the HHS FISMA review process.

    -   Application of appropriate earned value management techniques
        during the DME phases of the investment to ensure that cost and
        schedule variances remain within 10 percent.

```{=html}
<!-- -->
```
-   Each IT investment with steady state activities (includes mixed
    life-cycle investments) shall demonstrate, through operational
    analysis, how close it is to meeting original and current cost,
    schedule and performance goals, whether it continues to meet HHS and
    user requirements, and that the total investment costs for an IT
    investment covers the life cycle and includes all budgetary
    resources.

```{=html}
<!-- -->
```
-   Assignment of at least a qualified investment manager, or the
    equivalent, as determined by the HHS CIO.

**New IT Investments**

-   IT investment managers seeking approval of new IT investments must
    provide Prospectus information for the appropriate investment
    category.

    -   General contact, organization, investment type

    -   Brief description of IT investment

    -   Alignment with mission

    -   Potential benefits

    -   Major milestones

    -   Estimated cost and source of funding

    -   Acquisition risks

    -   Assignment of a qualified investment manager, as determined by
        the HHS CIO.

# Appendix B: CPIC Process Checklist

## B.1 Select Phase Screening Process

+-----------------+----------------------------------------------------+
| ### Wha         | -   The Business Sponsor, in coordination with     |
| t are the busin |     OPDIV management, identifies an unmet need and |
| ess needs for t |     assigns an Investment Manager to formally      |
| he investments? |     establish a business need and mission          |
|                 |     alignment.                                     |
|                 |                                                    |
|                 | -   The Investment Manager develops the investment |
|                 |     concept and prepares the preliminary           |
|                 |     Prospectus Form in the HHS Portfolio           |
|                 |     Management Tool (PMT).                         |
|                 |                                                    |
|                 | -   The Business Sponsor reviews the prospectus    |
|                 |     for quality, thoroughness, accuracy, etc.      |
|                 |     along with the Business Steering Committee,    |
|                 |     which reviews the prospectus for possible      |
|                 |     opportunities for integration or consolidation |
|                 |     with existing cross-cutting IT/Business        |
|                 |     systems.                                       |
|                 |                                                    |
|                 | -   Investment Managers address any outstanding    |
|                 |     issues and update the Prospectus Summary Form, |
|                 |     as necessary.                                  |
|                 |                                                    |
|                 | -   The CPIC Team reviews the Prospectus Form and  |
|                 |     provides any comments and or questions for the |
|                 |     Investment Manager to address, if necessary.   |
|                 |                                                    |
|                 | -   The Critical Partners review the Prospectus    |
|                 |     Form and provide any comments and or questions |
|                 |     to the Investment Manager to address, if       |
|                 |     necessary.                                     |
|                 |                                                    |
|                 | -   The Technical Review Board, CIO Council, or    |
|                 |     other technical review organization reviews    |
|                 |     these materials and makes recommendations      |
|                 |     regarding initiation of additional planning    |
|                 |     activities for the investment                  |
|                 |                                                    |
|                 | -   The ITIRB reviews the Prospectus Form. If the  |
|                 |     ITIRB approves the recommendation, the         |
|                 |     investment moves forward into Select Phase     |
|                 |     Pre-Selection Process. If it is not approved,  |
|                 |     it could return to the Investment Manager for  |
|                 |     additional work or cancellation.               |
+-----------------+----------------------------------------------------+

## B.2 Select Phase Pre-Selection Process

+------------------+---------------------------------------------------+
| ### How do       | -   The Business Sponsor along with the           |
| you know you hav |     Investment Manager develops, or reviews and   |
| e selected the b |     updates (in the case of existing investments) |
| est investments? |     the Business Case and high-level Project      |
|                  |     Management Plan in the PMT.                   |
|                  |                                                   |
|                  | -   The Business Steering Committee reviews the   |
|                  |     Business Case for possible opportunities for  |
|                  |     integration or consolidation with existing    |
|                  |     cross-cutting IT/Business systems             |
|                  |                                                   |
|                  | -   The CPIC Team reviews the Business Case and   |
|                  |     Project Management Plan and provides any      |
|                  |     comments and or questions for the Investment  |
|                  |     Manager to address, if necessary.             |
|                  |                                                   |
|                  | -   The Critical Partners review the Business     |
|                  |     Case to ensure the investment complies with   |
|                  |     standards for EA, Security, and Acquisition   |
|                  |     and provides any comments and or questions to |
|                  |     the Investment Manager to address, if         |
|                  |     necessary.                                    |
|                  |                                                   |
|                  | -   The Technical Review Board, CIO Council, or   |
|                  |     other technical review organization, reviews  |
|                  |     the Business Case and Project Management Plan |
|                  |     and makes recommendations regarding the       |
|                  |     technical feasibility of the investment. If   |
|                  |     approved, the Business Case and Project       |
|                  |     Management Plan are forwarded to the ITIRB    |
|                  |     for final review. If not, they are returned   |
|                  |     to the Business Sponsor and Investment        |
|                  |     Manager for update.                           |
|                  |                                                   |
|                  | The Departmental HHS ITIRB makes the final        |
|                  | investment decisions. If approved, a Project      |
|                  | Manager Accountability Agreement is signed        |
|                  | between the Investment Manager and the ITIRB. If  |
|                  | not approved the Business Case and Project        |
|                  | Management Plan are returned to the Business      |
|                  | Sponsor and Investment Manager for update and     |
|                  | revision.                                         |
+------------------+---------------------------------------------------+

## B.3 Select Phase -- Portfolio Prioritization Process

+------------------+---------------------------------------------------+
| ### How do you   | -   The HHS/OPDIV CPIC Team, CIO                  |
|  know you have s |     Council/Technical Review Board, and HHS/OPDIV |
| elected the best |     ITIRB develop, refine, and select scoring     |
|  investments acr |     criteria to compare, score and rank           |
| oss the HHS enti |     investments across portfolios and establish   |
| re IT portfolio? |     an Investment Portfolio.                      |
|                  |                                                   |
|                  | -   HHS/OPDIV CPIC Team develops the initial      |
|                  |     prioritized portfolio and presents it to the  |
|                  |     CIO Council/Technical Review Board and then   |
|                  |     the HHS/OPDIV ITIRB for review. The portfolio |
|                  |     may be adjusted based on these reviews or     |
|                  |     changing HHS strategic direction, funding     |
|                  |     issues, quality scores, etc                   |
|                  |                                                   |
|                  | -   The HHS/OPDIV ITIRB reviews and approves the  |
|                  |     prioritized Portfolio, adjusting              |
|                  |     prioritization, as required                   |
|                  |                                                   |
|                  | -   The final prioritized HHS-wide IT portfolio   |
|                  |     as recommended and approved by the HHS ITIRB  |
|                  |     is sent to the Secretary's Budget Council     |
|                  |     (SBC) for final funding decisions.            |
|                  |                                                   |
|                  | -   The SBC makes the final funding decisions on  |
|                  |     the IT investment portfolio. Those            |
|                  |     investments which are funded advance to the   |
|                  |     Control Phase.                                |
+------------------+---------------------------------------------------+

## B.4 Control Phase -- Periodic and Milestone Review Process

+------------------+---------------------------------------------------+
| ### What a       | -   The Investment Manager maintains current      |
| re you doing to  |     initiative costs, security, schedule, and     |
| ensure that the  |     technical baselines.                          |
| investments will |                                                   |
|  deliver the ben | -   The Investment Manager, IPT, and OPDIV        |
| efits projected? |     Sponsor assess the initiative's progress      |
|                  |     against performance measures.                 |
|                  |                                                   |
|                  | -   The Investment Manager prepares the periodic  |
|                  |     (monthly or quarterly) or milestone control   |
|                  |     reviews, annual investment review submission  |
|                  |     package, and proposes a Corrective Action     |
|                  |     Plan or Re-Baseline, if necessary. The        |
|                  |     Business Sponsor evaluates periodic or        |
|                  |     milestone control review documents.           |
|                  |                                                   |
|                  | -   The CPIC Team and Critical Partners review    |
|                  |     the initiative and provide an opportunity for |
|                  |     Investment Managers to raise issues           |
|                  |     concerning the IT developmental process,      |
|                  |     including security, telecommunications,       |
|                  |     enterprise architecture alignment,            |
|                  |     E-Government, GPEA compliance, Section 508    |
|                  |     concerns, etc.                                |
|                  |                                                   |
|                  | -   The Investment Manager updates the Periodic   |
|                  |     review documents in the PMT according to feed |
|                  |     back by the CPIC Team and Critical Partners.  |
|                  |                                                   |
|                  | -   The OPDIV CIO, or Technical Review Board,     |
|                  |     reviews the initiative. If the initiative is  |
|                  |     within cost and schedule, the OPDIV ITIRB     |
|                  |     recommends an appropriate action to the HHS   |
|                  |     ITIRB. If the initiative has deviated from    |
|                  |     its baseline by more than 5%, a Corrective    |
|                  |     Action Plan is formed and implemented.        |
|                  |     However, if major business, technology, or    |
|                  |     strategic changes have occurred, a            |
|                  |     re-baseline may be suggested.                 |
|                  |                                                   |
|                  | -   The Departmental HHS ITIRB makes final        |
|                  |     investment Control decisions to continue or   |
|                  |     discontinue operations.                       |
+------------------+---------------------------------------------------+

## B.5 Evaluate Phase Post Implementation Review (PIR) for New Investments

+------------------+---------------------------------------------------+
| ### Based on     | -   An Independent Auditor, along with the        |
|  your evaluation |     Business Sponsor, and Investment Managers,    |
| , did the invest |     conduct a PIR.                                |
| ments deliver wh |                                                   |
| at you expected? | -   Using the results of the independent audit,   |
|                  |     the Investment Manager updates the Business   |
|                  |     Case, if necessary, and presents results to   |
|                  |     the CPIC Team, Critical Partners, and         |
|                  |     Technical Review Board.                       |
|                  |                                                   |
|                  | -   The CPIC Team and Critical Partners review    |
|                  |     the PIR results, comparing the actual costs,  |
|                  |     quality, schedule and technology to the       |
|                  |     original plan. The reviewers document lessons |
|                  |     learned and revise the process, as            |
|                  |     appropriate.                                  |
|                  |                                                   |
|                  | -   The Technical Review Board reviews the PIR    |
|                  |     results and recommends the appropriate action |
|                  |     to the ITIRB.                                 |
|                  |                                                   |
|                  | -   The ITIRB reviews the PIR results and makes   |
|                  |     the final investment decision.                |
+------------------+---------------------------------------------------+

## B.6 Evaluate Phase Annual Evaluation Process for Existing Investments

+------------------+---------------------------------------------------+
| ###              | -   The Business Sponsor and the Investment       |
|  Do the investme |     Manager determine if the investment is still  |
| nts still cost-e |     effective and supports the mission            |
| ffectively suppo |     requirements.                                 |
| rt requirements? |                                                   |
|                  | -   The Business Sponsor and Investment Manager   |
|                  |     assess user and customer satisfaction.        |
|                  |                                                   |
|                  | -   The Investment Manager conducts a technology  |
|                  |     assessment.                                   |
|                  |                                                   |
|                  | -   The Business Sponsor and Investment Manager   |
|                  |     review O&M costs.                             |
|                  |                                                   |
|                  | -   The Business Sponsor and Investment Manager   |
|                  |     update the Business Case.                     |
|                  |                                                   |
|                  | -   The CPIC Team and Critical Partners review    |
|                  |     and approve the updated Business Case.        |
|                  |                                                   |
|                  | -   The Technical Review Board reviews the        |
|                  |     initiative and recommends an appropriate      |
|                  |     action to the ITIRB.                          |
|                  |                                                   |
|                  | -   The Departmental HHS ITIRB makes final        |
|                  |     investment decisions.                         |
+------------------+---------------------------------------------------+

## B.7 Process Improvement

+------------------+---------------------------------------------------+
| ### Is the curre | -   The OPDIV CPIC Manager performs an annual     |
| nt CPIC process  |     ITIM self-assessment.                         |
| progressing thro |                                                   |
| ugh the stages o | -   The OPDIV CPIC Manager provides the analysis  |
| f ITIM maturity? |     to the HHS CPIC Team for inclusion in the     |
|                  |     Department's process inventory and also       |
|                  |     forwards on any process improvements to the   |
|                  |     HHS CPIC Officer.                             |
|                  |                                                   |
|                  | -   The HHS CPIC Officer provides recommendations |
|                  |     and supports the OPDIV CPIC Manager to help   |
|                  |     the OPDIV achieve the next stage.             |
|                  |                                                   |
|                  | -   The OPDIV CIO reviews the changes and         |
|                  |     recommends an appropriate action to the OPDIV |
|                  |     ITIRB. The OPDIV ITIRB sends their            |
|                  |     recommendation to the HHS ITIRB.              |
|                  |                                                   |
|                  | -   The Departmental HHS ITIRB makes final        |
|                  |     process change decisions.                     |
|                  |                                                   |
|                  | In Addition:                                      |
|                  |                                                   |
|                  | -   At any time, the OPDIV CPIC Team, Investment  |
|                  |     Manager, or Business Sponsor can recommend a  |
|                  |     process improvement. These recommendations    |
|                  |     should be sent to the HHS CPIC Officer.       |
|                  |                                                   |
|                  | -   Quarterly, the HHS CPIC Officer monitors      |
|                  |     periodic/ quarterly reports and corrective    |
|                  |     action plans and provides any necessary       |
|                  |     guidance and direction.                       |
|                  |                                                   |
|                  | -   Semi --annually, HHS CPIC Advisory Board      |
|                  |     meets to conduct process review workshops.    |
+------------------+---------------------------------------------------+

## B.8 IT Management & Budget Formulation Calendar

The Select, Control, and Evaluate Phases of the CPIC process are tied to
the IT Management and Budget Formulation Calendar, which defines the
annual timing for key events needed to generate IT Management Plans and
Budgets. The calendar defines the timing for key deliverables such as
the IT Strategic Plan, Enterprise Architecture Plan, Security Plan, and
IT Budget, among others.

Key Activities on the Timeline:

-   **January:** HHS submits its IT budget Exhibits 53 and 300 to OMB
    for inclusion in the President's Budget (CY+1). HHS CIO completes IT
    Strategic Planning to inform HHS OPDIVs of Departmental IT
    priorities.

-   **February:** HHS submits President's Budget to Congress (CY+1).

-   **March:** Each HHS OPDIV presents a prioritized HHS OPDIV IT
    investment portfolio to the HHS CIO for HHS CPIC review and
    consolidation into an HHS IT investment portfolio (CY+2).

-   **April:** HHS issues the Secretary's budget guidance and HHS OPDIVs
    begin development of HHS Component budgets.

-   **June:** HHS OPDIVs present HHS OPDIV budgets and final OPDIV IT
    investment portfolios to the DAS for Budget and the HHS CIO,
    respectively.

-   **June:** The HHS CIO Council and ITIRB review HHS OPDIV and HHS
    Enterprise-wide portfolios and establish a prioritized HHS IT
    investment portfolio.

-   **July:** The Secretary's Budget Council (SBC) reviews HHS OPDIV
    budget requests individually, along with the OPDIV's prioritized IT
    investment portfolio.

-   **August:** HHS OPDIVs revise budget requests and IT investment
    portfolios in response to SBC decisions.

-   **September:** HHS submits the Secretary's Budget to OMB with
    Exhibit 53 and 300 forms

-   **October:** HHS begins the annual update of IT, EA and Security
    strategic plans for the next budget year.

-   **November:** OMB sends budget passback guidance to HHS and HHS
    provides its response. The HHS CIO considers passback results in
    conducting strategic planning for the following budget year.

