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Program Management and Earned Value Management

Program Management and Earned Value Management. David G. Ahern Director, Portfolio Systems Acquisition Deputy Under Secretary of Defense (A&T). Agenda. Interdependencies & Government/Industry Dynamics Principles of Program Management Data Quality & Integrity

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Program Management and Earned Value Management

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  1. Program Management and Earned ValueManagement David G. Ahern Director, Portfolio Systems AcquisitionDeputy Under Secretary of Defense (A&T)

  2. Agenda • Interdependencies & Government/Industry Dynamics • Principles of Program Management • Data Quality & Integrity • EVM-Related Issues/Challenges • Improving Program Performance & Collaboration

  3. • PRODUCT PERFORMANCE• INVESTMENT• FINANCING/CASH• PROFIT • REQUIREMENT• CONTRACT TYPE• TERMS AND CONDITIONS• AWARD AND ADMINISTRATION Program Manager's Challenge:Striking The Right Balance PROGRAM • PERFORMANCE• COST• SCHEDULE• SUPPORTABILITY INDUSTRY GOVERNMENT

  4. Understanding Government/IndustryDynamics Cost Growth Sales & Profit DIVERGENT CENTERS OF GRAVITY Est. Cost Growth Orig. CBB EAC CUSTOMER Warfighter / Taxpayer MARKET Stockholder Program Performance Cost / Schedule / Technical Financial Performance Sales / Profit / Cash Flow 4 We Must Find A Balance

  5. RDT&E Cost Growth DEVELOPMENT COST GROWTH BY CATEGORY ESTIMATINGASSUMPTIONS20% AVG RDT&E COST GROWTH FROM ACQUISITION PROGRAM BASELINE(ACROSS ALL PROGRAMS)65% SCHEDULE ASSUMPTIONS21% • CER’s • LABOR RATES • CA TO CDR • CDR TO FIRST FLT • FIRST FLT TO IOC TECHNICAL BASELINES59% • WEIGHT • VOLUME • COMMONALITY • SOFTWARE • # TEST ARTICLES • # TEST FLIGHTS Development Programs Experiencing Significant Cost Growth From Acquisition Program Baselines

  6. Principles of Program Management • Set the baseline – what is the task? • Performance, Cost, Schedule, and Risk • Integrated Product and Process Development • Optimize the design, manufacturing, and supportability processes • By integrating all essential acquisition activities through the use of multidisciplinary teams. • Dynamic Environment • Expect Changes • Communicate, Cooperate • Measurement and Reporting • EVM, C/SSR Reporting

  7. IPM Cost Schedule Technical TWO DISTINCT BUT RELATED AREAS OF FOCUS DoD Program Management Acquisition Program Management Integrated Project Management (IPM) • Acquisition Planning • APB • Source Selection Plan • Award Fee • SAR/DAES • Project Status/CPI & SPI • Estimate at Completion • Staffing • Tasks Completed • Management Processes • Risk Mitigation • Technical Reviews IPM/EVM Is Not Just CPI & SPI 7

  8. Cost Schedule Technical • Contract Requirements • Source Selections • Award Fee Criteria • Program Item Descriptions (PID) • Management System Assessments (MSAs) • Integrated Baseline Reviews (IBRs) • Integrated Master Schedule (IMS) • Cost Analysis Requirements Description (CARD) • Risk Identification • Key Performance Indicators (KPPs) • Resource Forecasts • Technical Reviews (PDR, CDR, etc.) • Management System Assessments (MSA) • Integrated Baseline Reviews (IBRs) • Award Fee Determination • Schedule Risk Assessments (SRAs) • Program Management Baseline (PMB) • Estimates at Completion (EACs) • Risk Mitigation • Program Performance Measurement • Burn Rate Trends • Management Reserve Usage • Staffing Plans • Baseline Execution Evaluations PLANNING EXECUTION Integrated ProjectManagementEarned Value Management IPM IPM = Cost, Schedule And Technical Integration “The Application of Basic Project Management Principles” 8

