General Services Administration

Earned Value Management System (EVMS) Compliance Review Guide

Office of t e C ief !nformation Officer (OC!O) "une #$$%

Version &'$

Prepared by:

!( )ortfolio E*ecution Services +ivision

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+ocument C ange Record Version ,um-er 1.0 +ate JUNE 2008 +escription Version 1.0 Guidance Ma.or C anges to t e Version Initial publication of EVM Compliance Revie !ui"e

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1. INTRODUCTION....................................................................................................................................................1 1.1. PURPOSE...........................................................................................................................................................1 1.2. SCOPE................................................................................................................................................................1 1.3. EVM OVERVIEW.............................................................................................................................................2 1.3.1. Overview of Standard ANSI/EIA 748-A.....................................................................................................3 1.3.2. OMBs E M !e"#ire$ents........................................................................................................................4 1.4. THE GUIDE.......................................................................................................................................................5 2. COMPLIANCE REVIEW PROCESS ..................................................................................................................5 2.1. I TEGR!TED PRO"ECT TE!M.....................................................................................................................5 2.2. REVIEW PROCESS...........................................................................................................................................# APPENDIX A SAMPLE CONTRACTOR SYSTEM DESCRIPTION DOCUMENT.....................................7 APPENDIX B TYPICAL DOCUMENTATION USED IN EVMS COMPLIANCE REVIEWS....................9 APPENDIX C COMPLIANCE MAP TEMPLATE...........................................................................................10

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!,(RO+2C(!O,

#n Earne" Value Mana$ement %&stem 'EVM%( Compliance Revie is t)e process of anal&*in$ t)e )ealt) of t)e !eneral %ervices #"ministration '!%#( EVM% processes applie" to one or more pro+ects or contracts. ,)e purpose of t)e revie is to ensure a capabilit& to mana$e cost- sc)e"ule- an" tec)nical performance usin$ EVM%. #n effective compliance revie process ensures t)at t)e .e& elements of t)e !%# EVM /olic& are maintaine" over time an" on subse0uent applications. ,)e $oals of !%#1s EVM% compliance revie are to2

Ensure t)at !%# an" contractor EVM%2 o o o o /rovi"e vali" an" timel& mana$ement information Compl& it) !%#1s EVM% policies an" $ui"elines

/rovi"e timel& in"ications of actual or potential problems /rovi"e baseline inte$rit&

Ensure t)at !%# an" contractor cost an" sc)e"ule reports contain2 o o o Information t)at is "erive" from t)e same "ata base as t)at use" b& !%# an" contractor mana$ement E3plicit an" compre)ensive variance anal&sis inclu"in$ propose" corrective action in re$ar" to cost- sc)e"ule- tec)nical- an" ot)er problem areas Information t)at "epicts actual con"itions

Ensure t)at !%# an" contractor processes an" proce"ures are bein$ follo e" in accor"ance it) approve" EVM% s&stem "escriptions Confirm t)at !%# an" contractor processes an" proce"ures continue to satisf& t)e $ui"elines in t)e #merican National %tan"ar"s Institute4Electronic In"ustr& #lliance1s '#N%I4EI#( 5687# %tan"ar" for EVM% Confirm t)at mana$ement '!%# an" contractors( are usin$ t)e EVM% "ata to ma.e mana$ement "ecisions

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)urpose

,)e purpose of t)is "ocument is to "escribe !%#1s EVM% compliance revie approac) inclu"in$ t)e steps necessar& to or$ani*e- plan- an" e3ecute t)e compliance revie activities. It also inclu"es a "etaile" "iscussion of t)e steps necessar& to trac. an" monitor t)e results ac)ieve" t)rou$) t)e revie process.

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Scope
it)

,)is $ui"e applies to all !%# ma+or I, investments to )ic) EVM% is applie". It s)all be use" in con+unction t)e !%# Earne" Value Mana$ement !ui"e to Implementin$ t)e #N%I %tan"ar"- !%# Capital /lannin$ an" Investment Control 'C/IC( !ui"e- t)e !%# Control Revie !ui"e- an" an& 8e"eral #c0uisition Re$ulation '8#R( an" !%# #c0uisition Re$ulation rules t)at are promul$ate" on t)e sub+ect.

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EVM Overview

Earne" Value Mana$ement 'EVM( is a pro+ect mana$ement control tec)ni0ue t)at )elps to ob+ectivel& an" succinctl& i"entif& )o a pro+ect is e3ecutin$ a$ainst t)e baseline plan- an" provi"es forecasts as to )o it ill finis). ,)e EVM met)o"olo$& measures an" communicates t)e real- p)&sical pro$ress of a pro+ect ta.in$ into account t)e or. complete"- t)e effort e3pen"e"- an" t)e costs incurre" to complete t)e or.. It provi"es information on t)e fun"amental patterns an" tren"s of past performance as ell as in"ications of future performance. ,)e $rap)ic belo "epicts EVM re0uirements for a subset of a t&pical pro+ect mana$ement s&stem.