#  {#section .unnumbered}

# Appendix C: Sample Prospectus Summary Form

## C.1 Purpose

The PMT Prospectus Summary Form is completed during the Select Phase,
Pre-Selection Process. The Prospectus Form is a summary document that
describes the operational problem and presents the major decision
factors that an ITIRB should evaluate in considering the need and
proposed investment. The Prospectus Form summarizes the results of the
analytic work completed, provides additional cost information, and
places it within the PMT for further review.

The following section provides a template for preparing the Prospectus
Summary Form located within the HHS PMT. Detailed quantitative and
analytical information should be included as attachments as appropriate
to the level and complexity of the investment.

## C.2 Prospectus Summary Template

+------------------+---------------------------------------------------+
| ###              | The Prospectus Summary Form is created during the |
|  General Instruc | Pre-Selection Process and must analytically       |
| tions for Comple | justify:                                          |
| ting the Prospec |                                                   |
| tus Summary Form | \(1\) the need for action to resolve a shortfall  |
|                  | in the Department's ability to provide the        |
|                  | services needed by its users or customers, or     |
|                  |                                                   |
|                  | \(2\) the need to explore a technological         |
|                  | opportunity for performing Department missions    |
|                  | more effectively.                                 |
|                  |                                                   |
|                  | The mission need must be derived from rigorous    |
|                  | mission analysis (e.g., continuous analysis of    |
|                  | current and forecasted mission capabilities in    |
|                  | relationship to projected demand for services)    |
|                  | and must contain sufficient quantitative          |
|                  | information to establish and justify the need and |
|                  | decision.                                         |
+------------------+---------------------------------------------------+

## C 3. Sample Prospectus Summary Form -- Major/Tactical

The Prospectus Summary Form is shown on the next few pages. It is a
blank form as found within the HHS PMT.

  ---------------------------------------------------------------------- --
  **Prospectus Summary - Major/Tactical** (Form)                         

  ---------------------------------------------------------------------- --

 

  -----------------------------------------------------------------------
  **INVESTMENT PROSPECTUS - MAJOR/TACTICAL**

  -----------------------------------------------------------------------

 

  ------- ------------------------------------------------------------------
  **1**   **Investment Prospectus**

  ------- ------------------------------------------------------------------

  -----------------------------------------------------------------------
  *A.  Investment Name @*

  *B.  What organization will be directly responsible for the planning
  and execution of the investment?*

   

  *C.  Who is the Project Manager? @*

   

  *D.  Investment Type (Major, Non-Major, Moving an existing investment
  to a PMA e-Gov or LOB common solution, or Partner Agency contributions
  to PMA e-Gov or LOB initiative?) @*

   

  *E.  If the investment is a non-major, is it a Tactical or Supporting
  program investment?*

   

  *F.  Should this investment be reviewed at the OPDIV or Department
  level? @*

   

  *G.  What does this investment do? Describe the functions this
  investment will perform. Please limit your response to no more than 100
  words.*

   

  *H.  Identify the executive sponsor/process owner who sets the
  requirements for the investment  (i.e., the entity that is the
  "customer" for the investment).  Provide the name, title and contact
  information.  @*

   

  *I.  How does this investment meet the business needs of the executive
  sponsor/process owner?  Discuss in terms of the sponsor's mission, not
  the investment's functionality.  Please limit your response to no more
  than 100 words.*

   

  *J.  What is the proposed life-cycle cost in \$M (DME and SS for
  current year and beyond)*

   

  *K.  What are the benefits to be achieved and/or mandates to be
  satisfied through this investment.  Discuss return on investment.*

   

  *L.  Major Milestones (Description, Start and End Dates, Duration (in
  Days), Planned Cost (in millions), Funding Agency)*

  *L.1 Proposed Projects*
  -----------------------------------------------------------------------

  -- --------------- --------- -------- ------------ --------------- ----------- --
                                                                                 

     **Description   **Start   **End    **Duration   **Planned Cost  **Funding   
     of Milestone**  Date**    Date**   (in days)**  (millions)**    Agency**    

                                                                                 

                                                                                 

                                                                                 

                                                                                 

                                                                                 

                                                                                 

                                                                                 

                                                                                 

                                                                                 

                                                                                 

                                                                                 
  -- --------------- --------- -------- ------------ --------------- ----------- --

  -----------------------------------------------------------------------
  *L.2 Existing Projects*

  -----------------------------------------------------------------------

  -- -------- --------------- --------- -------- ------------ -------------- ----------- --
                                                                                         

     ** **    **Description   **Start   **End    **Duration   **Planned Cost **Funding   
              of Milestone**  Date**    Date**   (in days)**  (millions)**   Agency**    

     **1**                                                                               

     **2**                                                                               

     **3**                                                                               

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     **14**                                                                              

     **15**                                                                              

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     **18**                                                                              

     **19**                                                                              

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     **24**                                                                              

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     **26**                                                                              

     **27**                                                                              

     **28**                                                                              

     **29**                                                                              

     **30**                                                                              

                                                                                         
  -- -------- --------------- --------- -------- ------------ -------------- ----------- --

 

  ------- ------------------------------------------------------------------
  **2**   **Cost Summary**

  ------- ------------------------------------------------------------------

  --------------- --------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
  ** **           **Cost Elements**     **FY04**   **FY05**   **FY06**   **FY07**   **FY08**   **FY09**   **FY10**   **FY11**   **Total**

  **Planning                                                                                                                     
  Costs**                                                                                                                       

  **1**           **Program Staff**                                                                                             

  **2**           **Training & Other                                                                                            
                  Admin Support**                                                                                               

  **3**           **Equipment**                                                                                                 

  **4**           **Contract Services**                                                                                         

  **5**           **Software**                                                                                                  

  **6**           **Hardware**                                                                                                  

  **7**           **Facilities**                                                                                                

  **8**           **Security**                                                                                                  

  **9**           **Other**                                                                                                     

  ** **           **Sub-Total**                                                                                                 

  **Acquisition                                                                                                                  
  Costs**                                                                                                                       

  **1**           **Program Staff**                                                                                             

  **2**           **Training & Other                                                                                            
                  Admin Support**                                                                                               

  **3**           **Equipment**                                                                                                 

  **4**           **Contract Services**                                                                                         

  **5**           **Software**                                                                                                  

  **6**           **Hardware**                                                                                                  

  **7**           **Facilities**                                                                                                

  **8**           **Security**                                                                                                  

  **9**           **Other**                                                                                                     

  ** **           **Sub-Total**                                                                                                 

  **Maintenance                                                                                                                 
  Costs**                                                                                                                       

  **1**           **Program Staff**                                                                                             

  **2**           **Training & Other                                                                                            
                  Admin Support**                                                                                               

  **3**           **Equipment**                                                                                                 

  **4**           **Contract Services**                                                                                         

  **5**           **Software**                                                                                                  

  **6**           **Hardware**                                                                                                  

  **7**           **Facilities**                                                                                                

  **8**           **Security**                                                                                                  

  **9**           **Other**                                                                                                     

  ** **           **Sub-Total**                                                                                                 

  ** **                                                                                                                         

  **Total**       ** **                                                                                                         
  --------------- --------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------

 

  ------- ------------------------------------------------------------------
  **3**   **Funding Source**

  ------- ------------------------------------------------------------------

  -----------------------------------------------------------------------
  *A.  Funding History (Funding by source by year)*

  -----------------------------------------------------------------------

  -- ---------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------- --
                                                                                                                                      

     **Funding Source**           **FY04**   **FY05**   **FY06**   **FY07**   **FY08**   **FY09**   **FY10**   **FY11**   **Total**   

     **Enterprise Information                                                                                                         
     Technology Fund**                                                                                                                

     **HHS Service and Supply                                                                                                         
     Fund**                                                                                                                           

     **Other**                                                                                                                        

     **Total Funding**                                                                                                                

                                                                                                                                      
  -- ---------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------- --

  -----------------------------------------------------------------------
  *B.  Describe the proposed strategy for funding the costs identified in
  Section 2 (i.e., the justification for the sources proposed, any
  commitments requested or received from those sources, and any expected
  shifts in funding source over the investment's life cycle).  Identify
  other funding sources listed in the table above.*

   

  *C.  Current Funding Status (funding level and date approved, and
  obligation status by funding source and Fiscal Year)*
  -----------------------------------------------------------------------

  -- ----------- ---------- -------------- ------------ --------------- --------------- -------------- --
                                                                                                       

     **Funding   **Fiscal   **Approved     **Approval   **Obligated**   **Obligated -   **Invoiced**   
     Source**    Year**     Funding        Date**                       Not Invoiced**                 
                            Level**                                                                    

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       
  -- ----------- ---------- -------------- ------------ --------------- --------------- -------------- --

  -----------------------------------------------------------------------
  *D.  If currently funded, when will this investment run out of approved
  funding at planned expenditure rates?*

   

  *E.  What funding alternatives are available for this investment should
  proposed funding sources not be available or provide partial funding?*

   

  *F.  What Government FTE are required to support this investment (in
  millions) @ (by fiscal year)*
  -----------------------------------------------------------------------

  -- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------- --
                                                                                                         

     **FY04**   **FY05**   **FY06**   **FY07**   **FY08**   **FY09**   **FY10**   **FY11**   **Total**   

                                                                                                         

                                                                                                         
  -- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------- --

  -----------------------------------------------------------------------
  *G.  Comments:*

   
  -----------------------------------------------------------------------

 

  ------- ------------------------------------------------------------------
  **4**   **Budget Impact**

  ------- ------------------------------------------------------------------

  -----------------------------------------------------------------------
  *A.  What effect would approving this investment have on the budget
  (increase base, base neutral, decrease base through increased
  efficiencies)? @*

   

   

  *B.  What would be the impact on the sponsor's program of not fully
  funding this investment? @*

   

   
  -----------------------------------------------------------------------

 

  ------- ------------------------------------------------------------------
  **5**   **Acquisition Strategy**

  ------- ------------------------------------------------------------------

  -----------------------------------------------------------------------
  *A.  How risky is this investment overall and what are the most
  significant risk elements?  How do you plan to mitigate those risks?*

   

  *B.  Discuss the contracts awarded or to be awarded (date, vendor,
  contract type, period of performance (base and option periods), current
  year funding (along with amount of current year funding obligated and
  invoiced/paid).  Discuss how the contracts relate to one another and to
  the investments cost, schedule and performance goals.  Discuss how the
  acquisition strategy relates to identified investment risks.  Identify
  contract incentives, awards and other provisions designed to allow the
  contractor to provide innovative, transformational­ solutions.*

   

  *C.  For other than firm fixed price, performance-base­d contracts,
  explain why the Government must assume the risk of contract achievement
  of cost, schedule and performance goals.  Explain the amount of risk
  the Government will assume.*

   
  -----------------------------------------------------------------------

 

  ------- ------------------------------------------------------------------
  **6**   **Performance**

  ------- ------------------------------------------------------------------

  -----------------------------------------------------------------------
  *A.  What is the current schedule variance for the investment?*

  *B.  What is the current cost variance for the investment?*

  -----------------------------------------------------------------------

 

  ------- ------------------------------------------------------------------
  **7**   **Dependencies**

  ------- ------------------------------------------------------------------

  -----------------------------------------------------------------------
  *A.  Identify existing and proposed investments (Type, name, manager,
  start and end date, current phase) that this investment will depend
  upon.*

  -----------------------------------------------------------------------

  -- -------- ---------- ---------- ------------- ------------ ---------- ---------------- --
                                                                                           

     **\#**   **Type**   **Name**   **Manager**   **Start      **End      **Current        
                                                  Date**       Date**     Phase**          

                                                                                           

                                                                                           

                                                                                           

                                                                                           

                                                                                           

                                                                                           
  -- -------- ---------- ---------- ------------- ------------ ---------- ---------------- --

  -----------------------------------------------------------------------
  *B.  Identify existing and proposed investments (type, name, manager,
  start and end date, current phase) that depend on this investment.*

  -----------------------------------------------------------------------

  -- -------- ---------- ---------- ------------- ------------ ---------- ---------------- --
                                                                                           

     **\#**   **Type**   **Name**   **Manager**   **Start      **End      **Current        
                                                  Date**       Date**     Phase**          

                                                                                           

                                                                                           

                                                                                           

                                                                                           

                                                                                           

                                                                                           
  -- -------- ---------- ---------- ------------- ------------ ---------- ---------------- --

  -----------------------------------------------------------------------
  *C.  Identify non-HHS investments related to this investment (e.g.,
  E-gov initiatives)*

   

  *D.  Has this investment adequately planned and budgeted to meet
  security requirements?  @*

   
  -----------------------------------------------------------------------

 

  ------- ------------------------------------------------------------------
  **8**   **Supplemental Documentation**

  ------- ------------------------------------------------------------------

  -----------------------------------------------------------------------
  *A.  Attach supplemental information to support the business case for
  this investment, if applicable.*

  -----------------------------------------------------------------------

  -- ------------- ---------- ---------- -------------- ------------------- --
                                                                            

     **Name**      **Link**   **Size**   **Owner**      **Uploaded**        

                                                                            

                                                                            

                                                                            

                                                                            
  -- ------------- ---------- ---------- -------------- ------------------- --

 

  ------- ------------------------------------------------------------------
  **9**   **Comments/Recomme­ndations**

  ------- ------------------------------------------------------------------

  -----------------------------------------------------------------------
  *A.  Investment manager comments.*

   

  *B.  CPIC staff comments/recomme­ndations regarding this investment.*

   
  -----------------------------------------------------------------------

**PMT INVESTMENT PROSPECTUS FORM GUIDANCE**

Managers of new investments will provide the data required via the
Portfolio Management Tool. Data for existing investments will populate
many of the categories on the Prospectus Form. Managers of existing
investments should verify the accuracy of the existing data. Note that
the Cost information is derived from the PMT Alternative Analysis Form
not the PMT Summary of Spending Table.

All dollars should be shown in millions using the following format:
\$2,225,000 = 2.225.