  9. MACRO ANALYSIS MICRO ANALYSIS UNDERSTAFFED * equivalent of 3 man-months per person INCOMPLETE WORK * >40% of delinquent tasks not yet started INITIAL RESULTS INDICATE FEW CONTRACTORS HAVE THE CAPABILITY TO DEVELOP AND MAINTAIN A HEALTHY INTEGRATED MASTER SCHEDULE. PRIMES WHO SUBCONTRACT LARGE PORTIONS OF WORK EXPERIENCE GREATER SCHEDULE DEVELOPMENT & MAINTENANCE DIFFICULTY, PARTICULARLY IF WORK IS SUBBED USING FFP. PRIMES ARE EXPERIENCING SKILLS SHORTAGES AND OVERAGES – MOST ARE INCAPABLE OF ACCURATELY PREDICTING OR FULFILLING SKILLS DEMANDS FOR +1 MONTH. SUBCONTRACTED WORK IS INCREASING; UP TO 7-FOLD INCREASES IN BUY DECISIONS OVER PRIOR EFFORTS, UP TO 3-FOLD INCREASES IN SKILLS SUBCONTRACTING FOR DESIGN EFFORTS. Leading Indicators –Contractor Staffing And Task Completion LAUNCHED THREE ANALYSIS ACTIVITIES • SCHEDULE CAPABILITY • SKILLS STAFFING ENVIRONMENT • SUBCONTRACTING ENVIRONMENT INCOMPLETE WORK STAFFING SHORTFALL Skills Staffing And Task Completion Inextricably Linked

  10. Program Management Tools • Type of Contract • Length of Contract • Technical Maturity • Integration • Constant Vigilance • Accurate, rolling baseline • Continuous, timely, accurate, execution data

  11. How are DoD Contracts Performing? Notional data for illustrative purposes only

  12. Program “X”

  13. Enterprise Data Quality Dimensions

  14. EV / Funding Data Quality Funding Data Quality: Acceptablefor Critical Measurements and Decision-making EVM Data Quality: Unacceptablefor Critical Measurements and Decision-making

  15. EVM Data Integrity

  16. EVM-Related Issues/Challenges • EVM requirements incorrectly placed on contract • Contract incentives that counter EVM’s objectives • Deficiencies in contractor EVM systems • Lack of timely, realistic, and executable performance measurement baselines OSD and DCMA have identified several EVM implementation issues on DoD contracts

  17. EVM Requirements • Issue: EVM requirements incorrectly placed on contract • EVM not being used as management tool; perception EVM is just a financial report • Failure to include applicable EVM requirements • Inappropriately modifying EVM requirements; incorrectly tailoring DIDs for CPR and IMS • Specifying contract requirements not consistent with EVM policy and EVMS guidelines • Use of EVM not considered in contract type selection decisions • Disallowing use of contractor’s EVMS on contracts not requiring reporting • Action: Ensure EVM requirements are identified and incorporated into solicitations and contracts, and are then properly executed • Work closely with program manager and EVM community throughout acquisition process • Involve EVM subject matter experts in establishing and implementing contract requirements (statement of work (SOW), request for proposals (RFP), CDRLs) • Consider EVM implications when selecting contract type • Discuss requirements in pre- and post-award conferences or similar forums • Include EVM on agenda at contracting meetings and conferences • Ensure the “right” EVM training is provided to contracting community It’s important to get the EVM requirements right up front – fixing problems later is more painful … and costly

  18. Contract Incentives • Issue: Contract incentives that counter EVM’s objectives • Contracting policies can work at cross purpose with EVM • Use of award fee incentives that drive undesired behavior – incentivizing achievement of good numbers rather than good performance • Result is PMs are denied objective performance information on their programs • Action: Find better ways to incentivize contractors (better use of fees) • Avoid use of cost and schedule indices (CPI and SPI) as only EVM-related award fee criteria • Work with EVM community to devise objective, yet effective, contract incentives • Consult EVMIG for ideas on appropriate EVM-related incentives (e.g., realistic and current cost and schedule forecasts) Paying contractors to maintain cost and schedule indices within predetermined boundaries encourages undesirable behavior