Initiation
Needs Needs Statement Statement

/lannin$

E3ecution ; Control
"rgani#ation "rgani#ation Reporting Deli$era%les !uality !ualityControl Control Ris Ris Control Control
Schedule/Cost Control

Schedule and Milestones

Communications Communications

Scope Scope Definition Definition Performance Performance Measurement Measurement Planning Planning Project Project Charter Charter

Quality !uality
!uality Ris Ris Schedule/Cost

WBS

Performance Measures

Performance Measurement Baseline

Contract ContractMgmt Mgmt Config Mgmt

People/Resources People/Resources Change Control

Blue boxes indicate EVM requirements

Project Management Plan

Performance Measures Analysis

1igure &4 Su-set of a )ro.ect Management System EVM not onl& inte$rates cost- sc)e"ule- an" scope of a performance measurement baseline 1- but also encompasses .e& pro+ect mana$ement practices- suc) as2
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/lannin$ scope of or. for t)e pro+ect from initiation to completion 9rea.in$ "o n t)e pro+ect or. scope into finite pieces t)at can be assi$ne" to a responsible person or or$ani*ation for control of tec)nical- sc)e"ule- an" cost ob+ectives Inte$ratin$ pro+ect or. scope- sc)e"ule- an" cost ob+ectives into a performance measurement baseline plan a$ainst )ic) accomplis)ments ma& be measure" Controllin$ c)an$es to t)e baseline Usin$ actual cost incurre" an" recor"e" in accomplis)in$ t)e or. performe" :b+ectivel& assessin$ accomplis)ments at t)e or. pac.a$e level #nal&*in$ si$nificant variances from t)e plan- forecastin$ impacts- an" estimatin$ cost at completion base" on performance to "ate an" or. to be performe" Inte$ratin$ EVM information into $overnance an" "ecision ma.in$ processes

,)e /erformance Measurement 9aseline '/M9( consists of a time p)ase" bu"$et t)at reflects t)e inte$ration of t)e inte$rate" master sc)e"ule it) costs. ,)is is t)e baseline a$ainst )ic) pro+ect performance ill be measure" usin$ earne" value. :nce establis)e"- t)e /M9 ma& c)an$e onl& if aut)ori*e" b& )i$)er level mana$ement- follo in$ a process t)at s)oul" be "escribe" in t)e pro+ect1s C)an$e Control /rocess.

&'3'&' Overview of Standard A,S!5E!A 67%8A

In June 1<<8- t)e Electronic In"ustries #lliance 'EI#( publis)e" %tan"ar" #N%I4EI# 5687#- =Earne" Value Mana$ement %&stems> in cooperation it) t)e National ?efense In"ustr& #ssociation an" ot)er or$ani*ations. ,)e EVM stan"ar" incorporates best business practices for pro$ram mana$ement s&stems t)at )ave been proven to provi"e stron$ benefits for pro$ram an" enterprise plannin$ an" control. #""itionall&- in"ustr& stan"ar"s "ictate compliance it) t)e #N%I stan"ar" as part of pro+ect mana$ement best practices. %tan"ar" #N%I4EI# 5687# uses a criteria concept to establis) a structure it)in )ic) an a"e0uate inte$rate" cost4sc)e"ule4performance mana$ement s&stem ill fit. ,)e @2 criteria are $roupe" into five )i$)7level cate$ories a""ressin$ basic mana$ement concepts2 :r$ani*ation- /lannin$ an" 9u"$etin$- #ccountin$Mana$erial #nal&sis an" Reportin$- an" 9aseline Mana$ement. Organi9ation ,)e :r$ani*ation criteria a""ress )et)er an initiative )as a soun" pro+ect or$ani*ation process. ,)is is evi"ence" b& t)e preparation of "ocuments t)at "efine an" assi$n t)e pro+ect or. scope an" properl& or$ani*e t)e pro+ect for EVM% reportin$ an" mana$ement control. ,)e primar& "ocuments t)at are create" to support t)is are t)e Aor. 9rea."o n %tructure 'A9%( 2- t)e :r$ani*ational 9rea."o n %tructure ':9%( @- an" t)e Responsibilit& #ssi$nment Matri3 'R#M( 6. )lanning and /udgeting ,)e /lannin$ an" 9u"$etin$ criteria verif& )et)er an initiative )as soun" pro+ect plannin$ an" controls in place. ,)is p)ase of t)e pro+ect is repeate" t)rou$)out t)e life of t)e pro+ect )en c)an$es are re0uire". Evi"ence to support compliance it) t)e criteria in t)is area inclu"es t)e A9%- :9% an" R#M. In a""ition- a $oo" pro+ect plan an"4or sc)e"ule an" use of Control #ccount Mana$ers 'C#Ms(B are $oo" evi"ence of compliance. # pro+ect plan provi"es t)e structure for critical milestone "ecision pointsC establis)es t)e frame or. for accountabilit& of time7p)ase" resources an" bu"$etsC an" provi"es t)e basis for assessin$ cost- sc)e"ule- business ris.- an" tec)nical ris.. /ro+ect sc)e"ule "evelopment estimates t)e effort across t)e planne" pro+ect "uration b& allocatin$ specific activities to specific or. pac.a$es. #lso- if not inclu"e" in t)e pro+ect plan- a pro+ect bu"$et must be in place to formall& allocate resources to cost accounts- aut)ori*e t)e e3pen"iture of resources to accomplis) t)e or.- an" trac. a$ainst plan. Accounting ,)e #ccountin$ criteria "e"uce )et)er cost "ata is "erive" from t)e performin$ or$ani*ation1s financial mana$ement s&stem to ensure accurate pro+ect cost information. 8or Ma+or I, initiatives- $overnment cost an" contractor cost s)oul" be mer$e" to provi"e a full picture of t)e pro+ect cost. # $overnment liaison s)oul" be establis)e" bet een t)e C#Ms- t)e /ro+ect Mana$ers- an" t)e accountin$ office to assist in t)e effort of reconcilin$ pro+ect "irect an" in"irect costs 'labor- material- ; contractors( it) t)e $eneral boo.s of account. Managerial Analysis and Reporting ,)e Mana$erial #nal&sis an" Reportin$ criteria verif& )et)er /ro+ect Mana$ers are accuratel& reportin$ earne" value "ata for t)eir pro+ects. ,)is inclu"es earne" value "ata from contractor7outsource" or.- as ell as t)e or. accomplis)e" internall& b& t)e $overnment. ,)e /ro+ect Mana$er must monitor an" trac. t)e contractor1s "efine" EV "ata to assure t)at t)e& are plannin$- controllin$ an" accuratel& reportin$ pro+ect cost an" performance information on at least a mont)l& basis.
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A9% 7 a $roupin$ of pro+ect elements t)at or$ani*es an" "efines t)e total or. scope of t)e pro+ect. ,)e A9% $ives "efinition to pro+ect scoperis.- sc)e"ule- an" cost- an" is t)e lo$ical startin$ point for implementin$ an or$ani*e" performance measurement approac). ,)e A9% is t)e foun"ation for earne" value an" is t)e most important plannin$ element 3 :9% D a C)art t)at s)o s t)e or$ani*ational units responsible for t)e "ifferent A9% elements. 4 R#M 7 Use" to assi$n roles an" responsibilities for specific activities to particular in"ivi"uals Esometimes calle" a /#RI% c)art since t)e role cate$ories t)at are often use" inclu"e /articipant '/(- #ccountable '#(- Revie Re0uire" 'R(- Input Re0uire" 'I(- an" %i$n7off Re0uire" '%(F. 5 C#M 7 sc)e"ules t)e or. an" estimates t)e value of t)e resources re0uire" to complete t)e or.- assiste" b& supportin$ or$ani*ations- pro+ect sta.e)ol"ers- an" pro+ect team members