+------------------------------------+---------------------------------+
| SECTIONS                           | COMMENTS                        |
+====================================+=================================+
| **SECTION 1: GENERAL INFORMATION** |                                 |
+------------------------------------+---------------------------------+
| A. Investment Name                 |                                 |
+------------------------------------+---------------------------------+
| B. What organization will be       | Answered if an organization     |
| directly responsible for the       | other than the sponsoring       |
| planning and execution of the      | organization will be managing   |
| investment?                        | day-to-day project execution.   |
+------------------------------------+---------------------------------+
| C. Who is the Project Manager?     | Provide name, title, telephone  |
|                                    | number and e-mail address.      |
+------------------------------------+---------------------------------+
| D. Investment Type (Major,         |                                 |
| Non-Major, Moving an existing      |                                 |
| investment to a PMA e-Gov or LOB   |                                 |
| common solution, or Partner Agency |                                 |
| contributions to PMA e-Gov or LOB  |                                 |
| initiative?)                       |                                 |
+------------------------------------+---------------------------------+
| E. If the investment is a          |                                 |
| non-major, is it a Tactical or     |                                 |
| Supporting program investment?     |                                 |
+------------------------------------+---------------------------------+
| F. Should this investment be       | The primary level of ITIRB      |
| reviewed at the OPDIV or           | review for the investment.      |
| Department level?                  |                                 |
+------------------------------------+---------------------------------+
| G. What does this investment do?   | Explains what the investment    |
| Describe the functions this        | does in specific functional     |
| investment will perform. Please    | terms. Not looking for broad    |
| limit your response to no more     | program-level requirements.     |
| than 100 words.                    |                                 |
+------------------------------------+---------------------------------+
| H. Identify the executive          | The organization ultimately     |
| sponsor/process owner who sets the | approving the cost, schedule    |
| requirements for the investment,   | and performance goals for the   |
| (i.e., the entity that is the      | investment (essentially         |
| "customer" for the investment).    | certifying business need).      |
| Provide the name, title and        |                                 |
| contact information.               |                                 |
+------------------------------------+---------------------------------+
| I. How does this investment meet   | Refer to alignment with         |
| the business needs of the          | strategic goals and objectives, |
| executive sponsor/process owner?   | President's Management Agenda   |
| Discuss in terms of the sponsor's  | or Secretarial Initiatives.     |
| mission, not the investment's      | State the drivers and mandates  |
| functionality. Please limit your   | in program (not technology)     |
| response to no more than 100       | terms.                          |
| words.                             |                                 |
+------------------------------------+---------------------------------+
| J. What is the proposed life-cycle | Gives a sense of what HHS is    |
| cost in \$M (DME and SS for        | buying into with the current    |
| current year and beyond)           | year's funding.                 |
+------------------------------------+---------------------------------+
| K. What are the benefits to be     | Looking here for a more         |
| achieved and/or mandates to be     | quantifiable discussion of      |
| satisfied through this investment. | benefits and at least           |
| Discuss return on investment.      | rudimentary cost/benefit        |
|                                    | analysis. Is this a good        |
|                                    | financial investment or is it   |
|                                    | just something we can't afford  |
|                                    | not to do for other reasons?    |
+------------------------------------+---------------------------------+
| L. Major Milestones (Description,  | Should provide a sense that the |
| Start and End Dates, Duration (in  | sponsor has thought through     |
| Days), Planned Cost (in millions), | cost and schedule issues and    |
| Funding Agency)                    | can present a feasible high     |
|                                    | level project plan.             |
|                                    |                                 |
|                                    | Two tables are provided.        |
|                                    |                                 |
|                                    | \- Proposed investments will    |
|                                    | use table L.1.                  |
|                                    |                                 |
|                                    | \- Existing investments will    |
|                                    | pull data from the Exhibit 300  |
|                                    | Section I.H.4 to populate table |
|                                    | L.2.                            |
+------------------------------------+---------------------------------+
| **SECTION 2: COST SUMMARY**        |                                 |
+------------------------------------+---------------------------------+
| A. Cost breakout by year by cost   | Shows where money will be spent |
| element for planning, acquisition  | on the investment. Can be       |
| (DME) and Maintenance (SS)         | compared with goals and         |
|                                    | objectives, milestones.         |
+------------------------------------+---------------------------------+
| **SECTION 3: FUNDING SOURCE**      |                                 |
+------------------------------------+---------------------------------+
| A. Funding History (Funding by     | Captures from current year      |
| source by year)                    | minus two to budget year plus 4 |
|                                    | to show:                        |
|                                    |                                 |
|                                    | Historical expenditures (even   |
|                                    | "new" investments may have a    |
|                                    | history)                        |
|                                    |                                 |
|                                    | Current year budget requests    |
|                                    |                                 |
|                                    | Future year funding             |
|                                    | requirements that will follow   |
|                                    | from funding the current year.  |
|                                    |                                 |
|                                    | The "Other" row refers to any   |
|                                    | funds received from sources     |
|                                    | other than the Enterprise IT    |
|                                    | Fund or the Service and Supply  |
|                                    | Fund.                           |
+------------------------------------+---------------------------------+
| B. Describe the proposed strategy  | Narrative discussion of how the |
| for funding the costs identified   | sponsor plans to fund the costs |
| in Section 2 (i.e., the            | identified in Section 2 over    |
| justification for the sources      | the life of the investment.     |
| proposed, any commitments          | State why this is an important  |
| requested or received from those   | project for funding.            |
| sources, and any expected shifts   |                                 |
| in funding source over the         |                                 |
| investment's life cycle). Identify |                                 |
| other funding sources listed in    |                                 |
| the table above.                   |                                 |
+------------------------------------+---------------------------------+
| C. Current Funding Status (funding | Indicates approved funding from |
| level and date approved, and       | all sources and                 |
| obligation status by funding       | obligation/commitment rates.    |
| source and Fiscal Year)            | Why ask for more money if there |
|                                    | is problem spending the money   |
|                                    | already provided?               |
+------------------------------------+---------------------------------+
| D. If currently funded, when will  | Provide the date. Shows         |
| this investment run out of         | adequacy of project planning    |
| approved funding at planned        | and indicates the urgency of    |
| expenditure rates?                 | funding decisions.              |
+------------------------------------+---------------------------------+
| E. What funding alternatives are   |                                 |
| available for this investment      |                                 |
| should proposed funding sources    |                                 |
| not be available or provide        |                                 |
| partial funding?                   |                                 |
+------------------------------------+---------------------------------+
| F. What Government FTE are         | Dollars in millions, not the    |
| required to support this           | number of FTE.                  |
| investment (\$ in millions) (by    |                                 |
| fiscal year)                       |                                 |
+------------------------------------+---------------------------------+
| G. Comments**:**                   | Any explanatory text regarding  |
|                                    | the FTE required.               |
+------------------------------------+---------------------------------+
| **SECTION 4: BUDGET SUPPORT**      |                                 |
+------------------------------------+---------------------------------+
| A. What effect would approving     | Increases Budget, Base Neutral  |
| this investment have on the budget | or Reduce Base.                 |
| (increase base, base neutral,      |                                 |
| decrease base through increased    | Plus a text box for             |
| efficiencies)?                     | explanation. The effect of the  |
|                                    | investment on the base is       |
|                                    | important, especially for       |
|                                    | infrastructure and other        |
|                                    | overhead investments. They      |
|                                    | won't necessarily align with    |
|                                    | high-priority strategic goals,  |
|                                    | but may reduce overhead cost    |
|                                    | structures significantly,       |
|                                    | freeing funds for other uses.   |
+------------------------------------+---------------------------------+
| B. What would be the impact on the | Low, Medium or High.            |
| sponsor's program of not fully     |                                 |
| funding this investment?           | Plus a text box for             |
|                                    | explanation. Decision makers    |
|                                    | need to understand in graphic   |
|                                    | terms what will happen if funds |
|                                    | aren't provided, including      |
|                                    | direct effects on programs,     |
|                                    | ripple effect on other          |
|                                    | investments/programs, etc.      |
+------------------------------------+---------------------------------+
| **SECTION 5: ACQUISITION           |                                 |
| STRATEGY**                         |                                 |
+------------------------------------+---------------------------------+
| A. How risky is this investment    | Is the investment of High,      |
| overall and what are the most      | Medium or Low risk? Describe    |
| significant risk elements? How do  | the risks and the mitigation    |
| you plan to mitigate those risks?  | strategies.                     |
+------------------------------------+---------------------------------+
| B. Discuss the contracts awarded   | Investment manager needs to     |
| or to be awarded (date, vendor,    | show a coherent strategy for    |
| contract type, period of           | deploying contracts for the     |
| performance (base and option       | investment. Is the acquisition  |
| periods), current year funding     | strategy consistent with the    |
| (along with amount of current year | risk portrayed?                 |
| funding obligated and              |                                 |
| invoiced/paid).                    |                                 |
|                                    |                                 |
| Discuss how the contracts relate   |                                 |
| to one another and to the          |                                 |
| investments cost, schedule and     |                                 |
| performance goals. Discuss how the |                                 |
| acquisition strategy relates to    |                                 |
| identified investment risks.       |                                 |
|                                    |                                 |
| Identify contract incentives,      |                                 |
| awards and other provisions        |                                 |
| designed to allow the contractor   |                                 |
| to provide innovative,             |                                 |
| transformational solutions.        |                                 |
+------------------------------------+---------------------------------+
| C. For other than firm fixed       |                                 |
| price, performance-based           |                                 |
| contracts, explain why the         |                                 |
| Government must assume the risk of |                                 |
| contract achievement of cost,      |                                 |
| schedule and performance goals.    |                                 |
| Explain the amount of risk the     |                                 |
| Government will assume.            |                                 |
+------------------------------------+---------------------------------+
| **SECTION 6: PERFORMANCE**         |                                 |
+------------------------------------+---------------------------------+
| A. What is the current schedule    | Applies to existing investments |
| variance for the investment?       | only. Calculated by the PMT.    |
+------------------------------------+---------------------------------+
| B. What is the current cost        | Applies to existing investments |
| variance for the investment?       | only. Calculated by the PMT.    |
+------------------------------------+---------------------------------+
| **SECTION 7: DEPENDENCIES**        |                                 |
+------------------------------------+---------------------------------+
| A. Identify existing and proposed  |                                 |
| investments (Type, name, manager,  |                                 |
| start and end date, current phase) |                                 |
| that this investment will depend   |                                 |
| upon.                              |                                 |
+------------------------------------+---------------------------------+
| B. Identify existing and proposed  |                                 |
| investments (type, name, manager,  |                                 |
| start and end date, current phase) |                                 |
| that depend on this investment.    |                                 |
+------------------------------------+---------------------------------+
| C. Identify non-HHS investments    |                                 |
| related to this investment (e.g.,  |                                 |
| e-gov initiatives)                 |                                 |
+------------------------------------+---------------------------------+
| D. Has this investment adequately  | A "checklist item" to ensure    |
| planned and budgeted to meet       | that security has been properly |
| security requirements?             | considered for this investment. |
+------------------------------------+---------------------------------+
| **SECTION 8: SUPPLEMENTAL          |                                 |
| DOCUMENTATION**                    |                                 |
+------------------------------------+---------------------------------+
| A. Attach supplemental information | An opportunity to provide       |
| to support the business case for   | PowerPoint slides, copies of    |
| this investment, if applicable.    | mandating documents, etc.       |
+------------------------------------+---------------------------------+
| **SECTION 9:                       |                                 |
| COMMENTS/RECOMMENDATIONS**         |                                 |
+------------------------------------+---------------------------------+
| **A. Investment manager            |                                 |
| comments.**                        |                                 |
+------------------------------------+---------------------------------+
| B. CPIC staff                      | Provides an opportunity for     |
| comments/recommendations regarding | OCIO staff to provide an        |
| this investment.                   | assessment of the information   |
|                                    | provided from a Departmental or |
|                                    | OPDIV perspective.              |
+------------------------------------+---------------------------------+

# Appendix D: Risk Management

## D.1 Purpose

A risk is an uncertain event or condition that, if it occurs, has a
positive or negative affect on a project objective. Risk, is one of
those words that immediately conjure up an image of something bad, but
it is important to remember that risk can also provide positive benefits
as well as negative ones.

Risk management is the systematic process of identifying, analyzing and
responding to project risk. We want to maximize the probability and
impact of any positive risk factors and minimize the probability and
impact of those that might negatively affect the project.

The need to manage risk increases with the complexity of the investment.
It is an ongoing process that requires continuous risk identification,
assessment, planning, and monitoring.

## D.2 Process

The Risk Management process includes two phases:

**Risk assessment** involves identifying, analyzing and prioritizing
risks; and

**Risk response** involves developing and planning risk response
strategies, executing those plans, evaluating the results of the
responses and documenting the results.

There are several ways that an Investment Manager may choose to manage
or respond to a specific risk. These options can be categorized into
three broad areas:

**Avoid** the specific threat, usually by eliminating the cause. (e.g.;
conduct a study or develop a prototype)

**Mitigate** the specific threat by reducing the expected monetary or
schedule impact of the risk, or by reducing the probability of its
occurrence.

**Manage** (accept) the consequences of the risk.

Risk management activities need to be balanced. The magnitude of the
effort required to identify, assess, manage, and monitor risks, must be
commensurate with the magnitude of the potential impact to the project.
Making informed decisions by consciously assessing what could go wrong,
as well as the likelihood and the severity of the impact is at the heart
of risk management.

##### 1. Risk Assessment

It is the responsibility of everyone associated with an investment to
identify and document risks. A risk identification process should be
identified, communicated and supported.

**Table D-1** provides a means by which risk identification can be
easily captured, documented, and analyzed.

+------+-------+--------+------------+-------------+---------+-------+
| **R  | *     | **Date | **Risk\    | **Overall   | **Risk  | **Sta |
| isk\ | *Risk | Identi | Des        | Risk        | R       | tus** |
| Pr   | Categ | fied** | cription** | Rating**    | esponse |       |
| iori | ory** |        |            |             | Str     |       |
| ty** |       |        |            | **          | ategy** |       |
|      |       |        |            | *(h-m-l)*** |         |       |
+------+-------+--------+------------+-------------+---------+-------+
|      |       |        |            |             |         |       |
+------+-------+--------+------------+-------------+---------+-------+
|      |       |        |            |             |         |       |
+------+-------+--------+------------+-------------+---------+-------+
|      |       |        |            |             |         |       |
+------+-------+--------+------------+-------------+---------+-------+

**Table D-1** Example of Risk Management Table

Each risk must be:

-   Described as completely as possible

-   Identified by phase or stage, along with who identified the risk,
    the date it was identified, and who was assigned as the primary
    point of contact

-   Analyzed for its probability of occurrence (high, medium, low)

-   Analyzed in terms of impact to the project schedule and budget

-   Given an overall risk (severity) rating (high, medium, low);

-   Categorized within the mandatory and optional areas of risk as
    identified by OMB

-   Prioritized among all identified risks.

##### 2. Risk Response Development and Control

After all risks have been identified, rated and categorized, each risk
is then prioritized. Not all risks identified will be carried into the
risk plan for mitigation and management. Project managers should
establish a pragmatic cut-off that is consistent with the scope of the
project. Each significant risk must then include a description of the
risk response strategy and activities. The risks must then be
categorized by strategy - eliminate, mitigate, or manage.

The risk management plan provides a means by which risks can be easily
tracked and managed. It identifies the priority, area of risk,
description, overall rating, risk response strategy category, and status
(new, increasing, static, decreasing, or eliminated). The risk
management plan will be used to track and communicate risk response
activities, their status and their potential impact on the schedule and
budget.

##### 3. Common Areas of Risk

The following common areas of risk are consistent with OMB Circular A-11
risk requirements for IT investments. Below are some examples of risks
areas that could be addressed in the Risk Management Table for each
category.

**MANDATORY IT RISK AREAS** --- at least one risk must be identified,
rated and prioritized, and include a risk response strategy in each of
the following risk areas.

***Technology*** --- Lack of expertise, software and hardware maturity
or immaturity, installation requirements, customization, O&M
requirements, component delivery schedules availability, uncertain and
or changing requirements, design errors and or omissions, technical
obsolescence.

***Project Schedule and Resources*** --- Scope creep, requirements
changes, insufficient or unavailable resources, overly optimistic task
durations, unnecessary activities within the schedule, critical
deliverables or reviews not planned into the schedule.

***Business*** ---Poorly written contracts, market or industry changes,
new competitive products become available, creating a monopoly for
future procurements.

***Organizational and Change Management*** --- Business process
re-engineering acceptance by users and management, time and commitment
managers will need to spend overseeing the change, lack of participation
of business owners in the re-engineering process, necessary change in
manuals and handbooks, personnel management issues, labor unions.

***Strategic*** --- Project does not tie to Department's mission or
strategic goals, project is not part of the Department's IT Capital
Planning and Investment Control (CPIC) process.

***Security*** --- Project does not conform to the requirements of OMB
Circular A-130.

***Privacy*** --- Project does not conform to the requirements of OMB
Circular A-130.

***Data*** --- Data standards not defined, data acquisition and or
conversion cost are unknown.

# Appendix E: Performance Measurement

## E.1 Purpose

Performance measurement is the process whereby an organization
establishes the parameters to measure how programs, investments, and
acquisitions are reaching the desired results in support of mission
goals. Performance measures are set during the Select Phase and assessed
during subsequent phases. The focus of performance measurement is on
outcomes, or how well the IT investment enables the program or
Department to accomplish its primary mission. Consequently, performance
measurement should look beyond measures of input (resource consumption),
activities (milestones), and output (production numbers), which are more
directly related to operational performance. This focus, however, does
not imply that input, activity, and output measures are not useful.
Indeed, internal measures are used to track resources and activities and
make necessary adjustments since investments are only successful if
hardware, software, and capabilities are delivered on time and meet
specifications.