  19. Contractor EVM Systems • Issue: Deficiencies in contractor EVM systems • Lack of knowledge by control account managers • Span of control issues • Inadequate schedules • Data integration and integrity problems • Undisciplined work authorization and change control processes • Poor variance analyses • No formal corrective action processes • Inadequate estimate at completion procedures • EVM used to report data, not to manage • Action: Contact DCMA for help with contractor EVMS problems • Work with local DCMA EVM specialist and/or the EVM Center • Implement appropriate remedial actions for EVMS non-compliance Based on findings from recent DCMA EVMS compliance reviews

  20. Baseline Planning/Execution • Issue: Lack of timely, realistic, and executable Performance Measurement Baseline (PMB) • Conduct of IBRs impacted by delays in defining work scope • Contractual direction to defer baseline planning until definitization • Incongruities between SOW and PMB (e.g., undefinitized contract actions) • Lag time in incorporating changes into baseline • Action: Know, understand, and implement ways to improve timeliness and quality of baseline planning and execution • Ensure IBRs are conducted within 180 days after contract award, and after exercise of significant options or major modifications • Stop direction to delay baseline planning until after contract definitization • Incorporate authorized unpriced work into PMB – detail plan near-term effort • Work with EVM community to ensure integrity of work scope and PMB – achievable contract schedule and proposal estimate Establishing an executable baseline is a critical prerequisite to the successful implementation of EVM

  21. lessons learned REQUIREMENTS DEFINITION PROGRAM BASELINE M/S A M/S B M/S A ’ DAB DAB JCIDS JCIDS JROC JROC FSA ICD ICD Draft CDD + Draft CDD + Draft CDD + Draft CDD + Draft Final CDD + Draft + Final CDD + + CONOPS CONOPS CONOPS CONOPS ICD CONOPS ICD CONOPS CONOPS Rev 0 Rev 1..n CONOPS Rev 0 Rev 1..n AoA AoA Plan Plan 1 3 2 4 5 6 SSA TMA TMA Preferred Assessment Assessment Preferred System System System System Production Definition Production Definition Concept RFP Concept Spec System (SDS) RFP AoA Spec System (SDS) AoA Spec Spec Technology Development & System Requirements Development Concept Refinement System Development and Demonstration Maturity Assessment & Technology Demonstration Models &/or Prototypes Test PLANNING Articles ASR Defense ITR SRR I SRR II PDR CDR Defense SFR Acq Acq System System Phase 0 Phase I Phase II Phase III KEY: AoA: Analysis of Alternatives TMA: Technology Maturity Assessment CDD: Capability Development Document DAB: Defense Acquisition Board FSA: Functional Solution Analysis JROC: Joint Requirements Oversight Council RFP: Request For Proposal ICD: Initial Capabilities Document SDS: System Design Specification SSA: Source Selection Authority lessons learned Technical Underpinnings Cost Risk Assessment Schedule Risk Assessment Technical Risk Assessment Solid Understanding of Requirements Realistic Baseline PARTNERING WITH INDUSTRY INFORMATION VISIBILITY lessons learned EXECUTION Collaborative Process Improvement Activity “Lean Six Sigma” Burning Platform Cockpit Chart Leading Indicators Continuous Improvement Transform Data into Information lessons learned Improving Program Performance

  22. Summary • We must improve program execution • Program Management is key to program success • PMs must have mutual understanding of the task • EVMS should provide an accurate picture of program status relative to the baseline plan • If data quality and integrity are suspect, then “garbage in-garbage out” applies • We must collaborate to improve EVM system implementation and PM’s comprehensive understanding/use of the data

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