/aseline Management ,)e 9aseline Mana$ement criteria see. to assess t)e c)an$e control processes of Ma+or I, initiatives. 9aseline c)an$es can arise "ue to pro+ect scope c)an$es- milestone an" 0ualit& revie s- issue resolution- as ell as at t)e re0uest of pro+ect sta.e)ol"ers or re$ulator& aut)orities. C)an$e is inevitable in pro+ects. ,)erefore- a process to control c)an$e to t)e pro+ect baseline is necessar& to retain control of t)e pro+ect. ,)e #N%I stan"ar" criteria an" associate" reportin$ re0uirements ensure t)at pro+ects use a"e0uate mana$ement processes to inte$rate cost- sc)e"ule- an" tec)nical performance. # compliant process- )en use" properl&- ill ensure t)at vali" cost- sc)e"ule- an" tec)nical pro$ress information provi"e pro+ect mana$ers it) an effective tool for "ecision ma.in$.

&'3'#' OM/:s EVM Re;uirements

,)e :ffice of Mana$ement an" 9u"$et ':M9( re0uires t)e use of a %tan"ar" #N%I4EI# 5687# compliant EVM s&stem for t)e "evelopment4 mo"erni*ation 4en)ancement '?ME( p)ases of ma+or information tec)nolo$& 'I,( initiatives. !%#1s EVM policies an" practices are ali$ne" to meet :M91s EVM re0uirements. In accor"ance it) :M9 Circular #711- /art 5 an" @00=In or"er to successfull& a""ress t)is section of t)e business case- &ou must "emonstrate use of an Earne" Value Mana$ement %&stem 'EVM%( t)at meets #N%I4EI# %tan"ar" 568- for bot) !overnment an" Contractor costs- for t)ose parts of t)e total initiative t)at re0uire "evelopment efforts 'e.$.protot&pes an" testin$ in t)e plannin$ p)ase an" "evelopment efforts in t)e ac0uisition p)ase( an" s)o )o close t)e initiative is to meetin$ t)e approve" cost- sc)e"ule an" performance $oals.> #n a""itional re0uirement is t)at a$encies use a performance7base" ac0uisition mana$ement s&stem- base" on t)e #N%I4EI# %tan"ar" 568- to obtain timel& information re$ar"in$ t)e pro$ress of capital investments. #$encies1 EVM% must also measure pro$ress to ar"s milestones on an in"epen"entl& verifiable basis- in terms of cost- capabilit& of t)e initiative to meet specifie" re0uirements- timeliness- an" 0ualit&. :M9 e3pects t)at a$encies1 Ma+or I, initiatives e3ecute it)in G4710H variance of cost- sc)e"ule an" performance $oals. #$enc& )ea"s must revie t)ose t)at are not it)in t)e tolerance limit an" "etermine corrective actions- to inclu"e potential initiative termination. In M70B72@ '#u$ust 200B(- =Improvin$ Information ,ec)nolo$& 'I,( /ro+ect /lannin$ an" E3ecution-> :M9 furt)er clarifie" an" e3ten"e" EVM re0uirements2 1. #ll ne ma+or I, initiatives must ensure cost- sc)e"ule- an" performance $oals are in"epen"entl& vali"ate" for reasonableness. 2. #ll on$oin$ ma+or I, initiatives it) ?ME efforts must ensure current cost- sc)e"ule- an" performance baselines are in"epen"entl& vali"ate" for reasonableness #N? s)oul" propose corrective actions- )ic) ma& inclu"e si$nificant re7baselinin$. :M9 must approve t)ese proposals. @. #ll )i$) ris. initiatives 7 t)ose re0uirin$ special attention from oversi$)t aut)orities an" )i$)est levels of a$enc& mana$ement "ue to inabilit& to "emonstrate $oo" pro+ect mana$ement on comple3 pro$rams)i$) ?ME or maintenance costsC mission criticalit&- etc- must be i"entifie" to :M9 an" monitore" 0uarterl&. In or"er to full& implement an EVM%- a$encies must "evelop EVM policiesC inclu"e EVM% re0uirements in contracts or in7)ouse initiative c)artersC perform compliance revie s of a$enc&4contractor EVM s&stemsC un"erta.e perio"ic s&stem surveillance revie sC an" e3ecute inte$rate" baseline revie s '?ME4mi3e" initiatives( an" operational anal&ses 'operational 4stea"&7state initiatives(.

