# Presentation: 110448

**EVM Implementation at DOI ****Independent Assessment of Baselines for Reasonableness ***October 26, 2006*

## OMB’s Review of DOI’s Implementation of EVM

-  On September 14, 2006, the DOI OCIO met with OMB staff to review DOI’s implementation of EVM
-  DOI must still meet with Karen Evans to demonstrate implementation of EVM in order to meet PMA eGov scorecard item
-  Areas of focus by OMB staff
- 	- Division of responsibilities between DOI and Bureaus
- 	- Implementation of the FAR EVM Clause including compliance reviews
- 	- Corrective action identification and implementation
- 		- Independent Assessment of Baselines for Reasonableness
- 		- Project Reviews

## DOI’s Message to OMB: We Have Implemented a Defined EVM Maturity Strategy

**DOI’s Message to OMB: We Have Implemented a Defined EVM Maturity Strategy**

## EVM Focus:  Interior’s Policies

-   _Earned Value Management (EVM) for Information Technology Investments_
- 	- Joint CIO & CAO Memorandum
- 	- May 25, 2005
-   _Improving Information Technology (IT) Project Planning and Execution_
-      _Independent Validation of Cost, Schedule and Performance Baselines_
- 	- OCIO Directive 2005-014
- 	- September 23, 2005
-   _Enhanced Performance Reporting for Major Information Technology Investments_
- 	- OCIO Directive 2006-013
- 	- May 13, 2006

## DOI’s Implementation of ANSI 748-A EVM Standards

| 
Criterion | 
Criterion Definition | Significant-Major Investments
(DME or Mixed) | Other Major
Investments
(DME or Mixed) | Steady
State
(O&M Only) |
| --- | --- | --- | --- | --- |
| 1a | Define the authorized work elements for the program (WBS)
 | Yes | Yes | Yes |
| 1b | Identify program organization structure (OBS) | Yes | Yes | Yes |
| 1c | Provide for the integration of the company’s planning, scheduling, budgeting, work authorization and cost accumulation processes with each other, and as appropriate, the program work breakdown structure and the program organizational structure.  | Yes | Yes | Yes |
| 1d | Identify the company organization responsible for controlling overhead (indirect costs).  | Yes | Yes | Yes |
| 1e | Provide for integration of the WBS and program organizational structure in a manner that permits cost and schedule performance measurement by elements of either or both structures as needed (RAM).  | Yes | Yes | Yes |

- Organization

**Notes:**
Training Agenda – Covers:
 The Directive
 EVM Standards
 OMB Processes, Planning and Decisions Making
 EVM: Standards, Terminology, Analysis 
 Reporting Tool
 Planning and Issues and Examples: ESN and LMR
  Reporting and the Tools
 Question & Answer Period:
	- Save questions until the Q&A session
	- We are giving you note cards to write questions, please:
	    1) Write your name
	    2) Contact information: email and phone number
	    3) Numbered each specific questions
	-  questions we don’t address or questions that need more elaboration
	   we will address through a follow-up email

## DOI’s Implementation of ANSI 748-A EVM Standards

| 
Criterion | 
Criterion Definition | Significant-Major Investments
(DME or Mixed) | Other Major
Investments
(DME or Mixed) | Steady
State
(O&M Only) |
| --- | --- | --- | --- | --- |
| 2a | Schedule the authorized work in a manner which describes the sequence of work and identifies significant task interdependencies required to meet requirements of program.  | Yes | Yes | Yes |
| 2b | Identify physical products, milestones, technical performance goals, or other indicators that will be used to measure progress.  | Yes | Yes | Yes |
| 2c | Establish and maintain a time phased budget baseline, at the control account level, against which program performance can be measured.  | Yes | Yes | Yes |
| 2d | Establish budgets for authorized work with identification of significant cost elements (labor, material, etc.) as needed for internal management and for control of subcontractor...  | Gov’t: Partial Implementation
Contractor: Yes | Gov’t: Partial Implementation
Contractor: Yes | Gov’t: Partial Implementation
Contractor: Yes |
| 2e | To the extent it is practicable to identify work in discrete work packages, establish budgets for this work in terms of dollars, hours, or other measurable units...  | Gov’t: Partial Implementation
Contractor: Yes | Gov’t: Partial Implementation
Contractor: Yes | Gov’t: Partial Implementation
Contractor: Yes |
| 2f | Provide that the sum of all work package budgets plus planning package budgets within a control account equals the control account budget.  | Yes | Yes | Yes |