To be useful, performance measure must evaluate the proper activities.
It is therefore vital that performance measures be aligned to the goals
of any investment to the outcomes specified in the Department's
Strategic Plan, and to the HHS Enterprise Architecture.

Performance is evaluated using two criteria---effectiveness and
efficiency. Effectiveness demonstrates that an organization is doing the
correct things, while efficiency demonstrates that an organization is
doing things optimally. New acquisitions and upgrades should indicate in
their Investment Prospectus how the investment will result in
effectiveness or efficiency improve­ments. For example, a new computer
network might result in enhanced efficiency because work is processed
faster, digital images are transferred among remote sites, or messages
are transmitted more securely.

Some questions that facilitate performance measure development include:

-   What product will be produced, shared, or exchanged?

-   Who will use the results?

-   What decisions or actions will result from delivery of products from
    this system?

Answers to these questions will help Investment Managers develop
effective performance measures with the following characteristics:

-   Strategically relevant

-   Directed to factors that matter and make a difference

-   Promote continuous and perpetual improvement

-   Focus on the customer

-   Agreed to by stakeholders.

-   Short, clear, and understandable

-   Meaningful.

-   Realistic, appropriate to the organizational level, and capable of
    being measured.

-   Valid

    -   Link to activity and provide a clear relationship between cause
        and effect

    -   Focus on managing resources and inputs, not simply costs

    -   Discarded when utility is lost or when new, more relevant
        measures are discovered.

OMB has developed a Performance Reference Model (PRM) as part of the
Federal Enterprise Architecture. The PRM contains a set of performance
measures that can be tailored to fit the specific Departmental needs and
a framework for using them. These performance measures are categorized
into four broad areas: mission & business results, customer results,
processes & activities, and technology. This model should be used to
develop specific investment performance measures. The following section
describes the business processes for linking together the various
elements of performance management described here.

## E.2 Process

Developing performance measures is the first step in a broader 6-step
performance management process that defines activities through a project
or investment's lifecycle. This process is depicted in Figure 1.

![](media/image2.wmf){width="4.495138888888889in"
height="2.0548611111111112in"}

**Figure E-1: Strategic Performance Management System**

It is important to understand that defining measures is only one part of
a more comprehensive process. After measures are developed, baseline
informa­tion is gathered if it does not already exist, and performance
informa­tion is collected, analyzed, interpreted, and used throughout the
investment's life. Steps one and two are completed during the Select
Phase. Steps two, three, and four are repeated activities during the
Control Phase. In the Evaluate Phase findings are reviewed and
corrective action, if necessary, is taken (Steps four/five). For the
system to be effectively institutionalized, each step requires a
commitment of management attention and resources.

Each of these process steps is defined in the following sections.

##### Define Measures

Step 1, Define Measures, can be accomplished using two activities:
Analyze How the Investment Supports the Mission and Reduces Performance
Gaps; and Develop IT Performance Measures that Characterize Success.

##### 

##### Analyze How the Investment Supports the Mission and Reduces Performance Gaps

Effective outcome-based performance measures are derived from the
relationship between the new investment and how users will apply
investment outputs. Specifically, the users' mission and critical
success factors (those activities and outputs that must be accomplished
if users are to achieve their mission) must be clearly understood. The
critical element of this step is linking proposed and in-process IT
investments and activities to the user mission and critical success
factors.

This concept is often described as a method of strategically aligning
programs and support functions with the Department's mission and
strategic priorities. The first step in effectively developing
outcome-based IT performance measures is to identify the organization's
mission, the critical tasks necessary to achieve the mission, and the
strategies that will be implemented to complete those tasks. One
structured method of accomplishing this step is to develop a Logic Model
linking the mission to IT performance measures.

Answers to the following questions will aid logic model development:

Identify the system.

-   What will the system do?

-   What are major functions or features that the system will provide
    (for example, what functionality or information)?

-   Is this system a stand-alone system or is it used or integrated with
    another system?

-   What is the purpose of that system?

-   How is it used?

What aspects of the system, service, and information quality are needed
for the system to perform optimally or acceptably?

Identify who will use the system. What is the principal business task
they perform? How will using the system help them with that task?

How does completion of that task contribute to a business function?

How does completion of the business function contribute to achievement
of program goals?

How does completion of program goals contribute to organizational goals?

How does completion of organizational goals contribute to Departmental
goals?

Determine whether there are related IT investments that impact the
mission area and goal(s) selected. Understand the relationships between
various IT investments that address the same or similar needs. This will
help identify potential areas for consolidation.

Once the mission is clearly defined, a gap analysis is performed to
understand how IT can improve mission performance. The analysis begins
with the premise that IT will improve effectiveness, efficiency, or
both. To accomplish this, requirements are defined and the following
questions are answered:

-   Why is this application needed?

-   How will the added functionality help users accomplish the mission?

-   How will the added functionality improve day-to-day operations and
    resource use?

Once this information is defined, it can be used to prepare the
Investment Prospectus, specifically section 1, questions G, H, I, K
justifying the investment and section 7 describing project dependencies.

##### Develop IT Performance Measures that Characterize Success

Well-designed performance measures define success parameters for the IT
initiative. The following questions should be asked for each performance
measure and answered affirmatively before deploying the measure:

Is it useful for monitoring progress and evaluating the degree of
success?

Is it focused on outcomes that stakeholders will clearly understand and
appreciate?

Is it practical? Does it help build a reliable baseline and
cost-effectively collect performance data at periodic intervals?

Can the performance measure be used to determine the level of investment
risk and whether the investment will meet performance targets?

Answering these questions affirmatively results in an agreement that the
IT investment, by supporting improvements identified earlier, will
support organizational goals and objectives. Additionally, it will help
limit the number of performance measures and focus management attention
on the requirements that have the greatest priority or impact. After
three to five major requirements have been identified, the following
questions are asked:

What are the performance indicators for each major requirement?

How well will those outputs satisfy the major requirements?

What additional steps must be taken to ensure outputs produce intended
outcomes?

How does this IT investment improve capabilities over the current
method?

Once requirements to be measured are identified, determine when each
requirement is met. Some requirements may need to be changed if they are
too difficult to measure. Or, if the requirement has indirect rather
than direct outcomes, it may be necessary to use "surrogate" performance
measures that mirror actual outcomes. For example, it is difficult to
measure the direct benefit of computer-based training (CBT) systems. In
this case, a surrogate measure might be the percentage of staff
achieving certifications through the CBT with implications that
certified staff are more desirable than non-certified staff because they
have demonstrated initiative and are more proficient.

Of the possible performance indicators, select one or more to report
performance against each requirement. One performance indicator may
provide information about more than one requirement. The objective is to
select the fewest number of performance indicators that will provide
adequate and complete information about progress.

Selecting the fewest performance indicators necessary is important
because data collection and analysis can be costly. The cost is
acceptable if the benefit of the information received is greater than
the cost of performance measurement, and if the data collection does not
hinder accomplishment of primary missions. Costs are calculated by
adding the dollars and staff time and effort required to collect and
analyze data. When calculating costs, you must consider whether they are
largely confined to initial or up-front costs, or will occur throughout
the IT lifecycle. For example, the cost of developing and populating a
database may have a large initial cost impact but diminish significantly
for later maintenance. Answers to the following questions will help to
determine the cost of tracking a specific performance indicator:

-   What data are required to calculate the performance measure?

-   Who collects the data and when?

-   What is the verification and validation strategy for the data
    collection?

-   What is the method to ensure the quality of the information
    reported?

In addition to determining costs, it is also necessary to determine the
baseline performance, target performance, and expected time to reach the
target. The baseline value is the start point for future change. If
performance measures are currently in use, the data collected can
provide the baseline. Otherwise the manager must determine the baseline
by a reasonable analysis method including the following:

-   Benchmarks from other agencies and private organizations

-   Initial requirements

-   Internal historical data from existing systems

-   Imposed standards and requirements.

To determine the target value, obtain stakeholder agreement regarding
the quantifiable benefits of the new system. These targets may be
plotted as a function over time, especially for IT investments that are
being installed or upgraded or as environmental factors change.

##### 2. Develop Collection Plan and Collect Data

To ensure performance data is collected in a consistent, efficient, and
effective manner, it is useful to develop and publish a collection plan
so all participants know their responsibilities and can see their
contributions. The collection plan details the following items:

-   Activities to be performed

-   Resources to be consumed

-   Target completion and report presentation dates

-   Decision authorities

-   Individuals responsible for data collection.

In addition, the collection plan answers the following questions for
each performance measure:

-   How is the measurement taken?

-   What constraints apply?

-   Who will measure the performance?

-   When and how often are the measurements taken?

-   Where are the results sent and stored, and who maintains results?

-   What is the cost of data collection?

While costs should have been considered during the previous step, the
actual cost will be more evident at this stage. Excessively costly
performance measures may require investment managers to find a
different, less costly mix of performance measures for the IT
investment. Or it may be necessary to creatively collect the measures to
reduce collection cost. For example, a sampling may produce sufficiently
accurate results at significantly less cost than counting every
occurrence, and some results can be automatically generated by the
system and accessed through a standard report.

To ensure data is being collected in a cost-effective and efficient
manner, it is important to ensure the data collectors are involved in
developing performance measures. The collectors will do a much better
job if they believe the performance measures are valid and useful, and
they will have insight regarding the best way to collect the data.

##### 4. Analyze Results

Performance measures are useful in monitoring the investment against
expected benefits and costs. To evaluate performance, data is compiled
and reported according to the collection plan that was previously
constructed. The data is then evaluated and the following questions are
answered regarding the collected data and the investment's performance:

-   Did the investment exceed or fall short of expectations? By how much
    and why?

-   If the data indicates targets are successfully reached or exceeded,
    does that match other situational perceptions?

-   What were the unexpected benefits or negative impacts to the
    mission?

-   What adjustments can and should be made to the measures, data, or
    baseline?

-   What actions or changes would improve performance?

This evaluation reveals any needed adjustments to the IT investment or
performance measures. It also helps surface any lessons learned that
could be fed back to the investment management process.

A key part of the activity in this step is to analyze the continuing
relevance of the measures themselves.

Performance measures provide feedback to managers and help them make
informed decisions on future actions. To ensure that performance
measures are still relevant and useful, answer the following questions:

Are the measures still valid?

-   Have higher-level mission or IT investment goals, objectives, and
    critical success factors changed

-   Are threshold and target levels appropriate in light of recent
    performance and changes in technology and requirements?

-   Can success be defined by these performance measures?

-   Can improvements in mission or operations efficiency be defined by
    the measures?

-   Have more relevant measures been discovered?

Are the measures addressing the right things?

-   Are improvements in performance of mission, goals, and objectives
    addressed?

-   Are all objectives covered by at least one measure?

-   Do the measures address value-added contributions made by overall
    investment in IT and or individual programs or applications?

-   Do the measures capture non-IT benefits and customer requirements?

-   Are costs, benefits, savings, risks, or ROI addressed?

-   Do the measures emphasize the critical aspects of the business?

-   Are measures linked to a specific and critical organizational
    process?

Are the measures the right ones to use?

-   Are measures targeted to a clear outcome (results rather than inputs
    or outputs)?

-   Are measures understood at all levels that must evaluate and use
    them?

-   Do the measures support effective management decisions and
    communicate achievements to internal and external stakeholders

-   Are measures accurate, reliable, valid, and verifiable?

-   Are measures built on available data at reasonable costs and in an
    appropriate and timely manner for the purpose?

-   Are measures able to show interim progress?

Are measures used in the right way?

-   Are measures used in strategic planning (e.g., to identify
    baselines, gaps, goals, and strategic priorities) or to guide
    prioritization of program initiatives?

-   Are measures used in resource allocation decisions and task, cost,
    and personnel management?

-   Are measures used to communicate results to stakeholders?

##### 5. Report Findings

In the Report Findings step the main goal is to communicate progress on
the strategic goals and objectives (i.e. IT outcomes) and status of IT
projects (i.e. IT outputs). Managers close to the day-to-day
administration of a project are typically interested in both outputs and
outcomes. Those farther removed from the project are interested in the
project's outcomes; for "major" IT projects oversight bodies are
interested in both the outcomes and the impacts of projects, and whether
these projects are on schedule and within budget.

Reports on progress are made via Earned Value analysis for projects in
Acquisition or Mixed Lifecycle phases and Operational Analysis and Post
Implementation Reviews are used for those projects transitioning to or
in Steady State.

##### 6. Take Action

For the performance measures embedded in a performance management
system, the intrinsic purpose is to guide management decisions and
actions. The take action step leverages the preceding steps by putting
the performance information into action. During this step, management
will rely on reports to gain insight into the investment project's
performance. This information is used to make sound decisions about
performance issues and to re-align strategies for the future.

If target goals are not being met, management must take corrective
actions to improve performance. The approach should be as follows:

-   Determine range of corrective actions

-   Prioritize corrective actions based on overall risk mitigation
    strategies and goals

-   Select most appropriate corrective action(s)

Analyze the root cause of performance deviations to determine the
corrective actions that might be applied. Corrective actions might
include: providing training for staff; establishing new processes and
procedures; changing or realigning business strategies; transitioning
funding between IT initiatives; or establishing new IT initiatives.

There may be several corrective actions applicable to a single
performance issue. However, some may be inappropriate to the scale of
the problem, or be too costly, or not be feasible for other resource
reasons. Applicable corrective actions should be prioritized in the
ascending order of cost and impact.

Corrective action selection is dependent upon the magnitude of the
problem. In the case of initiative-specific progress or performance
issues, the program manager must interface with HHS management to
develop a solution. In the event that broader gaps are identified in
achieving the IT strategies, management should realign its business
focus through the CPIC process to ensure that the IT and other asset
portfolios are comprehensive, complete and aligned to Department mission
and goals.

# Appendix F: Project Management

## F.1 Purpose 

Project Management is a crucial element for IT investment success. It
involves executing the necessary skills and management practices to
ensure successful investment development and implementation. This
integrated skill set addresses such areas as project planning, scope
management, cost, schedule, performance, risk, and organizational
management. Project Management is carried out by a **Project Manager**,
who is the single accountable individual provided sufficient authority
and responsibility to accomplish project objectives for development,
production, and sustainment. The Project Manager (PM) manages the
assigned project consistent with applicable statutes, regulations, and
directives. Accountability is ensured through cost, schedule, and
performance reporting.

A Project Manager responsible for the management of an investment is
also referred to as an Investment Manager; however, Project managers may
also manage projects that are sub-components of an investment. For the
purpose of this section, project management refers to the management of
an IT investment or a sub-component of an IT investment that requires
the use of project management principles.

The Project Manager is ultimately responsible for the investment, or
project's, success and ensuring the investment, or project, delivers the
functionality and capabilities expected by stakeholders (e.g., users,
customers, and senior leaders.) Perhaps the greatest project management
challenge is the development of a realistic risk-adjusted plan that can
be executed successfully in scope, on schedule and within budget.

HHS's project management (PM) practice and competency policies are based
on the ANSI/PMI/99-001-2004 standard Project Management body of
Knowledge (PMBOK®) and the Office of Management and Budget (OMB)-Federal
Chief Information Officers Councils (OCIO) guidance on information
technology (IT) project management. The PMBOK describes and recognizes
nine management areas that are generally accepted as PM professional
practices. Listed below are the nine management (knowledge) areas:

1.  Integration Management

2.  Scope Management

3.  Time Management

4.  Cost Management

5.  Quality Management

6.  Human Resource Management

7.  Communication Management

8.  Risk Management

9.  Procurement Management

When optimized, the CPIC and Project Management processes come together
as described in the following section titled; Relationship of Project
Management to Investment Management.