Recent EVM tren"s in"icate t)at t)e use of an #N%I4EI# 5687# %tan"ar" compliant EVM s&stem for all ?ME activities ma& not be efficient or effective. In a""ition- t)e 8e"eral #c0uisition Re$ulation '8#R( clause publis)e" Jul& B- 200I- =Earne" Value Mana$ement %&stem> no aut)ori*es $overnment a$encies to "efine =ma+or ac0uisitions.> ,)is ma& impl& t)at $overnment a$encies can "efine t)e re0uire" use of EVM b& contractorsallo in$ for a more efficient an" effective use of %tan"ar" #N%I4EI# 5687# compliant EVM s&stems.

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( e Guide

,)e !%# EVM% Compliance Revie !ui"e "efines a stan"ar" approac) for !%# internal pro+ects an" e3ternal contracts. # stan"ar"i*e" approac) to an effective compliance revie benefits !%# an" its contractors because it ensures a common un"erstan"in$ of e3pectations- encoura$es efficiencies t)rou$) t)e use of a uniform process- an" $ives consistent $ui"ance for !%# in implementin$ t)e #N%I4EI# 568 EVM% $ui"elines. Compliance revie s are structure" to facilitate t)e e3c)an$e of information about t)e EVM process implementation an" t)e pro+ect or contract1s approac) to it. It is a mentorin$ or problem7solvin$ e3perience rat)er t)an an au"it because it not onl& i"entifies inconsistencies an" t)e reasons for t)em but also i"entifies possible solutions. Effective compliance revie s e3)ibit an" promote open an" )onest communication t)rou$) )ic) a revie team can i"entif& potential ea.nesses an" recommen" successful practices from ot)er pro+ects or contracts. ,)is can be facilitate" b&2 #n in"epen"ent or$ani*ation it) t)e aut)orit& an" e3pertise to con"uct a compliance revie process

Clearl& "efine" roles an" responsibilities for all sta.e)ol"ers in t)e revie ?etaile" processes an" $ui"elines t)at ma.e sense for !%# # t)orou$) plannin$ an" selectin$ process

9est practices tools an" met)o"olo$ies t)at )ave proven successful in t)e past

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COM)0!A,CE REV!E< )ROCESS

!%# ill con"uct EVM% compliance revie s on pro$rams an" pro+ects )en t)e contractor is usin$ an EVM s&stem t)at )as not been previousl& accepte" b& a 8e"eral a$enc&. ,)e $overnment7le" revie s are +oint revie s t)at can inclu"e t)e contractor if t)e contractor "esires to participate. Compliance revie s ill assess t)e mana$ement s&stems1 inte$ration an" t)eir application. ,)e compliance revie "oes not "etermine t)e a"e0uac& of t)e Contract Aor. 9rea."o n %tructure or an& ot)er pro+ect7specific artifact. Rat)er it assesses t)e capabilit& of t)e mana$ement s&stem an" t)e use of t)at s&stem b& t)e contractor.

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!ntegrated )ro.ect (eam

%taff members of t)e I, /ortfolio Mana$ement ?ivision ill lea" t)e Inte$rate" /ro+ect ,eam 'I/,( for a revie . ,)e I/, is also t&picall& comprise" of staff from t)e contractor- t)e !%# %%:- an" t)e !%# pro+ect office. ,)e contractor team members on t)e I/, s)oul" not be members from t)e specific pro$rams or pro+ects bein$ revie e". ,)e contractor1s team members ma& come from anot)er location or business unit. ,)e level of e3perience of all t)e team members must be commensurate it) t)e nee". 8or some pro+ects or pro$rams- t)e comple3it& of t)e effort or its si*e ill re0uire not onl& a lar$er team- but also a team t)at )as $reater e3perience in EVM% t)an ot)er teams on a pro+ect t)at )as little comple3it& or cost. Eac) team is selecte" specificall& for eac) revie it) consi"eration of t)ese factors. ,)e selection also consi"ers t)e level to )ic) eac) $ui"eline must be revie e" or is applicable. 8or e3ample- )en t)e contractor complies it) t)e Cost #ccountin$ %tan"ar"s 'C#%( an" t)e "isclosure re0uirements- t)e I/, ma& nee" a member )o is familiar it) t)e C#%- t)e contractor1s "isclosure statement- as ell as t)e contractor1s accountin$ s&stem.