- Planning and Budgeting

**Notes:**
Training Agenda – Covers:
 The Directive
 EVM Standards
 OMB Processes, Planning and Decisions Making
 EVM: Standards, Terminology, Analysis 
 Reporting Tool
 Planning and Issues and Examples: ESN and LMR
  Reporting and the Tools
 Question & Answer Period:
	- Save questions until the Q&A session
	- We are giving you note cards to write questions, please:
	    1) Write your name
	    2) Contact information: email and phone number
	    3) Numbered each specific questions
	-  questions we don’t address or questions that need more elaboration
	   we will address through a follow-up email

## DOI’s Implementation of ANSI 748-A EVM Standards

| 
Criterion | 
Criterion Definition | Significant-Major Investments
(DME or Mixed) | Other Major
Investments
(DME or Mixed) | Steady
State
(O&M Only) |
| --- | --- | --- | --- | --- |
| 2g | Identify and control level of effort activity by time-phased budgets established for this purpose. Only that effort which is unmeasurable or for which measurement is impracticable may be classifed as level of effort.  | Gov’t: Partial Implementation
Contractor: Yes | Gov’t: Partial Implementation
Contractor: Yes | No |
| 2h | Establish overhead budgets for each organizational component of the company for expenses which become indirect costs. Reflect in the program budgets, at the appropriate level, the amounts in overhead pools that are planned to be allocated to the program as indirect costs.  | Gov’t: Partial Implementation
Contractor: Yes | Gov’t: Partial Implementation
Contractor: Yes | No |
| 2i | Identify management reserves and undistributed budget.  | No | No | No |
| 2j | Provide that the program target cost goal is reconciled with the sum of all internal program budgets and management reserves | Limited Implementation due to 2h | Limited Implementation due to 2h | Limited Implementation due to 2h |

- Planning and Budgeting (Continued)

**Notes:**
Training Agenda – Covers:
 The Directive
 EVM Standards
 OMB Processes, Planning and Decisions Making
 EVM: Standards, Terminology, Analysis 
 Reporting Tool
 Planning and Issues and Examples: ESN and LMR
  Reporting and the Tools
 Question & Answer Period:
	- Save questions until the Q&A session
	- We are giving you note cards to write questions, please:
	    1) Write your name
	    2) Contact information: email and phone number
	    3) Numbered each specific questions
	-  questions we don’t address or questions that need more elaboration
	   we will address through a follow-up email

## DOI’s Implementation of ANSI 748-A EVM Standards

| 
Criterion | 
Criterion Definition | Significant-Major Investments
(DME or Mixed) | Other Major
Investments
(DME or Mixed) | Steady
State
(O&M Only) |
| --- | --- | --- | --- | --- |
| 3a | Record direct costs consistent with the budgets in a formal system controlled by general book of accounts | Not Implemented | Not Implemented | Not Implemented |
| 3b | When a WBS is used, summarize direct cost from control costs into the WBS without allocation of a single account to two or more WBS elements | Yes | Yes | Yes |
| 3c | Summarize direct cost from the control accounts into the contractor’s organization elements without allocation of a single control account to two or more organization elements | Yes | Yes | Yes |
| 3d | Record all indirect cost which will be allocated to the contract | Gov’t: Partial Implementation
Contractor: Yes | Gov’t: Partial Implementation
Contractor: Yes | Gov’t: Partial Implementation
Contractor: Yes |
| 3e | Identify unit cost, equivalent unit cost, or lot cost when needed | Yes | Yes | Yes |
| 3f | Material Accounting System Requirements | Not Implemented | Not Implemented | Not Implemented |

