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Pinnacle

5 Ways to Scale Your EVMS

Posted by Michael Breuker on Tuesday, November 30, 2021

Much has been written about how complicated and difficult Earned Value Management (EVM) can be, and a term that has grown in popularity in response to this perception is “EVM Lite.” One of the problems with the term “EVM Lite” is that it suggests a version of EVM that is incomplete in some way. 

In fact, proponents of EVM Lite sometimes suggest whittling down the 32 guidelines into just 10 core guidelines. But what many people don’t know is that the EIA-748 32 guidelines were always meant to be scaled for different project types. NDIA, which authors the EIA-748 guidelines, recently addressed this by producing the Earned Value Management System (EVMS) Scalability Guide, on which I was proud to be a contributing author. 

A “scaled EVMS” makes it clear that there is a range of implementation options, from doing a simple CPI and SPI calculation in a schedule, to implementing a fully EIA-748 compliant EVMS on a government contract. Scalability suggests that a range of implementation options could apply to different types of projects. I highly recommend reading the NDIA EVMS Scalability Guide and using it to help tailor your own implementation. In the meantime, here are five ways to get started. 

1.   Create a tiered policy

I recommend starting with a corporate policy that defines when and how EVM will be applied on various types of projects your organization may execute. Define the system in tiers, from the lowest (perhaps just a comparison of budget and actuals with no earned value at all) to a fully EIA-748 compliant system. Where a project fits in the tiers could be based on many factors, such as: 

Project Owner: Is this an Internal Investment or Contract? 

Contract Type: For contracts, is it a T&M, CP, or FFP? Is EVM a contractual requirement?

Project Type: Software Development, Construction, Engineering, Manufacturing, Operations & Maintenance, Research, etc. 

Project Size: Consider both the total value and length of the project 

Risk: Is this something that has been done before, or is it entirely new? 

In my experience, 4 or 5 tiers is adequate. Each tier will have increasing reporting, process controls, compliance, and surveillance requirements. 

2.   Build your WBS to the right level

One of the ways in which the EVM methodology is designed to be scalable is by using a product-oriented Work Breakdown Structure (WBS). Smaller projects simply don’t need to be broken down into a lot of detail. Sometimes a WBS that only consists of 2 or 3 levels is good enough to manage. Less WBS elements on a project means fewer control accounts and charge numbers, significantly reducing the administrative burden of managing the data. 

3.   Simplify your OBS structure

EIA-748 guideline #2 requires that an Organizational Breakdown Structure (OBS) be created that depicts how the project will be managed, including major subcontractors. The intersection of the OBS and WBS defines control accounts. 

While complex projects will have multiple levels of an OBS hierarchy, simpler projects, such as projects being performed by a single functional organization, may only have one level to an OBS. In these cases, the project manager would be the Control Account Manager (CAM) for all the work on the project. 

4.   Report in whole costs if possible

Federal Acquisition Regulations (FAR) mandate Earned Value Management to be performed on development contracts that are more than $20M in value. These contracts tend to be cost plus, and thus EVM is often associated with requirements to report on direct and indirect costs. This necessitates the use of EVM software that can support complex rate escalations and burdens. 

But these complexities are due to contract reporting requirements and government accounting regulations and have little to do with EVM. For T&M or Fixed Price contracts, and for internal investment projects, it is fine to plan and manage in whole dollars, and this can usually be done directly within the schedule without additional software.  

5.   Reduce paperwork and approval processes

Earned Value Management Systems are often associated with lots of administrative paperwork. But there is nothing in the EIA-748 guidelines, or in any other published EVM standard, that requires this. Two factors are generally responsible for the paperwork and approval processes commonly in place for an EVMS.

1. Compliance with federal contract regulations 

Organizations that have an EIA-748 validation requirement need to maintain detailed records to support audits by the Cognizant Federal Agency (CFA). This will include detailed budget logs, work authorization documents, baseline change requests, etc. All of this paperwork will have approvals associated with it, and must be validated and traceable across systems in order to meet compliance requirements. While there is certainly some value to the organization to have auditable systems in place, it may not all be necessary if compliance and external surveillance are not required. 

2. Contractual reporting requirements 

For government contracts that require EVM reporting, the format is usually the Integrated Project Management Report (IPMR) or Integrated Program Management Data & Analysis Report (IPMDAR). Both reports require a bit of effort to produce, with the most intensive effort usually focused on the Variance Analysis Report (VAR) component (Format 5 for the IPMR, Narrative Summary for the IPMDAR). 

Some ways to reduce paperwork and streamline processes include: 

  • Streamline the budget authorization procedures. Smaller projects don’t require paperwork to authorize budgets at lower levels of the WBS. The project manager can distribute the budget at their own discretion directly within the schedule or other project management tool. 
  • Simplify change approvals. No EVMS will work well without at least some change control for the PMB, but this is another area where the project manager can be the sole decision-maker for smaller projects. The level of formality for approvals, and the paperwork required, should be scaled for the size and type of project. Many tools have automatic change logs that can be utilized as well. 
  • Eliminate formal VAR reporting. Variance Analysis Reporting primarily serves as a tool to provide information from the Control Account Manager to the Program Manager and external stakeholders. It can be a cumbersome exercise, albeit necessary on larger projects. Smaller projects can streamline variance analysis by including EVM data in weekly or monthly project status meetings and discussing the root causes and corrective actions directly. 

 

Are you considering implementing Earned Value Management but are unsure of where to start? We can help. Contact us for a free consultation - Schedule a Call With Us or Send Us an Email

 

Topics: Aerospace & Defense, Energy, Utilities, Oil & Gas, Engineering & Construction, Earned Value Management (EVM), Integrated Program Management (IPM), Technology, Deltek PPM, Oracle Primavera, Government & Public Sector, Microsoft EPM, forProject Technology, Encore Analytics Empower, Recent Articles

Michael Breuker

By Michael Breuker

Michael is President of Pinnacle Management Systems. Since joining the company in 2000, he has performed in a variety of consulting and management roles affecting transformative change within federal agencies and suppliers, IT organizations, Engineering & Construction, Aerospace, Finance, and other industries that desire to improve project and program performance. Michael is a Microsoft Certified Professional and certified Primavera trainer and consultant. He is also an AACE certified Earned Value Professional (EVP), and an APMG certified trainer for IPPM. He currently serves as the Dean of Scheduling for the College of Performance Management (CPM) and is an active participant with the NDIA Integrated Program Management Division (IPMD) and the Civilian Agency Industry Working Group (CAIWG). As part of his contribution to the industry, he helped author the NDIA EVMS Scalability Guide.

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