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Review )rocess

,)e "etaile" process use" to con"uct a compliance revie ill var& b& t)e scope of pro+ect's(- t)e scope of t)e revie - t)e team- t)e location an" ot)er factors. A)ile t)ere is a common frame or.- eac) revie is planne" specificall& for t)at event. ,)ou$) t)e process ma& be tailore"- t)e con"uct of eac) revie is consistent an" repeatable. ,)e process is as follo s2 1. ,)e necessit& for a revie is i"entifie" b& "irection- re0uest or ot)er means.

2. #n initial plannin$ session is con"ucte" at t)e performin$ location. ,)e purpose of t)e plannin$ session is to i"entif& t)e pertinent !%# an" contractor or$ani*ationsC un"erstan" t)e pro+ect- pro$ram or area of interestC i"entif& in"ivi"ual team members4participantsC an" "evelop a plannin$ sc)e"ule for completin$ t)e revie . @. ,)e contractor ill t&picall& prepare a responsibilit& assi$nment matri3 'R#M(- t)e EVM s&stem "escription or e0uivalent "ocumentation 'see #ppen"i3 #(- t)e pro+ect's( "escription- an" a compliance map )ic) asseses t)e capabilit& of t)e EVM s&stem 'see #ppen"i3 C(. ,)ese items are $enerall& submitte" "urin$ t)e plannin$ meetin$ for t)e revie . ,)is initial set of pro"ucts facilitates t)e revie plannin$. 6. ,)e team is finali*e". ,)e team- le" b& t)e I, /ortfolio Mana$ement ?ivision- ill be compose" of !%# %%: personnel- contractor personnel 'if "esire" b& t)e contractor(- an" ot)er 8e"eral !overnment personnel as necessar&. ,o ensure in"epen"ence- team members from t)e $overnment or contractor performin$ or$ani*ations s)oul" be avoi"e"- since t)e contractor personnel are t)e operators an" users of t)e s&stem un"er revie . B. ,)e I, /ortfolio Mana$ement staff "etermines- in con+unction it) t)e contractor an" t)e team- t)e "ocumentation necessar& to con"uct t)e revie . ,)e contractor "elivers t)e "ocumentation to t)e team lea" for "issemination an" revie . I. ,)e team revie s t)e "ocuments to $ain un"erstan"in$ of t)e pro$ram or pro+ect- t)e scope of or.- t)e met)o"olo$ies an" processes t)at comprise t)e contractor1s EVM% an" to "etermine lo$ical areas of e3amination. ,)ese areas are i"entifie" to t)e contractor an" relate" "ocumentation is re0ueste" 'see #ppen"i3 9(. 5. ,)e team is traine" b& t)e I, /ortfolio Mana$ement staff to con"uct t)e revie . ,rainin$ is con"ucte" prior to ever& revie . ,rainin$ provi"es t)e means to buil" a team- to un"erstan" t)e scope of t)e revie an" to revie t)e #N%I stan"ar" an" its application. 8. ,)e revie is con"ucte" at t)e performin$ location. It is structure" as a series of intervie s follo e" b& team "iscussion an" resolution. ,)e team is bro.en into sub7teams an" assi$ne" specific areas for )ic) to intervie Control #ccount Mana$ers- /ro+ect Mana$ers an" ot)er contractor pro+ect personnel. ,)e revie is con"ucte" on a non7interference basis- so contractors1 or. s)oul" not stop "urin$ t)is process. Intervie s are con"ucte" it) in"ivi"uals 'an" sometimes it) one or t o ot)er in"ivi"uals simultaneousl&(. #t t)e en" of eac) "a&- t)e entire team meets to$et)er to s)are observations an" conclusions. <. ,)rou$)out t)e revie - t)e team $enerates Corrective #ction Re0uests 'C#Rs( an" Continuous Improvement :pportunities 'CI:s(. # C#R is use" )en t)e team )as "etermine" t)at t)e s&stem "oes not compl& it) a specific $ui"eline in t)e stan"ar". CI:s are emplo&e" )en t)e team i"entifies t)at a specific practice coul" be improve" to be more effective. C#Rs are cate$ori*e" as ma+or or minor b& t)e follo in$ $ui"elines2 a. Ma+or Corrective #ction Re0uests are s&stemic non7compliances- or )ave ma+or impact upon t)e baseline- t)e "ata or ot)er aspects of t)e pro+ect.

b. Minor Corrective #ction Re0uests are non7s&stemic an" )ave limite" impact on t)e pro+ect. 10. ,)e results of t)e revie are presente" to t)e contractor. ,)e results ill inclu"e t)e "ocumente" C#Rs an" CI:s i"entifie" b& t)e team. ,)e contractor must respon" to t)e team lea" it) a corrective action plan for eac) C#R. ,)e contractor ma& c)oose to respon" to CI:s as "esire". ,)e I, /ortfolio Mana$ement ?ivision revie s an" accepts t)e corrective action plan. ,)e contractor ta.es action as i"entifie" in t)e corrective action plan an" t)e corrective actions are verifie" b& t)e team lea". 11. ,)e I, /ortfolio Mana$ement staff prepares t)e final report an" recommen"s acceptance of t)e contractor1s s&stem to !%#. 12. !%#1s C)ief #c0uisition :fficer issues a letter to t)e contractor notif&in$ t)em t)at t)e #$enc& )as accepte" t)e s&stem. 1@. ,)e contractor follo s up t)e revie it) a surveillance plan to maintain t)e s&stem- con"ucts an annual assessment of t)e s&stem an" issues a status report to !%# re$ar"in$ t)e continue" maintenance of t)e s&stem.