- Accounting Considerations – An Area for Improvement

**Notes:**
Training Agenda – Covers:
 The Directive
 EVM Standards
 OMB Processes, Planning and Decisions Making
 EVM: Standards, Terminology, Analysis 
 Reporting Tool
 Planning and Issues and Examples: ESN and LMR
  Reporting and the Tools
 Question & Answer Period:
	- Save questions until the Q&A session
	- We are giving you note cards to write questions, please:
	    1) Write your name
	    2) Contact information: email and phone number
	    3) Numbered each specific questions
	-  questions we don’t address or questions that need more elaboration
	   we will address through a follow-up email

## DOI’s Implementation of ANSI 748-A EVM Standards

| 
Criterion | 
Criterion Definition | Significant-Major Investments
(DME or Mixed) | Other Major
Investments
(DME or Mixed) | Steady
State
(O&M Only) |
| --- | --- | --- | --- | --- |
| 4a | At least on a monthly basis, generate the following information at the CA level and other levels as necessary for management control...1) Schedule Variance; 2) Cost Variance.  | Yes | Quarterly
Reporting | Quarterly
Reporting |
| 4b | Identify at least monthly, significant difference between both planned and actual schedule and cost performance, and provide the reasons for the variances in the detail needed by program management.  | Yes | Quarterly
Reporting | Quarterly
Reporting |
| 4c | Identify budgeted and applied (or actual) indirect cost at the level and frequency needed by management for effective control along with the reason for any significant variances.  | Gov’t: Partial Implementation
Contractor: Yes | Gov’t: Partial Implementation
Contractor: Yes | Gov’t: Partial Implementation
Contractor: Yes |
| 4d | Summarize data elements and associated variances through the program organization and or WBS to support management needs.  | Yes | Yes | Yes |

- Analysis and Management Reports

**Notes:**
Training Agenda – Covers:
 The Directive
 EVM Standards
 OMB Processes, Planning and Decisions Making
 EVM: Standards, Terminology, Analysis 
 Reporting Tool
 Planning and Issues and Examples: ESN and LMR
  Reporting and the Tools
 Question & Answer Period:
	- Save questions until the Q&A session
	- We are giving you note cards to write questions, please:
	    1) Write your name
	    2) Contact information: email and phone number
	    3) Numbered each specific questions
	-  questions we don’t address or questions that need more elaboration
	   we will address through a follow-up email

## DOI’s Implementation of ANSI 748-A EVM Standards

| 
Criterion | 
Criterion Definition | Significant-Major Investments
(DME or Mixed) | Other Major
Investments
(DME or Mixed) | Steady
State
(O&M Only) |
| --- | --- | --- | --- | --- |
| 4e | Implement managerial actions taken as result of EV information. | Yes | Yes | Yes |
| 4f | Develop revised EAC based on performance to date, commitment value for material, estimates of future condition. Compare this information with the performance measurement baseline to identify variances at completion important to company management and any applicable customer reporting requirements including statements of funding requirements.  | Yes | Yes | Yes |

- Analysis and Management Reports (Continued)

**Notes:**
Training Agenda – Covers:
 The Directive
 EVM Standards
 OMB Processes, Planning and Decisions Making
 EVM: Standards, Terminology, Analysis 
 Reporting Tool
 Planning and Issues and Examples: ESN and LMR
  Reporting and the Tools
 Question & Answer Period:
	- Save questions until the Q&A session
	- We are giving you note cards to write questions, please:
	    1) Write your name
	    2) Contact information: email and phone number
	    3) Numbered each specific questions
	-  questions we don’t address or questions that need more elaboration
	   we will address through a follow-up email