## F.1 Relationship of Project Management to Investment Management

![](media/image3.wmf){width="6.288194444444445in"
height="4.729861111111111in"}

**Diagram F. 1 Project Management & CPIC**

## F.2 Components

Management (business sponsors and investment managers) should complete
the following project management components to help ensure the
investment's successful completion:

**Project Plan:**

A Project Plan is a document that describes the technical and management
approach to carrying out a defined scope of work, including the project
organization, resources, methods, and procedures and the project
schedule. This document, and event, should follow PMBOK Guidance and
should include the nine project management areas sub-plans that include
their respective execution controls and change control management (CCM)
procedures. The nine sub-plans include:

1.  **Integration Management Plan**, including integrated change control

2.  **Scope Management Plan**, including the scope definition

3.  **Time Management Plan**, including the project schedule baseline

4.  **Cost Management Plan**, including the cost baseline

5.  **Quality Management Plan**, including the quality monitoring and
    control

6.  **Human Resource Management Plan**, including responsibility matrix

7.  **Communication Management Plan**, including performance reporting

8.  **Risk Management Plan**, including the risk adjusted plan

9.  **Procurement Management Plan**, including solicitation, selection
    and contract administration

> The Investment Manager is responsible for developing a project plan.
> The project plan should meet the following requirements:

-   The planning process should be a defined part of the CPIC/PM process
    sequence, (see diagram E.1 in previous section)

-   The project plan's acceptance should be under the OPDIV or HHS
    ITIRB's authority and OPDIV or HHS ITIRB responsibility, as
    appropriate.

-   The project plan's review of adherence to standards should be by the
    project review process within the CPIC process, organized and
    supported by the HHS and OPDIV OCIOs.

-   The project plan should be an acceptance prerequisite to the OMB's
    developmental phase start (see diagram E.1 in previous section)

-   Project plan changes, corrective action plans, and re-baselining, if
    applicable, should conform to HHS's CPIC policies and guidance.

-   Project plan changes, corrective action plans, and re-baselining, if
    applicable, should result in changes (updates) to the Business Case
    (see diagram E.1 in previous section.)

**Project Plan - Work Breakdown Structure (WBS)**

Project planning may occur at the Investment level or for the
sub-components of investments, which may, of themselves, comprise
projects. For purposes of this section, project refers to an investment
or a sub-component of an investment that requires the discipline of
project management.

Investments typically involve multiple components that may be complex or
interface with other proposed or existing systems or data. Integrating
these components is very challenging. To support improved integration
and management, it is useful to develop a Work Breakdown Structure for
project planning. A Work Breakdown Structure (WBS) is an organized
method to break down a project into logical subdivisions or subprojects
at lower and lower levels of details. It is very useful in organizing a
project.

A WBS provides a management framework by separating the investment
lifecycle into distinct, manageable components related to various phases
or stages of activities and interfaces. Each component is defined with
appropriate sub-components and activities, such that one individual or
team can implement each component. This enables the Project Manager to
more effectively estimate the cost and schedule for completing
individual components. It also supports sequencing activities and
identifying interdependencies, and it provides a basis to identify
milestones and tasks as part of the investment's or project's specific
WBS.

**Table F-1**---WBS Example

  ----------- -----------------------------------------------------------
  **Plan      
  Project**   

  100         Define Project

  10          Determine Project Objectives

  20          Define Project Scope

  30          List Project Products

  40          Determine Project Constraints

  50          Select Project Approach

  60          Determine Project Standards

  70          Assess Project Risks

  200         Make Project Plan

  10          Define Work Breakdown Structure for the investment or
              project

  20          Determine Activity Dependencies

  30          Define Project Milestones

  40          Determine Project Organization

  50          Estimate Effort

  60          Allocate Resources

  70          Schedule Activities

  80          Develop Budget

  90          Assess Project Risks

  300         Obtain Project Approval

  10          Assemble Project Plan

  20          Present Project Plan

  30          Agree to Project Plan
  ----------- -----------------------------------------------------------

**Table F-1** Example of a Project Planning WBS Activities during the
Select Phase

**Scope Management**---The scope frames what is expected of the
investment's ultimate capability and functionality, it directly impacts
functional and system requirements development. The Investment Manager
should obtain the Business Sponsor's concurrence on the investment's
scope, and then effectively manage that scope and mitigate scope creep.
This can be accomplished by maintaining requirements traceability
throughout the project lifecycle and implementing configuration
management procedures. It is important for the Business Sponsor to
determine whether existing requirements have been redefined, new
requirements have been identified, or existing requirements eliminated
based upon events.

The project scope should be based on the business requirements
identified during the Pre-Select Phase and traced throughout the project
lifecycle. All system features, functions, and capabilities should be
linked to original customer requirements throughout the entire planning,
acquisition, design and implementation phases to ensure accurate system
or network design.

**Risk**---Risk is inherent in every investment. To aid in effectively
identifying, analyzing, developing responses, and managing risk,
Investment Managers should develop a risk management plan early in the
planning stages, ideally during the Select Phase. Investment Managers
should employ subject matter experts (SMEs) among the various functional
areas of the investment to identify risk and provide mitigation
strategy. Key risk areas may include technology, cost, schedule, and
performance or quality. The risk management plan is continually updated
throughout the investment's lifecycle and is part of periodic reviews.

Appendix D: Risk Management provides additional guidance on risk
assessment and management.).

**Cost and Schedule Management**---Effective investment management
entails establishing cost and schedule baselines. Actual information is
collected, analyzed, and compared to original projections and the
current baseline. Variances are identified, and appropriate actions are
taken to inform senior management and mitigate the impacts of increased
costs and schedule slippages. The WBS, milestones, activities, and
project plan assist the development and tracking of cost and schedule.
Earned value techniques provide a means to more completely evaluate
costs and schedule, and assist in early risk identification.

**Performance**---An investment's ultimate objective is to meet or
exceed stakeholder performance expectations by ensuring the investment
satisfies the mission need and business requirements. In the Pre-Select
and Select Phases, performance planning includes defining performance
measures and identifying activities required to ensure performance
objectives will be met (see Appendix E: Performance Measurement). This
may include benchmarking to establish a baseline and to further refine
the investment's performance objectives. The Control Phase includes a
continual monitoring of the performance baseline to potentially include
quality reviews, tests, or pilot tests. In the Evaluate Phase, a PIR
helps compare actual investment performance with expectations,
performance measures are analyzed to determine whether investments are
continuing to meet mission needs and performance expectations.

**Organizational Management**---Organizational management skills needed
to manage an investment include project staffing, communications, and
organizational understanding. Investment Managers should be able to
identify the needed skill sets and assign appropriate personnel to
accomplish a given set of activities. Investment Managers should also
have the requisite interpersonal and leadership skills to communicate
with the project team, Business Sponsor, and stakeholders. This includes
possessing a vision for the investment and how to best meet stakeholder
expectations, as well as ensuring the project team is able to focus on
assigned tasks or activities. Additionally, Investment Managers should
be able to communicate and build consensus with key stakeholders, since
this ultimately impacts the investment's success or failure.

# Appendix G: Earned Value Management

## G.1 Purpose

Earned Value Management (EVM) is a program management technique
developed at the Department of Defense that uses an investment's past
performance and work to evaluate and forecast the investment's future
performance. This enables the Investment Manager to make changes that
keep the investment at or bring the investment closer to planned
expectations.

HHS requires EVM for all IT investments. The requirement is established
in the HHS Earned Value Management Policy. Earned value analysis is part
of a performance based management system required by OMB for all IT
investments. Earned Value analysis is built into the business case
template. Earned value management may be applied at the Investment level
or applied to sub-components of the investment that require the
application of project management principles, included earned value
management principles. For purposes of this section, IT investment
refers to both a single IT investment and to sub-components of
investments.

The Investment Manager plans work breakdown structure (WBS) tasks and
builds budget estimates for each task in the project plan. As the plan
is executed, the Investment Manager tracks actual progress and
expenditures at the completion of each WBS against planned figures to
obtain cost and schedule variances. These variances can then be used to
identify schedule and cost-over or under-runs so they can be resolved as
quickly as possible. For the purpose of this section, Investment Manager
applies to the project manager responsible for managing an investment
and to project managers of sub-component of investments.

The earned value methodology requires an investment to be fully defined
at the outset. The information that is required to complete an earned
value analysis includes:

-   List of all WBS tasks and critical milestones

-   Planned cost of each WBS task

-   Planned WBS start and completion dates

-   Total budget for the investment

-   Any project reserve.

As the project plan is executed, the Investment Manager tracks:

-   Work (WBS tasks) completed

-   Value of the completed work

-   The actual cost of the work performed.

Earned Value analysis is based on the budgeted cost of work performed
(BCWP), the budgeted cost work scheduled (BCWS) and the actual cost of
work performed (ACWP). These three parameters provide the Investment
Manager, Business Sponsor, and others with all the input data required
to assess project cost, scope, schedule, and performance.

The approach can provide accurate and reliable assessments from as early
as 15 percent into the investment's lifecycle. It provides early
indications of cost and schedule variances, which help investment
managers, take appropriate risk mitigation steps. Typically, investments
that are over-budget and cost variance percentage, when 15 percent of
the investment is finished, will result in cost overruns. Once a cost
overrun is identified, it can generally be reduced by only 10 percent,
which indicates the need to support early awareness of potential cost
and schedule risks. Early investment assessment and identification of
cost and schedule variances is critical for the overall success of the
investment, and supports improved cost and schedule control.

When calculating Earned Value, the following perspective should be
considered:

-   Government Activities

-   Second and Third Party Agreements; contacts, inter-organization
    agreements.

Components of Government expenditures include:

-   Labor (like staff time)

-   Equipment

-   Materials

-   Facilities (like office space)

-   Activities (like travel)

Second and Third Party agreements are based on (contract) terms
including:

-   A "firm-fixed" contract, tracking specified deliverables
    expenditures by planned verse actual delivery schedules (dates).