A))E,+!= A > SAM)0E CO,(RAC(OR S?S(EM +ESCR!)(!O, +OC2ME,(

,)e EVM %&stem ?escription provi"es a "escription of t)e s&stem an" t)e contractor1s compre)ensive plan for meetin$ t)e $ui"elines in #N%I4EI# 5687#. ,)e EVM %&stem ?escription provi"es an un"erstan"in$ of eac) activit& re0uire" to meet t)e EVM% stan"ar". ,)e "ocument s)oul" briefl&- but compre)ensivel&- present t)e contractor1s approac) an" sc)e"ule of internal activities to "emonstrate t)at t)e s&stem an" processes meet t)e $ui"elines in t)e stan"ar". ,)e "escription s)oul" inclu"e t)e contractor1s plan for implementation of- an" activities lea"in$ up to- a compliance revie b& t)e I, /ortfolio Mana$ement staff. Contractor format is acceptable.

9ecause s&stem "escriptions encompass information on internal compan& processes- t)e "escriptions are usuall& not release" for $eneral public use. ,)e follo in$ is an EVM %&stem ?escription sample outline t)at )as been use" b& a lar$e $overnment contractor it) mature processes in place. ,)is format or an& ot)er format ma& be emplo&e". ,)ere is no preferre" format or content list. (A/0E O1 CO,(E,(S 1. E3ecutive %ummar& 2. /roposal preparation @. :r$ani*in$ for /ro$ram Mana$ement. a. Establis)in$ t)e Aor. 9rea."o n %tructure. b. #ssi$nin$ pro$ram or$ani*ational responsibilit&. c. I"entif&in$4?istributin$ t)e %cope of Aor.. ". Inte$ratin$ subsi"iar& processes. e. Mo"if& t)e pro$ram for ma+or c)an$es. 6. Establis)in$ an" Maintainin$ an Inte$rate" %c)e"ule for /ro$ram Mana$ement. a. I"entif&in$ Master %c)e"ule contents4re0uirements. b. Inte$ratin$ sc)e"ules it) t)e A9% an" compan& control s&stems. c. %tructurin$ sc)e"ules for pro$ress status an" forecastin$. ". #"+ustin$ sc)e"ules for pro$ram c)an$es. B. #ut)ori*in$ /ro$ram Aor. %cope- %c)e"ule- an" Resources. a. #ut)ori*in$ scope an" resources to t)e or.in$ level. b. %c)e"ulin$ resources in t)e control account. c. /rovi"in$ sc)e"ule an" resources for future effort. ". Establis)in$ ob+ective measures of or. pro$ress. e. Maintainin$ control of t)e performance measurement baseline. I. Interfacin$ t)e /ro+ect Mana$ement Control %&stem '/MC%( it) #ctual Cost /rocesses. a. Ensurin$ t)at actual costs are comparable to pro$ram bu"$ets. b. Establis)in$ a cost collection structure to support mana$ement re0uirements. c. /rovi"in$ appropriate allocation of in"irect costs to pro$rams. 5. Mana$in$ usin$ /ro$ram /erformance Information. a. /rovi"in$ performance an" cost variances for pro$ram anal&sis. b. /reparin$ summari*e" information for mana$ement evaluation. c. ?eterminin$ an" implementin$ appropriate corrective actions. ". Evaluatin$ an" up"atin$ estimates of pro$ram costs. 8. Incorporatin$ #pprove" C)an$es to /ro$ram Information. a. Ensurin$ "ocumentation reflects t)e impact of scope- sc)e"ule- an" resource c)an$es. b. Maintainin$ correlation to approve" pro$ram values. c. Establis)in$ proce"ures for baseline values in e3cess of pro$ram cost. <. Mana$in$ /ro$ram Material #n" %ubcontracte" Items. a. I"entif&in$ all material an" subcontract items re0uire" to e3ecute t)e %:A. b. %c)e"ulin$ material re0uirements. c. Establis)in$ bu"$et values for procure" items. ". Ensurin$ accountin$ s&stem interface supports pro$ram mana$ement nee"s. e. /rovi"in$ performance an" cost variances for pro$ram anal&sis. f. /reparin$ summari*e" information for mana$ement evaluation. $. ?eterminin$ an" implementin$ appropriate corrective actions. ). Evaluatin$ an" up"atin$ estimates of pro$ram costs for material an" subcontracts.

&

10. /MC% a. b. c. ". e. A))E,+!CES

Maintenance. Implementation Responsibilities. Continuin$ %urveillance. /MC% ,rainin$. %ubcontractor %urveillance. /MC% Improvement Initiatives an" Implementation.

