DoD EVM Implementation

Section 887 of the FY 2009 National Defense Authorization Act and the Weapons System Acquisition Reform Act (WSARA) required DoD to submit the following report to Congress on DoD implementation of EVM.

DoD Report to Congress: DoD Earned Value Management: Performance, Oversight, and Governance (Report)
Link: DAU web site: DoD Report to Congress
Excerpts from the WSARA Report follow:
"Utility of EVM has declined to a level where it does not serve its intended purpose."
Excerpts from DoD EVM Report to Congress
Significant Deficiency: Use of management reserve to alter internal and subcontract performance levels and
overruns
1. Change in...culture is necessary
·      Encourage Program Managers to identify and quantify the impacts of schedule slips and cost overruns
·      Contractors often worry that poor performance may result in
o Program cancellation
o Reduced profits
o Damaging performance evaluations
·      Contractors may circumvent proper EVM practices to keep EVM metrics favorable and problems hidden
·      Engineering community should establish technical performance measures (TPM) that enable objective confirmation that tasks are complete
2. Accuracy of EVM data provided by vendors---in conveying the true status of the project
·         Various subsystems that make up many contractors' EVMS are not integrated, resulting in inconsistent portrayals of status
·         Schedules often cannot show downstream impacts of problems or cannot determine the critical path driving contract completion
·         When assessing cost and schedule variances, contractors cannot effectively identify the root cause, impact, and appropriate corrective actions
·         Contractors do not have a process for developing reliable estimates at completion
·         Contractor change control processes do not maintain the integrity of the PMB
·         Contractors treat EVM as a reporting requirement rather than the management process it is intended to be
·         Many instances of inappropriate changes
o Arbitrarily changing past variances
o Moving budgets to mask overruns
o Making changes that were not properly authorized
"End result: Many Defense contractors cannot accurately predict outcomes that affect program costs or

deliveries"
3. Technical Performance Measures (TPM)
·      EV process is reliable and accurate only if
o   TPMs are identified and associated with completion of appropriate work packages
o   Quality of work must be verified
o   Criteria must be defined clearly and unambiguously
·      If good TPMs are not used:
o   Programs could report 100 percent of earned value..even though behind schedule
§ Validating requirements
§ Completing the preliminary design
§ Meeting weight targets
§ Delivering software releases that meet the requirements
·      Program Manager should ensure that the EVM process measures the quality and technical maturity of technical work products instead of just the quantity of work performed.
4. Systems Engineering (SE)
EV process is reliable and accurate only if
o   Augmented with a rigorous SE process
o   SE products are costed and included in EVM tracking
o   SE life-cycle management method is integrated with the planning of the PMB

"SE and EVM should be integrated, not stove-piped"
Assessment of Report: The DoD Report includes many valid assessments and recommendations for corrective actions. However, it also contains incorrect and insufficient information. Most importantly, the Report does not provide a needed recommendation for legislative action to link earned value with technical performance, or Quality.
Consequently, the foIlowing letters were sent to the Senate and House Armed Services Committees and to Mr. J. Zients, Dep. Director for Management and Chief Performance Officer, Office of Management and Budget (OMB).
Letter to Senate Armed Services Committee
Letter to Mr. Zients (OMB)
Industry input to DoD: DoD received industry views from the Council of Defense and Space Industry Associations (CODSIA). CODSIA’s responded to Mr. Shay Assad, DoD Director, Defense Procurement & Acquisition Policy CODSIA .
Assessment of CODSIA report:
The CODSIA response does not sufficiently address the deficiencies in the quality of EVMS reporting and the contributing factors. CODSIA also did not identify the correct root causes of deficient EVM implementation. Finally, the CODSIA letter has limited guidance regarding Integrated Baseline Reviews (IBR). Consequently, I sent two letters to Mr. Assad that covered two topics:
EVM implementation Comments on EVM Implementation
IBRs IBR letter
Deficiency in FAR, Defense Federal Acquisition Regulation Supplement (DFARS) and the EVMS Standard:
Contractor has no requirement to:
Link EV to technical performance or Quality
Integrate the EV Performance Measurement Baseline with the technical baseline (Functional Baseline, Allocated Baseline, or Product Baseline)

Performance-Based Earned Value ®

PBEV = EVM + Quality