-   A "time and materials" contract, tracking expenditures (as with the
    government):

```{=html}
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```
-   Labor

-   Equipment

-   Materials

-   Facilities

-   Activities

## G.2 Process

Before completing earned value analysis, the Investment Manager needs to
complete the following project management tasks:

-   Define investment activities

-   Develop a project plan for the activities

-   Develop a WBS, including costs and schedule estimates, for each
    activity

-   Chart and evaluate the investment's status.

The Investment Manager will then have the basis for periodically
assessing the investment's performance and completing the following four
steps in the earned value analysis process:

##### 1. Update the Schedule

The scheduled activities are reported as started, completed, or with a
remaining duration as appropriate. For unfinished activities, the
percent complete is reported. For work that results in discrete or
concrete deliverable products (e.g., reports, studies, briefings, etc.),
it generally is easy to determine the percent complete. For efforts that
are not so easily measured, special "earning rules" may be employed. A
common "earning rule" is to report percent complete according to
completed milestones within an activity. There also many other Earned
Value Management techniques for accessing completed work (e.g., 50-50
rule)

##### 2. Record Actual Costs

After updating the schedule, actual costs from the investment's or
organization's accounting system are recorded. In situations where the
accounting system does not provide the level of detail required to
obtain actual accounting costs, the Investment Manager may need to
estimate what percentage of actual costs should be assigned to the
investment, but this should only be done when actual costs are not
readily available.

##### 3. Calculate Earned Value Measures

After recording actual costs for the reporting period, earned value
measures are calculated and reports generated. This can be done, in
part, by creating an earned value chart as shown below.

**Figure H-1---Sample Earned Value Analysis Chart** (This can be
accomplished using a standard project management or spreadsheet
software's charting functionality or through an EVM tool.)

![](media/image4.png){width="5.9631944444444445in"
height="4.178472222222222in"}

**Figure G-1.** Sample Earned Value Analysis Chart

The sample chart includes the following earned value measures:

**Actual Cost of Work Performed (ACWP)---**The sum of costs actually
incurred and recorded in accomplishing the work performed through the
data date.

**Budget at Completion (BAC)---**The sum of all planned budgets
established for the investment.

**Budgeted Cost for Work Performed (BCWP)---**The sum of the budgets for
completed work packages and completed portions of open work packages,
plus the applicable portion, usually a percentage, of the budgets for
level of effort and apportioned effort as of the data date, this is also
called the "earned value."

**Budgeted Cost of Work Scheduled (BCWS)---**The sum of all WBS element
budgets that were planned or scheduled for completion as of the data
date.

**Contract Budget Base (CBB)---**The total cost of all budgeted
activities necessary to complete a task.

**Cost Performance Index (CPI)---**Earned value divided by the actual
cost (BCWP divided by ACWP).

**Cost Variance (CV)---**Earned value minus the actual cost of work
performed (BCWP minus ACWP).

**Cost Variance Percentage (CV percentage)---**Cost variance divided by
earned value (CV divided by BCWP).

**Estimate at Completion (EAC)---**The actual costs incurred, plus the
estimated costs for completing the remaining work (BAC divided by CPI).

**Estimate to Complete (ETC)---**The budget necessary to complete all
tasks from the ACWP end date through the investment's conclusion (EAC
minus ACWP).

**Management Reserve (MR)---**The amount of the total allocated budget
withheld for management control purposes rather than designated for the
accomplishment of a specific task or set of tasks; not part of the
performance measurement.

**Performance Measurement Baseline (PMB)---**The time-phased budget plan
against which investment performance is measured.

**Schedule Performance Index (SPI)---**Earned value divided by the
planned budget for the completed work (BCWP divided by BCWS).

**Schedule Variance (SV)---**Earned value minus the planned budget for
the completed work (BCWP minus BCWS).

**Schedule Variance Percentage (SV percentage)---**Scheduled variance
divided by the planned budget for the completed work (CV divided by
BCWS).

**Variance at Completion (VAC)---**The difference between the total
budget assigned to a contract, WBS element, organizational entity, or
cost account and the estimate at completion; represents the amount of
expected overrun or under run.

##### 4. Analyze the Data and Report Results

The critical path milestones used to complete the earned value analysis
are directly derived from the project plan. These are the milestones
that require completion before a successive milestone can begin. The
data is collected and monitored for each milestone throughout the
project to achieve maximum effectiveness.

# Appendix H: Post-Implementation Reviews

## H.1 Purpose

Post-Implementation Reviews (PIRs) support the Evaluation Phase of the
process (see **Chapter 7---Evaluate Phase Post Implementation
Reviews**). PIRs help determine whether investments have achieved
expected benefits, such as lowered cost, reduced cycle time, increased
quality, or increased speed of service delivery.

The PIR has a dual focus:

It provides an assessment of the implemented investment, including an
evaluation of the development process.

It indicates the extent to which the HHS's decision-making processes are
sustaining or improving the success rate of IT investments.

The PIR usually occurs either after a system has been in operation for
about six months or immediately following investment termination.

In order to ensure independent validation and verification, a team of
independent reviewers or other selected individuals (as appropriate)
should conduct the PIR. The team [should not include members from the
investment under review]{.underline}. The PIR team should review the
following investment elements:

-   Mission alignment

-   IT architecture including security and internal controls

-   Performance measures

-   Project management

-   Customer acceptance

-   Business process support

-   Cost versus anticipated savings.

As a minimum, the PIR team will evaluate stakeholder and customer or
user satisfaction with the end product, mission or program impact, and
technical capability, as well as provide decision-makers with lessons
learned so they can improve investment decision-making processes.

The review will provide a baseline to decide whether to continue the
system without adjustment, to modify the system to improve performance
or, if necessary, to consider alternatives to the implemented system.
Even with the best system development process, it is quite possible that
a new system will have problems or even major flaws that must be
rectified to obtain full investment benefits. The PIR should provide
decision-makers with useful information on how best to modify a system,
or to work around the flaws in a system, to improve performance and
bring the system further in alignment with the identified business
needs.

## H.2 Process

There are seven major steps to conducting a PIR:

##### 1. Initiate PIR

The OCIO and the investment sponsor select the PIR review team. The
review team initiates a PIR by preparing and sending a memorandum to the
Investment Manager stating the review has begun. The memorandum should
include a schedule for the planned review and indicate any areas that
may receive special review emphasis.

##### 2. Analyze Documentation

The review team reviews existing investment documentation and analyzes
the information to understand the investment scope, generate interview
and survey questions, prepare for system overview briefings, and plan
the PIR. The review team also reviews any existing reports and memoranda
from the Pre-Select, Select, and Control Phases to uncover any findings
or outstanding issues.

##### 3. Interview Key Players

The review team interviews all key IT and business process players. The
interviews should help the team develop an understanding of the system's
goals, objectives, benefits, and costs as described in the Exhibit 300
or 300-1 business case submitted during the Select Phase. Additionally,
the interviews will help the team determine how efficiently and
effectively the system's objectives, goals, performance measures, and
benefits are being achieved, as well as identify system deficiencies and
enhancement needs.

##### 4. Measure Performance

The review team assesses the investment performance measures established
during the Select Phase. These performance measures are compared to
actual data generated during the operations and or production stage. In
the absence of certain statistics, the review team may perform onsite
observations to measure specific criteria.

##### 5. Perform User Surveys

The review team conducts qualitative surveys with users to determine
user satisfaction with the system. Executing the survey may include
designing questionnaires, distributing survey questionnaires to remote
users' locations, receiving responses, analyzing results, and generating
a survey results memorandum. The survey measures the system's efficiency
and effective­ness in achieving its stated goals and benefits and in
satisfying user needs.

If users are external to HHS we need approval from OMB prior to sending
them a questionnaire.

##### 6. Perform Analysis

The review team analyzes all documentation, survey results, and
performance measurements to determine if the system efficiently and
effectively achieved its objectives.

##### 7. Findings and Recommendation Report

After comments are received from the Business Sponsor, the review team
prepares the Final Report and submits it for the OPDIV CIO and OPDIV
ITIRB review. Report findings and recommendations must be clear and
concise to avoid any misunderstandings.

##### 8. Final Decision

The CIO, investment manager and Department sponsor determine the
appropriate course of action to resolve any outstanding issues.
Decisions will also be made whether to continue the system without
adjustment, modify, or terminate, based on the PIR recommendations.

## H.3 Sample Initiative Evaluation Sheet

  -------------------- -------------- -------------- -------------- --------------
  **SAMPLE INITIATIVE                                               
  EVALUATION SHEET**                                                

  General information                                               

  Title:                                                            

  Description:                                                      

  Business Sponsor:                                                 

  UPI:                                                              

  PIR Conducted By:                                                 

  Date of PIR:                                                      

  Performance Measures                                              

  Item                 Baseline       Actual         Variance       Comments

  Quantitative                                                      

  Financial                                                         

  Non-Financial                                                     

  Baseline Status                                                   

  Item                 Baseline       Actual         Variance       Comments

  Lifecycle Cost                                                    

  Lifecycle Return                                                  

  Schedule                                                          

  Enterprise                                                        
  Architectural                                                     
  Analysis                                                          

  Enterprise                                                        
  Architectural                                                     
  Assessment                                                        

  IT Accessibility                                                  
  Analysis                                                          

  IT Accessibility                                                  
  Assessment                                                        

  Telecommunications                                                
  Analysis                                                          

  Telecommunications                                                
  Assessment                                                        

  Risk Analysis                                                     

  Risk Management                                                   

  Security Analysis                                                 

  System security risk                                              
  management or                                                     
  mitigation review.                                                
  Additional                                                        
  mitigation                                                        
  strategies and                                                    
  counter measures (if                                              
  needed).                                                          

  Stakeholder                                                       
  Assessment                                                        

  General Comments                                                  

  Lessons Learned                                                   

  Project Management                                                
  Assessment                                                        

  Technical Assessment                                              
  -------------------- -------------- -------------- -------------- --------------

**Table H-1 IT Initiative Evaluation Data Sheet**

## H.4 Investment Management Report

  -----------------------------------------------------------------------
  **INVESTMENT MANAGEMENT REPORT**

  Name of Investment:

  Business Sponsor:

  Date of PIR:

  Background (Description of Project)

  Management Approach

  Organizational Structure

  Resources

  Acquisition Strategy

  Contracting Strategy

  Security Strategy

  Documentation

  Technical Approach

  Architecture (description, adherence to ISTA, and IT accessibility
  requirements, security, telecommunications, and architecture standards)

  Development (if applicable)

  Testing

  Lessons Learned

  List of lessons learned

  Recommended best practices
  -----------------------------------------------------------------------

**Table H-2 IT Investment Management Report Data Sheet**

## H.5 IT Initiative Evaluation Data Sheet

  ---------------- --------------- ------------ ----------- ---------------- ------------ ------------- -------------- ----------
                   **Initiative    **Screen**   **Score**   **Pre-Select**   **Select**   **Control**   **Evaluate**   **Steady
                   Development**                                                                                       State**

  Was each phase                                                                                                       
  conducted at the                                                                                                     
  appropriate time                                                                                                     
  in the process?                                                                                                      

  Was the data                                                                                                         
  content                                                                                                              
  sufficient to                                                                                                        
  move forward to                                                                                                      
  the next phase                                                                                                       
  in the process?                                                                                                      

  Were there                                                                                                           
  enough resources                                                                                                     
  (e.g., people)                                                                                                       
  allocated for                                                                                                        
  each phase in                                                                                                        
  the process?                                                                                                         

  Were the right                                                                                                       
  types of people                                                                                                      
  and expertise                                                                                                        
  involved?                                                                                                            

  Was there an                                                                                                         
  acceptable level                                                                                                     
  of information                                                                                                       
  flow?                                                                                                                

  Was HHS PMT able                                                                                                     
  to support the                                                                                                       
  activity in each                                                                                                     
  phase in the                                                                                                         
  process?                                                                                                             

  List suggested                                                                                                       
  corrective                                                                                                           
  actions for any                                                                                                      
  phase in the                                                                                                         
  process.                                                                                                             

  Comments:                                                                                                            
  ---------------- --------------- ------------ ----------- ---------------- ------------ ------------- -------------- ----------

**Table H-3** IT Initiative Evaluation Data Sheet

# Appendix I: Operational Analysis

## I.1 Purpose

This document provides guidance for conducting an Operational Analysis
review for Information Technology (IT) investments. OMB requires that
all Steady State projects must be reviewed at least annually to document
the continued effectiveness in supporting mission requirements and
minimize the cost of asset ownership. ( The cost of asset ownership is
defined as the total of all costs incurred by the owners and users to
obtain the benefits of a given project or investment.) The intent, in
part, is to reduce the number of stove-piped legacy systems that are
expensive to maintain. Operational Analysis results are reported to OMB
each year in the Exhibit 300\'s Project (Investment) and Funding Plan
section. A investment manager may choose to perform an Operational
Analysis more frequently.

The annual Operational Analysis is a key practice within the Government
Accountability Office\'s (GAO) Information Technology Investment
Manage­ment (ITIM) Stage 2 maturity model.

Using verifiable data, each investment board must regularly review the
performance of IT projects and systems against stated expectations.
Investment boards use of the Steady State project\'s Operational
Analysis support ITIM Stage 2.

## I.2 Management Objectives

Ownership costs such as: operations, maintenance, service contracts, and
disposition, can easily consume as much as 80% of the total life-cycle
costs. Operations are a critical area where improved effectiveness and
productivity can have the greatest net measurable benefit in cost,
performance, and mission accomplishment.

The Operational Analysis formally assesses how well an investment is
meeting program objectives, customer needs, and is performing within
baseline cost, schedule, and performance goals. The results may signal
to management the need to redesign an asset if undetected faults in the
design, construction, or installation are discovered during the course
of operations. Two examples may be: if Operation and Maintenance (O&M)
costs are higher than anticipated; or, if the asset fails to meet
program requirements.

## I.3 Roles and Responsibilities

**Business Sponsor or System Owner:** Coordinates with the Investment
Manager to schedule the Operational Analysis and provides guidance to
the Investment Manager.

**Investment Manager:** Prepares the Operational Analysis.

**OCIO:** Receives and analyzes the Operational Analysis report.

**IT Investment Review Board:** Reviews the Operational Analysis report
and makes recommendations for disposition of the investment.

## I.4 Process

The Business Sponsor must establish a schedule (annually, semi-annual or
quarterly) to conduct an operational analysis. The Business Sponsor must
establish a strategy to solicit user or customer input. This strategy
can be a survey, focus groups or regular user group meetings. The
Business Sponsor must document the schedule and strategy, and notify all
users or customers of this formal and regular schedule.

Based on projected project or investment costs and benefits (e.g., cost,
schedule and performance), the survey, focus group or regular user group
results will determine whether the Steady State project is meeting its
original or revised objectives. The results are documented in the
Operational Analysis template.

Enhancements outside of the existing project scope are considered a new
investment. To fund an enhancement, the Business Sponsor must enter the
Pre-Select CPIC processes where alternatives to close the gap are
identified, and their costs and benefits estimated.

The general OA methodology is summarized below and the actions
documented in the Operational Analysis Template.

![](media/image5.wmf){width="5.000694444444444in"
height="4.102777777777778in"}**Step 1: Perform Mission Analysis.**
Describe how the investment supports the OPDIV \'s and the Departments
Mission, Goals, and Objectives. Establish the level of functionality and
performance provided by the existing investment.

Describe also how the investment supports the **HHS E-Government
Implementation Plan.**

**Step 2: Perform Customer Assessment.** Establish a strategy to
document customer or user requirements. Periodic surveys, focus groups,
or user group meetings are often assessed. Also examine usage trends,
system reports, and change order requests -- these can give insight into
emerging requirements. Summarize and categorize the information into
either performance needs or new functional requirements.

**Step 3: Perform Gap Analysis.** Report Performance and Earned Value
variances based on information provided in the HHS PMT. Based on the
Customer and User Requirements, Performance and Earned Value Variance
analyses, discuss the root cause of any gap. Identify what, if any
additional functionality or performance is required.

The following table summarizes example topics for consideration:

  ----------------------------------- -----------------------------------
  **Cause of Gap or Problem**         **Required Functionality or
                                      Performance**

  Limited interoperability within     Scalable platform to support EA
  OPDIV , Department or Federal       compliant IT infrastructure
  Government                          

  Non-compliance with EA              System consistent with EA

  Poor data sharing and data          Enterprise-based interoperable
  integrity                           systems with shared data standards,
                                      descriptions, and relationships

  Poor reliability                    Modernized workstations and
                                      frequent technology refresh to
                                      maximize system reliability

  Cannot meet growing demand or       Increased capacity to meet
  transaction volume                  processing, service, and mission
                                      demands

  Inadequate information and computer Enterprise-based security
  security                            authentication and or control, and
                                      strengthened IT and information
                                      security

  Poor customer service               Electronic application submission
                                      and processing to improve customer
                                      service

  Technical architecture not scalable Fewer operational disruptions,
                                      reduced O&M costs

  Limited legislative and regulatory  Meets Congressional mandates and
  compliance                          GAO oversight concerns
  ----------------------------------- -----------------------------------

**Step 4: Perform Operational Assessment.** Identify solutions that can
provide the needed functionality or performance. This may include
designing new processes, implementing technologies compliant with the
Department\'s Enterprise Architecture, or collaborating with other
initiatives within the federal government. The system may have been
targeted for replacement by our modernization blueprinting efforts.

Recommend if the existing system should be a) continued with no
additional investment, b) enhanced, or c) terminated d) migrated to a
similar system and retired.

<table style="width:100%;">
<colgroup>
<col style="width: 8%" />
<col style="width: 0%" />
<col style="width: 13%" />
<col style="width: 2%" />
<col style="width: 8%" />
<col style="width: 6%" />
<col style="width: 1%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 7%" />
<col style="width: 4%" />
<col style="width: 12%" />
<col style="width: 4%" />
<col style="width: 13%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="14"><p><strong>OPERATIONAL REVIEW TEMPLATE</strong></p>
<p><strong>Example</strong></p></td>
</tr>
<tr class="even">
<td colspan="14"><strong>1. Administrative Information</strong></td>
</tr>
<tr class="odd">
<td colspan="6">Investment Title</td>