## DOI’s Implementation of ANSI 748-A EVM Standards

| 
Criterion | 
Criterion Definition | Significant-Major Investments
(DME or Mixed) | Other Major
Investments
(DME or Mixed) | Steady
State
(O&M Only) |
| --- | --- | --- | --- | --- |
| 5a | Incorporate authorized changes in a timely manner, recording the effects of such change in the budgets and schedule.  | Yes | Yes | Yes |
| 5b | Reconcile current budgets to prior budgets in terms of changes to the authorized work and internal replanning in the detail needed by management for effective control.  | Yes | Yes | Yes |
| 5c | Control retroactive changes pertaining to work performed that would change previously reported amounts for actual costs, earned value or budgets. Adjustments should be made only for correction of errors, routine accounting adjustments, effects of customer or management directed changes, or to improve the baseline integrity and accuracy of performance measurement data.  | Yes | Yes | Yes |
| 5d | Prevent revisions to the program budget except for authorized changes.  | Yes | Yes | Yes |
| 5e | Document changes to the performance measurement baseline. | Yes | Yes | Yes |

- Revisions and Data Maintenance

**Notes:**
Training Agenda – Covers:
 The Directive
 EVM Standards
 OMB Processes, Planning and Decisions Making
 EVM: Standards, Terminology, Analysis 
 Reporting Tool
 Planning and Issues and Examples: ESN and LMR
  Reporting and the Tools
 Question & Answer Period:
	- Save questions until the Q&A session
	- We are giving you note cards to write questions, please:
	    1) Write your name
	    2) Contact information: email and phone number
	    3) Numbered each specific questions
	-  questions we don’t address or questions that need more elaboration
	   we will address through a follow-up email

## Management Controls in DOI’s Federated Environment

- Bureau Responsibilities
-  Institute and maintain bureau Investment Review Board to manage bureau IT portfolio
- Comply with Department reporting requirements
-  Review and approve changes to major project baselines prior to review by DOI-wide IRB
- Conduct independent assessments of baselines
- Incorporate EVM clauses into contracts
-  Achieve “Green” on Internal Scorecard

- Department/OCIO Responsibilities
-  Institute and maintain Department-wide IRB to manage IT portfolio
- Analyze project scope and performance and develop select recommendations
- Review performance of all major projects (quarterly/monthly depending on project) and brief IRB
- Ensure baselines requesting changes are brought to IRB
- Conduct project reviews as appropriate
- Verify that Bureaus complying with Department requirements
- Assess Bureau’s performance for Internal Scorecard

## Independent Assessment of Baselines for Reasonableness/Integrated Baseline Reviews

**FAR Clause requires Integrated Baseline Review**
**OMB expects that IBRs/Independent Assessments are occurring prior to obligation of development funds**
**OMB expects that the IBRs/Independent Assessments result in corrective actions and/or baseline modifications**
**Issues observed during this year’s compilation of independent assessment results**
**No physical proof that independent assessment/independent baseline review conducted**
**Assessments/reviews not conducted consistently – some projects only reviewed cost benefit analysis**
**No documentation of corrective actions that arose from reviews/assessments**

## Brainstorming

**What is your Bureau’s process for ensuring baselines are validated? Is the process formally defined?**
**Who conducts the assessment/review for your Bureau’s projects? Are Capital Planners involved?**
**The Department needs to receive the results of the review – how do we make this happen? **
**Who performs the review**
**Methodology**
**Corrective Actions identified to baselines**
**Baseline change requests**
**What do you need from the Department to address this requirement? **

## Verifying EVM Implementation

**DOI OCIO is working with DOI PAM to leverage the FY 2007 Management Control Process to ensure acquisition community is following FAR EVM Clause**
**Bureau Headquarters conduct reviews of field compliance**
**Guidance is distributed annually; report results are distributed in July**
**Chief Acquisition Officer signs assurance statement that a reasonable system of controls is in place**
**DOI needs to continue to collect evidence that EVM clauses have been included in contracts**
**DOI must continue to demonstrate collection and use of EVM data to manage project performance**

## Brainstorming

**Are EVM Clauses in all of the significant development clauses issued?**
**How can we ensure that proof that the clauses are included is always provided to DOI OCIO? **
**Is your Bureau performing compliance reviews – is your Bureau actually checking that the contractor systems are EVM compliant?**
**What could be done to facilitate implementation of EVM in your Bureau? Is there anything that the Department needs to do? **