11. Compliance Matri3 12. #cron&ms an" ?efinitions 1@. Man"ator& ?irectives

A))E,+!= / > (?)!CA0 +OC2ME,(A(!O, 2SE+ !, EVMS COM)0!A,CE REV!E<S

# sample of "ocumentation use" in EVM% compliance revie s is liste" in t)is appen"i3. ,)is list is not inten"e" to be a minimum or ma3imum list. It is merel& illustrative. :t)er similar "ocumentation can be use". Man& times t)e "ocumentation ma& be combine" into a pro$ram or pro+ect plan. ,)is list ma& serve as a startin$ point for t)e contractor an" t)e revie team to consi"er )at is relevant for t)e compliance revie . ,)e follo in$ @ "ocuments are t&picall& provi"e" in t)e initial sta$es of plannin$ for a compliance revie 2 @2 !ui"elines cross reference to EVM% "escription 'compliance map( Responsibilit& #ssi$nment Matri3 'R#M( %&stem ?escription an" EV proce"ures4re$ulations

,)e follo in$ are t&picall& provi"e" "urin$ t)e final sta$es of t)e plannin$ for t)e revie 2 Contract an" c)an$es4mo"ifications

'

?ata Element ?escriptions Cost /erformance Reports 'C/R( Contract Re0uirements Jist Contract 8un"s %tatus Report 'C8%R( Control #ccount Mana$er Noteboo.s :r$ani*ational C)art ; :r$ani*ational 9rea."o n %tructure Aor. 9rea."o n %tructure 'A9%( A9% ?ictionar& Control #ccount /lans /ro$ram %c)e"ules Variance #nal&sis Reports Variance #nal&sis Corrective #ction Jo$ Mana$ement Reserve Jo$ Un"istribute" 9u"$et Jo$ 9aseline C)an$e Jo$ Estimates #t Completion /roce"ures an" %upportin$ ?ocument 9ill of Materials Material Re0uirement Reports :ver)ea" 9u"$et /olicies an" /roce"ures In"irect Cost /ool Jistin$ C)ar$e Number %tructure E3planation Rate ,ables- Rationale for /ro+ecte" Rates #ccountin$ Manual ?isclosure %tatement Copies of an& ?C##- I! or ot)er #u"it Reports Jist of %ubcontractors %ubcontractor %cope of Aor. %ubcontractor /ro$ram %c)e"ule %ubcontractor Control #ccount /lans %ubcontractor E#C /roce"ures an" %upportin$ ?ocument :t)er %upplier Internal EV Reports Cost #ccountin$ %tan"ar"s ?isclosure %tatement

A))E,+!= C > COM)0!A,CE MA) (EM)0A(E

,)is template is a tool t)at contractors ma& emplo& in assessin$ t)e implementation of EVM%. ,)e value of t)e template lies in t)e i"entification of $aps in t)e s&stem. ,)e template is not inten"e" to "etermine )et)er t)e policies an" proce"ures compl& it) t)e stan"ar"- onl& t)at t)e& e3ist. Compliance it) t)e stan"ar" re0uires furt)er assessment 'revie (. A,S!5E!A867%8A G2!+E0!,ES !M)0EME,(!,G )O0!C!ES @ )ROCE+2RES ORGA,!AA(!O, A))0!CA/0E SEC(!O,S

Criterion 1. ?efine t)e aut)ori*e" or. elements for t)e a$enc&. # A9%- tailore" for effective internal

1(

mana$ement control- is commonl& use" in t)is process. Criterion 2. I"entif& t)e or$ani*ational structure inclu"in$ t)e ma+or contractors responsible for accomplis)in$ t)e aut)ori*e" or.- an" "efine t)e or$ani*ational elements in )ic) or. ill be planne" an" controlle". Criterion @. /rovi"e for t)e inte$ration of t)e a$enc&1s plannin$sc)e"ulin$- bu"$etin$- or. aut)ori*ation an" cost accumulation processes it) eac) ot)er- t)e A9%- an" t)e :9%. Criterion 6. I"entif& t)e or$ani*ation or function responsible for controllin$ over)ea" 'in"irect costs(. Criterion B. /rovi"e for inte$ration of t)e A9% an" t)e or$ani*ational structure in a manner t)at permits cost an" sc)e"ule performance measurement b& elements of eit)er or bot) structures as nee"e". /J#NNIN!- %CKE?UJIN!- #N? 9U?!E,IN! Criterion I. %c)e"ule t)e aut)ori*e" or. in a manner t)at "escribes t)e se0uence of or. an" i"entifies si$nificant tas. inter"epen"encies re0uire" to meet all aut)ori*e" re0uirements Criterion 5. I"entif& p)&sical pro"ucts- milestones- tec)nical performance $oals- or ot)er in"icators t)at ill be use" to measure pro$ress. Criterion 8. Establis) an" maintain a time7p)ase" bu"$et baseline- at t)e control account level- a$ainst )ic) performance can be measure". 9u"$et for far7term efforts ma& be )el" in )i$)er7level accounts until an appropriate time for allocation at t)e control account level. Initial bu"$ets establis)e" for performance measurement ill be base" on eit)er internal mana$ement $oals or t)e e3ternal customer7ne$otiate" tar$et cost inclu"in$ estimates for aut)ori*e" but un"efine" or.. Criterion <. Establis) bu"$ets for aut)ori*e" or. it) i"entification of si$nificant cost elements 'labormaterial- etc.( as nee"e" for internal mana$ement an" for