<td colspan="8"></td>
</tr>
<tr class="even">
<td colspan="6">Office</td>
<td colspan="8"></td>
</tr>
<tr class="odd">
<td colspan="6">Date of Operational Analysis</td>
<td colspan="8"></td>
</tr>
<tr class="even">
<td colspan="6">System Manager</td>
<td colspan="8"></td>
</tr>
<tr class="odd">
<td colspan="6">System Owner</td>
<td colspan="8"></td>
</tr>
<tr class="even">
<td colspan="6">Submission Date</td>
<td colspan="8"></td>
</tr>
<tr class="odd">
<td colspan="6">Revision Number</td>
<td colspan="8"></td>
</tr>
<tr class="even">
<td colspan="6">Revision Date</td>
<td colspan="8"></td>
</tr>
<tr class="odd">
<td colspan="6">System Owner Signature &amp; Date</td>
<td colspan="8"></td>
</tr>
<tr class="even">
<td colspan="14"><p><strong>2. Project Description</strong></p>
<p>Provide a brief summary describing the asset and a description of the
business processes that the investment supports.</p></td>
</tr>
<tr class="odd">
<td colspan="14"></td>
</tr>
<tr class="even">
<td colspan="14"><strong>3. Mission Analysis</strong></td>
</tr>
<tr class="odd">
<td colspan="14"><strong>3. a.</strong> For each OPDIV and Departmental
mission or strategic goal that the investment supports, explain how the
investment is continuing to meet OPDIV and Department mission or
strategic goals.</td>
</tr>
<tr class="even">
<td colspan="14"></td>
</tr>
<tr class="odd">
<td colspan="14"><strong>3. b.</strong> Describe how the project
supports the Department’s E-Government Strategy.</td>
</tr>
<tr class="even">
<td colspan="14"></td>
</tr>
<tr class="odd">
<td colspan="14"><p><strong>4. User or Customer Assessment</strong></p>
<p>Briefly describe the investment's users and the process (e.g.,
surveys, user group meetings, customer focus groups, etc.) used to
assess user or customer satisfaction. Summarize the results of surveys
or other user or customer inputs, and usage trends. Is the existing
system providing customers the needed functionality and
performance?</p></td>
</tr>
<tr class="even">
<td colspan="14"></td>
</tr>
<tr class="odd">
<td colspan="14"><p><strong>5. Gap Analysis</strong></p>
<p>Identify the need for additional functionality and performance.
Examine gaps in supporting the OPDIV and Department’s Mission and
Strategic Goals, Technical Performance as measured by Earned Value, and
results from the User or Customer Survey.</p></td>
</tr>
<tr class="even">
<td colspan="14"><p><strong>a. Performance Variance</strong></p>
<p>For the prior and current fiscal year, provide the Performance Goals
and Measures table(s) with prior year actual results and current year
interim results, if known. Complete Tables 1 and or Table 2 below. If
the project collects, manages or reports to other performance goals and
measures, add rows to record those goals and measures.</p></td>
</tr>
<tr class="odd">
<td colspan="14"><strong>Table 1</strong></td>
</tr>
<tr class="even">
<td><strong>Fiscal Year</strong></td>
<td colspan="2"><strong>Strategic Goal(s) Supported</strong></td>
<td colspan="2"><strong>Existing Baseline</strong></td>
<td colspan="3"><strong>Planned Performance Improvement
Goal</strong></td>
<td colspan="2"><strong>Actual Performance Improvement
Results</strong></td>
<td colspan="2"><strong>Planned Performance Metric</strong></td>
<td colspan="2"><strong>Actual Performance Metric Results</strong></td>
</tr>
<tr class="odd">
<td><strong>2004</strong></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
</tr>
<tr class="even">
<td><strong>2004</strong></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
</tr>
<tr class="odd">
<td><strong>2005</strong></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
</tr>
<tr class="even">
<td><strong>2005</strong></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
</tr>
<tr class="odd">
<td colspan="14"><strong>Table 2</strong></td>
</tr>
<tr class="even">
<td colspan="2"><strong>Fiscal Year</strong></td>
<td colspan="2"><strong>Measurement Area</strong></td>
<td colspan="3"><strong>Measurement Category</strong></td>
<td colspan="2"><strong>Measurement Indicator</strong></td>
<td colspan="2"><strong>Baseline</strong></td>
<td colspan="2"><strong>Planned Improvements to the
Baseline</strong></td>
<td><strong>Actual Results</strong></td>
</tr>
<tr class="odd">
<td colspan="2"><strong>2004</strong></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td colspan="2"><strong>2004</strong></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="2"><strong>2004</strong></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td colspan="2"><strong>2004</strong></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="2"><strong>2005</strong></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td colspan="2"><strong>2005</strong></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="2"><strong>2005</strong></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td colspan="2"><strong>2005</strong></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="14"><p><strong>b. User or Customer Analysis</strong></p>
<p>Based on your user or customer inputs, is actual performance
consistent with user or customer expectations, or do the current
performance goals reflect current user or customer functional or
performance requirements? Has the investment exceeded expectations, and
the performance measures need to be re-baselined? Discuss how your
project addresses the following operational indicators:</p>
<blockquote>
<p>1) efficiency</p>
<p>2) effectiveness</p>
<p>3) maintainability</p>
<p>4) productivity</p>
<p>5) security</p>
<p>6) availability</p>
<p>7) reliability</p>
<p>8) energy usage</p>
</blockquote></td>
</tr>
</tbody>
</table>

<table>
<colgroup>
<col style="width: 19%" />
<col style="width: 8%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 3%" />
<col style="width: 6%" />
<col style="width: 10%" />
<col style="width: 6%" />
<col style="width: 5%" />
<col style="width: 10%" />
<col style="width: 9%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="11"></td>
</tr>
<tr class="even">
<td colspan="11"><blockquote>
<p><strong>c. Earned Value Analysis</strong></p>
</blockquote></td>
</tr>
<tr class="odd">
<td></td>
<td colspan="6"><strong>OMB-Approved Baseline</strong></td>
<td colspan="4"><strong>Actual Outcome</strong></td>
</tr>
<tr class="even">
<td rowspan="2"><strong>Description of Milestone</strong></td>
<td colspan="3"><strong>Schedule</strong></td>
<td colspan="2" rowspan="2"><strong>Planned Cost</strong></td>
<td rowspan="2"><strong>Funding Agency</strong></td>
<td colspan="2"><strong>Schedule</strong></td>
<td rowspan="2"><strong>Percent Complete</strong></td>
<td rowspan="2"><strong>Actual Cost</strong></td>
</tr>
<tr class="odd">
<td><strong>Start Date</strong></td>
<td><strong>End Date</strong></td>
<td><strong>Duration (in days)</strong></td>
<td><strong>Start Date</strong></td>
<td><strong>End Date</strong></td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="7">Completion date: OMB-approved baseline:</td>
<td colspan="4">Estimated completion date:</td>
</tr>
<tr class="even">
<td colspan="7">Total cost: OMB-approved baseline:</td>
<td colspan="4">Estimate at completion:</td>
</tr>
<tr class="odd">
<td colspan="11"><p><strong>Earned Value Variance</strong></p>
<p>Provide the following cumulative earned value data.</p></td>
</tr>
<tr class="even">
<td colspan="5">Cost Variance = (BCWP-ACWP) =</td>
<td colspan="6"></td>
</tr>
<tr class="odd">
<td colspan="5">Cost Variance % = (CV/BCWP) x 100% =</td>
<td colspan="6"></td>
</tr>
<tr class="even">
<td colspan="5">Schedule Variance = (BCWP-BCWS) =</td>
<td colspan="6"></td>
</tr>
<tr class="odd">
<td colspan="5">Schedule Variance % = (SV/BCWS) x 100% =</td>
<td colspan="6"></td>
</tr>
<tr class="even">
<td colspan="11"><p><strong>c.1. Earned Value Variance
Analysis</strong></p>
<p>If cost or schedule variances are a negative 5% or more, explain the
reason for the variance. Discuss the actions that will be taken to
correct the variances, the risk associated with the actions, and how
close the planned actions will bring the investment to the original
baseline.</p></td>
</tr>
<tr class="odd">
<td colspan="11"></td>
</tr>
<tr class="even">
<td colspan="11"><p><strong>c.2. Technical Performance Variance
Analysis</strong></p>
<p>If the performance variances are a negative 5% or more, explain the
reason for the variance. Discuss the actions that will be taken to
correct the variances, the risk associated with the actions, and how
close the planned actions will bring the investment to the original
planned improvement.</p></td>
</tr>
<tr class="odd">
<td colspan="11"></td>
</tr>
</tbody>
</table>

+-----------------------------------------------------------------------+
| **d. Gap Analyses**                                                   |
|                                                                       |
| Based on the Customer and User Requirements, Performance Analysis,    |
| and Earned Value Variance analyses, discuss the root cause of a gap,  |
| and what, if any, additional functionality or performance is          |
| required.                                                             |
+-----------------------------------------------------------------------+
|                                                                       |
+-----------------------------------------------------------------------+
| **6. Operational Assessment**                                         |
+-----------------------------------------------------------------------+
| **a. Opportunities**                                                  |
|                                                                       |
| Based on the Gap Analysis, identify opportunities to improve          |
| functionality, performance (effectiveness and or efficiency). These   |
| opportunities may include investing in technology compliant with the  |
| Departmental EA; business process reengineering; and or collaborating |
| with another project. Discuss whether E-Gov initiatives can be        |
| leveraged. Describe how the project could deliver services more       |
| efficiently in a web-based environment.                               |
+-----------------------------------------------------------------------+
|                                                                       |
+-----------------------------------------------------------------------+
| **b. Investment Manager Recommendations**                             |
|                                                                       |
| Justify if the existing system should continue in operation as is, be |
| enhanced, or terminated. If the system is to be enhanced or           |
| terminated, summarize the actions to be taken this fiscal year.       |
+-----------------------------------------------------------------------+
|                                                                       |
+-----------------------------------------------------------------------+
| OPDIV ITIRB Recommendation:                                           |
+-----------------------------------------------------------------------+
| HHS ITIRB Decision:                                                   |
+-----------------------------------------------------------------------+

# Appendix J: IT Investment Rating and Ranking Criteria- HHS Priority and Quality Scoring

## J.1 Purpose

To define the criteria that will be used to rate and rank the IT
investments being presented to the IT Investment Review Board (ITIRB)
and other executive management committees.

## J.2 Background

Ongoing Departmental IT portfolio management activities require
development of rating and ranking criteria to compare IT investments in
support of investment management decisions. Competition for resources
may only allow a portion of the proposed investments to be approved and
funded. In addition, a structured investment decision making process is
required by OMB. The proposed criteria will produce one standard view
for comparing major IT investments across the Department. The ITIRB
reviews and revises the rating criteria on an annual basis to ensure
that they reflect value, risk, health of the project, and quality of the
business case. The table below describes the source for each of the
criteria. Each of these categories contains a structured set of
criteria; for example, the quality category reflects the OMB business
case scoring criteria.

## J.3 Scoring Methodology

The Select Phase of the HHS Capital Planning and Investment Control
(CPIC) process includes Prioritization and Quality reviews and scoring. 
Based on information provided by OPDIV and Enterprise Initiative
investment managers via the HHS Portfolio Management Tool (PMT) and
investment reviews conducted by HHS Critical Partners and the HHS
Business Case Quality Review Team, each Major and Tactical investment
will receive (1) a priority score without risk, (2) a priority score
adjusted for risk, and (3) a quality score.  Each of the three scores is
normalized to a scale of zero to 100.

+-------------------------------------+--------------------------------+
| Category                            | Source of Rating Criteria      |
+-------------------------------------+--------------------------------+
| Priority                            | Cost, schedule, and            |
|                                     | performance variances will be  |
| Calculates a priority score based   | derived from the latest        |
| upon a consideration of investment  | quarterly or monthly reports.  |
| value and alignment with strategy.  |                                |
| Can be determined with or without   |                                |
| risk consideration.                 |                                |
+-------------------------------------+--------------------------------+
| Value                               | These criteria are defined     |
|                                     | further below in this          |
| Measures the value of the           | appendix.                      |
| investment to the Department or     |                                |
| Division.                           |                                |
+-------------------------------------+--------------------------------+
| Risk                                |                                |
|                                     |                                |
| Measures high-level risks           |                                |
| associated with the investment.     |                                |
+-------------------------------------+--------------------------------+
| Quality                             | Based on the OMB scoring       |
|                                     | criteria contained in circular |
| Measures the current quality of the | A-11. Scores will reflect the  |
| business case.                      | most current version of the    |
|                                     | business case (Exhibit 300)    |
|                                     | for each of the major and      |
|                                     | tactical investments.          |
+-------------------------------------+--------------------------------+
| Alignment                           | Based on alignment with PMA,   |
|                                     | HHS Department Strategic       |
| Measures an investment's level of   | objectives, OPDIV Strategic    |
| alignment with strategy             | objectives, etc.               |
+-------------------------------------+--------------------------------+

## J.4 Prioritization Criteria

+--------------+-------------------------------------------------------+
| **Decision   | **Scoring**                                           |
| Criteria**   |                                                       |
+==============+=======================================================+
| **Value      |                                                       |
| Factors**    |                                                       |
+--------------+-------------------------------------------------------+
| **P-1:       | The **Priority Score without Risk** is calculated     |
| Priority     | based upon:                                           |
| without      |                                                       |
| Risk**       | 1.  Alignment to Strategy                             |
|              |                                                       |
| How well     | ```{=html}                                            |
| does the     | <!-- -->                                              |
| investment   | ```                                                   |
| contribute   | 1.  Investment Value                                  |
| toward       |                                                       |
| meeting HHS  | The Priority Score without Risk is calculated for     |
| or Division  | each investment using the following formula:          |
| objectives   |                                                       |
| in terms of  | > **Priority Score w/o Risk = (Alignment + Value) x   |
| ef           | > 5.5.**                                              |
| fectiveness? |                                                       |
+--------------+-------------------------------------------------------+
| **P-1:       | The **Priority Score with Risk** is calculated based  |
| Priority     | on:                                                   |
| with Risk**  |                                                       |
|              | 1.  Alignment to Strategy                             |
| How well     |                                                       |
| does the     | ```{=html}                                            |
| investment   | <!-- -->                                              |
| contribute   | ```                                                   |
| toward       | 1.  Investment Value                                  |
| meeting HHS  |                                                       |
| or Division  | 2.  Investment Risk                                   |
| objectives   |                                                       |
| in terms of  | The Priority Score with Risk is calculated for each   |
| ef           | investment using the following formula:               |
| fectiveness? |                                                       |
|              | **Priority Score W/ Risk = (Alignment + Value) x 5.5  |
|              | x ((9/Overall Risk Score) x 11/100))**                |
+--------------+-------------------------------------------------------+
|              | **Prioritization Components**                         |
+--------------+-------------------------------------------------------+
| **C-1:       | Each investment manager rates his or her investment's |
| Alignment to | alignment to the President's Management Agenda, HHS   |
| Strategy**   | Strategic Goals, HHS IT Strategic Goals, and OPDIV    |
|              | strategic goals as:                                   |
| **(PMT Form  |                                                       |
| 1.03.03)**   | -   High = initiative's primary objective supports    |
|              |     this strategic goal,                              |
|              |                                                       |
|              | -   Medium = some of the secondary objectives support |
|              |     this strategic goal,                              |
|              |                                                       |
|              | -   Low = some aspects of the project support this    |
|              |     strategic goal, or                                |
|              |                                                       |
|              | -   Not Applicable.                                   |
|              |                                                       |
|              | The investment manager also is asked to provide the   |
|              | primary alignment at each level, but this is not used |
|              | in the scoring formula.                               |
|              |                                                       |
|              | Individual investments will be scored for each        |
|              | strategic goal using the following scale:             |
|              |                                                       |
|              |   ---------------------------------------- ---------  |
|              |   High                                     9          |
|              |                                                       |
|              |   Medium                                   6          |
|              |                                                       |
|              |   Low                                      3          |
|              |                                                       |
|              |   Not Applicable                           0          |
|              |   ---------------------------------------- ---------  |
|              |                                                       |
|              | An Alignment Score is calculated for each level (PMA, |
|              | HHS, etc.) by averaging all the answers at each       |
|              | level.  For example,                                  |
|              |                                                       |
|              | > **PMA Score = (Answer 1 + Answer 2 + Answer 3 +     |
|              | > Answer 4 + Answer 5)/5**                            |
|              |                                                       |
|              | The HHS Overall Alignment Score is calculated using a |
|              | weighted average formula and the following weights:   |
|              |                                                       |
|              | > HHS Overall Alignment Score Weights:                |
|              |                                                       |
|              |   ---------------------------------------- ---------  |
|              |   PMA                                      3          |
|              |                                                       |
|              |   HHS                                      2          |
|              |                                                       |
|              |   HHS IT                                   1          |
|              |                                                       |
|              |   OPDIV                                    2          |
|              |   ---------------------------------------- ---------  |
|              |                                                       |
|              | **Overall Alignment Score = ((PMA Score x 3) + (DHHS  |
|              | Score x 2) + (DHHS IT Score x 1) + (OPDIV Score x     |
|              | 2))/ 8**                                              |
+--------------+-------------------------------------------------------+
| **C-2:       | The Investment Value score is calculated by using a   |
| Investment   | mix of the qualitative and quantitative criteria      |
| Value (PMT   | listed below:                                         |
| Form 1.03.07 |                                                       |
| with input   | > Quantitative criteria = 5 Year Return on Investment |
| from Forms   | > (ROI)                                               |
| 1.03.04 and  | >                                                     |
| 1.03.06)**   | > \[ROI = Cumulative Net Discounted                   |
|              | > Benefits/Cumulative Net Discounted Costs\]          |
|              | >                                                     |
|              | > Each investment will receive a score from 0 to 9    |
|              | > for ROI values using the following scale:           |
|              |                                                       |
|              |   ---------------------------------------- ---------  |
|              |   \> 200%                                  9          |
|              |                                                       |
|              |   \<200% and \>150%                        7          |
|              |                                                       |
|              |   \<150% and \>100%                        5          |
|              |                                                       |
|              |   \<100% and \>50%                         3          |
|              |                                                       |
|              |   \<50% and \>0%                           2          |
|              |                                                       |
|              |   0% or Negative                           0          |
|              |   ---------------------------------------- ---------  |
|              |                                                       |
|              | > Qualitative criteria =                              |
|              |                                                       |
|              | -   Contribution to the programmatic goals            |
|              |                                                       |
|              | -   Impact of funding this investment                 |
|              |                                                       |
|              | -   Programmatic impact of not fully funding this     |
|              |     investment                                        |
|              |                                                       |
|              | > Responses to the programmatic goals contribution    |
|              | > questions will be rated using the following scale   |
|              | > and numerical values:                               |
|              |                                                       |
|              |   ---------------------------------------- ---------  |
|              |   High                                     9          |
|              |                                                       |
|              |   Medium                                   5          |
|              |                                                       |
|              |   Low                                      2          |
|              |                                                       |
|              |   Not Applicable                           0          |
|              |   ---------------------------------------- ---------  |
|              |                                                       |
|              | > Responses to the impact of funding question will be |
|              | > rated using the following scale and numerical       |
|              | > values:                                             |
|              |                                                       |
|              |   ---------------------------------------- ---------  |
|              |   Increases Budget                         2          |
|              |                                                       |
|              |   Base Neutral                             5          |
|              |                                                       |
|              |   Reduce Base                              9          |
|              |                                                       |
|              |   Not Applicable                           0          |
|              |   ---------------------------------------- ---------  |
|              |                                                       |
|              | > Responses to the impact of NOT fully funding        |
|              | > question will be rated using the following scale    |
|              | > and numerical values:                               |
|              |                                                       |
|              |   ---------------------------------------- ---------  |
|              |   Low                                      2          |
|              |                                                       |
|              |   Medium                                   5          |
|              |                                                       |
|              |   High                                     9          |
|              |                                                       |
|              |   Not Applicable                           0          |
|              |   ---------------------------------------- ---------  |
|              |                                                       |
|              | > NOTE: In this question, users should be evaluating  |
|              | > the NEGATIVE impact of not fully funding the        |
|              | > investment.                                         |
|              |                                                       |
|              | The Overall Value Score will be calculated using an   |
|              | average formula and the following weights:            |
|              |                                                       |
|              | Quantitative Benefits (ROI                            |
|              | Score)                                1               |
|              |                                                       |
|              |                                                       |
|              |                                                       |
|              |                                                       |
|              | Qualitative                                           |
|              | Benefits                                              |
|              |                                                     2 |
|              |                                                       |
|              |   -------------------------------------------- -----  |
|              |   Contribution to programmatic goals           1      |
|              |                                                       |
|              |   Impact of funding this investment            1      |
|              |                                                       |
|              |   Programmatic impact of cutting/not funding   2      |
|              |   this investment                                     |
|              |   -------------------------------------------- -----  |
|              |                                                       |
|              | >                                                     |
|              | >                                                     |
|              |                                                       |
|              | For example, an investment with:                      |
|              |                                                       |
|              | ROI Score = 3                                         |
|              |                                                       |
|              | Contribution to programmatic goals = 5                |
|              |                                                       |
|              | Impact of funding this investment = 6                 |
|              |                                                       |
|              | Programmatic impact of cutting or not funding this    |
|              | investment = 2                                        |
|              |                                                       |
|              | will have an overall value score of ((3x1) +          |
|              | ((5x1+6x1+2x2)/4)x2))/3= 3.5                          |
+--------------+-------------------------------------------------------+
| **C-3:       | For major and tactical investments, the level of risk |
| Investment   | will be determined using the standard risk questions  |
| Risk (PMT    | from OMB Circular A-11, Section 300:                  |
| Form 1.03.10 |                                                       |
| with input   | OMB risk for all projects:                            |
| from Forms   |                                                       |
| 1.03.08 and  | 1.  Schedule,                                         |
| 1.03.09)**   |                                                       |
|              | ```{=html}                                            |
|              | <!-- -->                                              |
|              | ```                                                   |
|              | 1.  Initial costs,                                    |
|              |                                                       |
|              | 2.  Life-cycle costs,                                 |
|              |                                                       |
|              | 3.  Technical obsolescence,                           |
|              |                                                       |
|              | 4.  Feasibility,                                      |
|              |                                                       |
|              | 5.  Reliability of systems,                           |
|              |                                                       |
|              | 6.  Dependencies and interoperability between this    |
|              |     investment and others,                            |
|              |                                                       |
|              | 7.  Surety (asset protection) considerations,         |
|              |                                                       |
|              | 8.  Risk of creating a monopoly for future            |
|              |     procurements,                                     |
|              |                                                       |
|              | 9.  Capability of agency to manage the investment and |
|              |                                                       |
|              | 10. Overall risk of project failure                   |
|              |                                                       |
|              | > OMB risks for IT projects:                          |
|              |                                                       |
|              | 1.  Organizational and change management,             |
|              |                                                       |
|              | 2.  Business,                                         |
|              |                                                       |
|              | 3.  Data/info,                                        |
|              |                                                       |
|              | 4.  Technology,                                       |
|              |                                                       |
|              | 5.  Strategic,                                        |
|              |                                                       |
|              | 6.  Security,                                         |
|              |                                                       |
|              | 7.  Privacy and                                       |
|              |                                                       |
|              | 8.  Project resources.                                |
|              |                                                       |
|              | Users should answer all questions and select "No      |
|              | Risk," as applicable. **Risk areas that are not       |
|              | answered or where "No Value" is selected will be      |
|              | considered as "High" risk in the average risk scores  |
|              | calculation.**                                        |
|              |                                                       |
|              | Each investment will be rated for each risk area      |
|              | using the following scale and numerical values:       |
|              |                                                       |
|              | Impact                                                |
|              |                                                       |
|              |                                                       |
|              |                                                       |
|              |   ---------------------------------------- ---------  |
|              |   High                                     3          |
|              |                                                       |
|              |   Medium                                   2          |
|              |                                                       |
|              |   Low                                      1          |
|              |                                                       |
|              |   No Value                                 3          |
|              |   ---------------------------------------- ---------  |
|              |                                                       |
|              | > Probability of Occurrence                           |
|              |                                                       |
|              |   ---------------------------------------- ---------  |
|              |   High                                     3          |
|              |                                                       |
|              |   Medium                                   2          |
|              |                                                       |
|              |   Basic (Low)                              1          |
|              |                                                       |
|              |   No Value                                 3          |
|              |   ---------------------------------------- ---------  |
|              |                                                       |
|              | A score will be calculated for each risk question by  |
|              | multiplying the Impact score times the Probability of |
|              | Occurrence score.  The score will be calculated for   |
|              | each risk question according to the following matrix: |
|              |                                                       |
|              | Impact x Probability                                  |
|              |                                                       |
|              |   ---                                                 |
|              | ------- --- ------------- ------------- ------------- |
|              |                  High          Medium        Low      |
|              |                                                       |
|              |               Probability   Probability   Probability |
|              |                                                       |
|              |             of Occurrence of Occurrence of Occurrence |
|              |                  3             2             1        |
|              |                                                       |
|              |   High       3   9             6             3        |
|              |   Impact                                              |
|              |                                                       |
|              |   Medium     2   6             4             2        |
|              |   Impact                                              |
|              |                                                       |
|              |   Low Impact 1   3             2             1        |
|              |   ---                                                 |
|              | ------- --- ------------- ------------- ------------- |
|              |                                                       |
|              | For each set of risks (All Projects and IT Projects   |
|              | Scores), a Risk Score will be calculated using an     |
|              | average formula. For example,                         |
|              |                                                       |
|              |             All Projects Score = (Answer 1+ ... +     |
|              | Answer 11)/11                                         |
|              |                                                       |
|              | IT Projects Score = (Answer 1+ ... + Answer 8)/8      |
|              |                                                       |
|              | An Overall Risk Score will be calculated using a      |
|              | weighted average formula:                             |
|              |                                                       |
|              | Overall Risk Score = ((All Projects Score x 1) + (IT  |
|              | Projects Score x 1))/2                                |
|              |                                                       |
|              | The resulting average scores are given a High, Medium |
|              | and Low value based on the following scale:           |
|              |                                                       |
|              |   ----------------------------------- --------------  |
|              |   High = Average overall risk score   \> 5.4          |
|              |                                                       |
|              |   Medium = Average overall risk score \< 5.5 and \>   |
|              |                                       2.4             |
|              |                                                       |
|              |   Low = Average overall risk score    \< 2.5          |
|              |   ----------------------------------- --------------  |
|              |                                                       |
|              |                                                       |
+--------------+-------------------------------------------------------+
|              | **Investment Prioritization Components**              |
+--------------+-------------------------------------------------------+
| **Investment | The Quality Score is calculated based on:             |
| Quality      |                                                       |
| Components** | 1.  Business Case Quality                             |
|              |                                                       |
|              | ```{=html}                                            |
|              | <!-- -->                                              |
|              | ```                                                   |
|              | 1.  Critical Partner Review                           |
|              |                                                       |
|              | 2.  Cost Variance %                                   |
|              |                                                       |
|              | 3.  Schedule Variance %                               |
|              |                                                       |
|              | The Quality Score will be calculated for each         |
|              | investment using the following formula:               |
|              |                                                       |
|              | > **Quality Score = (((Business Quality Score/5)-1) + |
|              | > (Critical Partners Score) + (Cost Variance Score) + |
|              | > (Schedule Variance Score)) x 2.8**                  |
+--------------+-------------------------------------------------------+
| **IQC-1:     | The HHS Business Case Quality Review Team will score  |
| Business     | each business case using the scoring criteria         |
| Case Quality | established by OMB Circular A-11, Section 300.        |
| Score**      |                                                       |
|              | 1.  Supports the President\'s Management Agenda Items |
|              |     (AI)                                              |
|              |                                                       |
|              |     a.  Expanding e-Gov                               |
|              |                                                       |
|              |     b.  Improved Financial Performance                |
|              |                                                       |
|              |     c.  Strategic Management of Human Capital         |
|              |                                                       |
|              |     d.  Budget and Performance Integration            |
|              |                                                       |
|              | ```{=html}                                            |
|              | <!-- -->                                              |
|              | ```                                                   |
|              | 1.  Acquisition Strategy (AS)                         |
|              |                                                       |
|              | 2.  Program Management (PM)                           |
|              |                                                       |
|              | 3.  Enterprise Architecture (EA)                      |
|              |                                                       |
|              | 4.  Alternatives Analysis (AA)                        |
|              |                                                       |
|              | 5.  Risk Management (RM)                              |
|              |                                                       |
|              | 6.  Performance Goals (PG)                            |
|              |                                                       |
|              | 7.  Security and Privacy (SE)                         |
|              |                                                       |
|              | 8.  Performance Based Management System (PB)          |
|              |                                                       |
|              | 9.  Life-Cycle Costs Formulation (LC)                 |
|              |                                                       |
|              | A total score will be calculated for the entire       |
|              | business case ranging in value from 10 to 50.         |
|              |                                                       |
|              | Score Definition:                                     |
|              |                                                       |
|              |                                                       |
|              |  ------- -------------------------------------------- |
|              |   41-50   Strong documented business cases (BC)       |
|              |           (including all sections as appropriate).    |
|              |                                                       |
|              |                                                       |
|              |  31-40   Very few weak points within the BC but still |
|              |           needs strengthening.                        |
|              |                                                       |
|              |   21-30   Much work remains to solidify and quantify  |
|              |                                                       |
|              |          BC. BC has the opportunity to either improve |
|              |           or degrade very quickly.                    |
|              |                                                       |
|              |   11-20   Significant gaps in the required categories |
|              |           of the BC.                                  |
|              |                                                       |
|              |                                                       |
|              |  1-10    Inadequate in every category of the required |
|              |           BC.                                         |
|              |                                                       |
|              |  ------- -------------------------------------------- |
+--------------+-------------------------------------------------------+
| **IQC-2:     | There are five Critical Partners (CP): Acquisition    |
| Critical     | (A), Security & Privacy (S), Enterprise Architecture, |
| Partner      | Finance (F), and Human Resources (HR).  Critical      |
| Review**     | Partners in the five areas review the investments and |
|              | score each investment using the following scale:      |
|              |                                                       |
|              |   ------------------------------------------ -------  |
|              |   Approve                                    9        |
|              |                                                       |
|              |   Conditionally Approve                      5        |
|              |                                                       |
|              |   Disapprove                                 0        |
|              |   ------------------------------------------ -------  |
|              |                                                       |
|              | The CP Score is calculated using an average formula:  |
|              |                                                       |
|              | > **CP Score = (A Score + S Score + EA Score + F      |
|              | > Score + HR Score)/5.**                              |
+--------------+-------------------------------------------------------+
| **IQC-3:     | Cost Variance % Score                                 |
| Cost         |                                                       |
| Variance     | The Cost Variance % Score is calculated based on the  |
| (PMT Form    | cost variance (CV) and budgeted cost of work          |
| 1.03.15)**   | performed (BCWP) for the total cost of the            |
|              | investment, i.e. DME plus Steady State.               |
|              |                                                       |
|              | **            Cost Variance % = (CV/BCWP) x 100.**    |
|              |                                                       |
|              | A Cost Variance % Score is assigned based on the      |
|              | following scale:                                      |
|              |                                                       |
|              | > Cost Variance % \< -- 5% = Green 9                  |
|              | >                                                     |
|              | > Cost Variance % \< + 5% = Green 9                   |
|              | >                                                     |
|              | > Cost Variance % \> or = -- 5% and \< -10% = Yellow  |
|              | > 6                                                   |
|              | >                                                     |
|              | > Cost Variance % \> or = + 5% and \< +10% = Yellow 6 |
|              | >                                                     |
|              | > Cost Variance % \> or = -- 10% = Red 3              |
|              | >                                                     |
|              | > Cost Variance % \> or = + 10% = Red 3               |
+--------------+-------------------------------------------------------+
| **IQC-4:     | The Schedule Variance % Score is calculated based on  |
| Schedule     | the schedule variance (SV) and budgeted cost of work  |
| Variance     | scheduled (BCWS) for the total cost of the            |
| (PMT Form    | investment, i.e. DME plus Steady State.               |
| 1.03.15)**   |                                                       |
|              | **            Schedule Variance % = (SV/BCWS) x       |
|              | 100.**                                                |
|              |                                                       |
|              | A Schedule Variance % Score is assigned based on the  |
|              | following scale:                                      |
|              |                                                       |
|              | > Schedule Variance % \< -- 5% = Green 9              |
|              | >                                                     |
|              | > Schedule Variance % \< + 5% = Green 9               |
|              | >                                                     |
|              | > Schedule Variance % \> or = -- 5% and \< -10% =     |
|              | > Yellow 6                                            |
|              | >                                                     |
|              | > Schedule Variance % \> or = + 5% and \< +10% =      |
|              | > Yellow 6                                            |
|              | >                                                     |
|              | > Schedule Variance % \> or = -- 10% = Red 3          |
|              | >                                                     |
|              | > Schedule Variance % \> or = + 10% = Red 3           |
|              |                                                       |
|              | NOTE:  If BCWP and BCWS values are not entered (i.e.  |
|              | Null), then the Cost Variance % Score and Schedule    |
|              | Variance % Scores will be set to zero (0).            |
+--------------+-------------------------------------------------------+

          

# Appendix K: References

## 

*Assessing Risks and Returns: A Guide for Evaluating Federal Agencies'
IT Investment Decision-Making,* U.S. General Accounting Office,
Accounting and Information Management OPDIV, February 1997.

*Capital Programming Guide,* Office of Management and Budget, July 1997.

*Circular A-11:* Preparing and Submitting Budget Estimates, Office of
Management and Budget, July 2004

*Circular A-76:* Performance of Commercial Activities, Office of
Management and Budget, May 29^th^ 2003.

*Circular A-94:* Discount Rates to be Used in Evaluating
Time-Distributed Costs and Benefits, Office of Management and Budget,
January 2002.

*Circular A-127:* Financial Management Systems, Office of Management and
Budget, 1993.

*Circular A-130:* Management of Federal Information Resources, Office of
Management and Budget, January 28, 2000.

*Clinger-Cohen Act of 1996* (formerly the Information Technology
Management Reform Act \[ITMRA\]).

*Earned Value Management Systems (EVMS) Basic Concepts,* Project
Management Institute, [Project Management Institute (PMI) Home
Page](http://www.pmi.org/info/default.asp)

*Evaluating Information Technology Investments,* Office of Management
and Budget, February 1995. http://www.whitehouse.gov/omb/index.html

*Executive Guide: Leading Practices in Capital Decision-Making,* U.S.
General Accounting Office, Accounting and Information Management OPDIV,
December 1998.

Fleming, Quentin W., Joel M. Koppelman, *Earned Value, Project
Management,* Second Edition, Project Management Institute, Inc., 2000.

Grant, Eugene L., W. Grant Ireson, *Principles of Engineering Economy,*
Fifth Edition, The Ronald Press Company, 1970.

*Information Technology Investment Management: A Framework for Assessing
and Improving Process Maturity (Exposure Draft),* U.S. General
Accounting Office, Accounting and Information Management OPDIV, May
2000. *http://www.gao.gov/new.items/d04394g.pdf*

*Smart Practices in Capital Planning,* The Federal CIO Council, Capital
Planning and IT Management Committee, Industry Advisory Council (IAC),
October 2000.