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control of contractors. Criterion 10. ,o t)e e3tent it is practical to i"entif& t)e aut)ori*e" or. in "iscrete or. pac.a$esestablis) bu"$ets for t)is or. in terms of "ollars- )ours- or ot)er measurable units. A)ere t)e entire control account is not sub"ivi"e" into or. pac.a$es- i"entif& t)e far term effort in lar$er plannin$ pac.a$es for bu"$et an" sc)e"ulin$ purposes. Criterion 11. /rovi"e t)at t)e sum of all or. pac.a$e bu"$ets plus plannin$ pac.a$e bu"$ets it)in a control account e0uals t)e control account bu"$et. Criterion 12. I"entif& an" control level of effort activit& b& time7 p)ase" bu"$ets establis)e" for t)is purpose. :nl& t)at effort )ic) is immeasurable or for )ic) measurement is impractical ma& be classifie" as level of effort. Criterion 1@. Establis) over)ea" bu"$ets for eac) si$nificant or$ani*ational component of t)e compan& for e3penses t)at ill become in"irect costs. Reflect in t)e bu"$ets- at t)e appropriate levelt)e amounts in over)ea" pools t)at are planne" to be allocate" as in"irect costs. Criterion 16. I"entif& mana$ement reserves an" un"istribute" bu"$et. Criterion 1B. /rovi"e t)at t)e allocate" bu"$et is reconcile" it) t)e sum of all internal bu"$ets an" mana$ement reserves. #CC:UN,IN! Criterion 1I. Recor" "irect costs in a manner consistent it) t)e bu"$ets in a formal s&stem controlle" b& t)e $eneral boo.s of account. Criterion 15. %ummari*e "irect costs from control accounts into t)e A9% it)out allocation of a sin$le control account to t o or more A9% elements. Criterion 18. %ummari*e "irect costs from t)e control accounts into t)e a$enc&1s or$ani*ational elements it)out allocation of a sin$le control account to t o or more or$ani*ational elements.

12

Criterion 1<. Recor" all in"irect costs t)at ill be allocate" to t)e a$enc&. Criterion 20. I"entif& unit costse0uivalent units costs- or lot costs )en nee"e". Criterion 21. 8or EVM%- t)e material accountin$ s&stem ill provi"e for2 #ccurate cost accumulation an" assi$nment of costs to control accounts in a manner consistent it) t)e bu"$ets usin$ reco$ni*e"acceptable- costin$ tec)ni0ues. Cost performance measurement at t)e point in time most suitable for t)e cate$or& of material involve"- but no earlier t)an t)e time of pro$ress pa&ments or actual receipt of material. 8ull accountabilit& of all material purc)ase" inclu"in$ t)e resi"ual inventor&. M#N#!ERI#J #N#JL%I% ; RE/:R,IN! Criterion 22. #t least on a mont)l& basis- $enerate t)e follo in$ information at t)e control account an" ot)er levels as necessar& for mana$ement control usin$ actual cost "ata from- or reconcilable it)t)e accountin$ s&stem2 Comparison of t)e amount of planne" bu"$et an" t)e amount of bu"$et earne" for or. accomplis)e". ,)is comparison provi"es t)e sc)e"ule variance. Comparison of t)e amount of t)e bu"$et earne" it) t)e actual 'applie" )ere appropriate( "irect costs for t)e same or.. ,)is comparison provi"es t)e cost variance. Criterion 2@. I"entif&- at least mont)l&- t)e EV Variance bet een bot) planne" an" actual sc)e"ule performance an" planne" an" actual cost performance- an" provi"e t)e reasons for t)e variances in t)e "etail nee"e" b&

13

mana$ement. Criterion 26. I"entif& bu"$ete" an" applie" 'or actual( in"irect costs at t)e level an" fre0uenc& nee"e" b& mana$ement for effective controlalon$ it) t)e reasons for an& si$nificant variances. Criterion 2B. %ummari*e t)e "ata elements an" associate" variances t)rou$) t)e or$ani*ation an"4or A9% to support mana$ement nee"s an" an& customer reportin$ specifie" in t)e contract. Criterion 2I. Implement mana$erial actions ta.en as t)e result of earne" value Criterion 25. ?evelop revise" E#C base" on performance to "atecommitment values for materialan" estimates of future con"itions. Compare t)is information it) t)e performance measurement baseline to i"entif& variances at completion important to compan& mana$ement an" an& applicable customer reportin$ re0uirements inclu"in$ statements of fun"in$ re0uirements. 9#%EJINE M#N#!EMEN, Criterion 28. Incorporate aut)ori*e" c)an$es in a timel& mannerrecor"in$ t)e effects of suc) c)an$es in bu"$ets an" sc)e"ules. In t)e "irecte" effort prior to ne$otiation of a c)an$e- base suc) revisions on t)e amount estimate" an" bu"$ete" to t)e or$ani*ations. Criterion 2<. Reconcile current bu"$ets to prior bu"$ets in terms of c)an$es to t)e aut)ori*e" or. an" internal replannin$ in t)e "etail nee"e" b& mana$ement for effective control. Criterion @0. Control retroactive c)an$es to recor"s pertainin$ to or. performe" t)at oul" c)an$e previousl& reporte" amounts for actual costs- earne" value- or bu"$ets. #"+ustments s)oul" be ma"e onl& for correction of errorsroutine accountin$ a"+ustmentseffects of customer or mana$ement "irecte" c)an$es- or to improve t)e baseline inte$rit& an" accurac& of performance measurement "ata. Criterion @1. /revent revisions to

14

t)e a$enc& bu"$et e3cept for aut)ori*e" c)an$es. Criterion @2. ?ocument c)an$es to t)e performance measurement baseline.

15