The Government Manager's Guide to Earned Value Management

By Charles I. Budd PMP and Charlene S. Budd PhD, CPA, CMA, CFM, PMP

This volume presents practical guidance for the government manager on earned value management (EVM), from basic calculations to how to find the most useful information online. Emphasis is on the relevant reports that contractors are required to submit to the federal government as part of their compliance with mandated EVM on projects. Because the data submitted on reports do not translate automatically into recommendations for actions to be taken, information is included on how to analyze and evaluate contractor reports. This book is a must-read for understanding EVM on government projects.

• Language: English
• Publisher: Berrett-Koehler Publishers, Inc.
• Release date: Dec 1, 2013
• ISBN: 9781567264401

Charles I. Budd PMP

Charles I. Budd, PMP, is a principal of Budd Management Systems in Atlanta, Georgia. He is certified as a system analyst by the Foundation for Administration Research.

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The Government Manager’s Essential Library

The Government Manager’s Essential Library is a series of easy-to-use, subject-specific guides on issues every government manager faces:

1.     The Government Manager’s Guide to Appropriations Law, William G. Arnold, CDFM-A

2.     The Government Manager’s Guide to Source Selection, Charles D. Solloway, Jr., CPCM

3.     The Government Manager’s Guide to Contract Negotiation, LeGette McIntyre

4.     The Government Manager’s Guide to Plain Language, Judith Gillespie Myers, Ph.D.

5.     The Government Manager’s Guide to the Work Breakdown Structure, Gregory T. Haugan, Ph.D., PMP

6.     The Government Manager’s Guide to Strategic Planning, Kathleen E. Monahan

7.     The Government Manager’s Guide to Project Management, Jonathan Weinstein, PMP, and Timothy Jaques, PMP

8.     The Government Manager’s Guide to Leading Teams, Lisa DiTullio

   The Government Manager’s Guide to Earned Value Management, Charles I. Budd, PMP, EVP, and Charlene S. Budd, Ph.D., CPA, CMA, CFM, PMP

10.    The Government Manager’s Guide to the Statement of Work, Michael G. Martin, PMP

11.    The Government Manager’s Guide to Contract Law, Terrence O’Connor

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Copyright © 2014 by Management Concepts, Inc.

All rights reserved. No part of this book may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording, or by an information storage and retrieval system, without permission in writing from the author and the publisher, except for brief quotations in review articles.

Printed in the United States of America

Library of Congress Control Number: 2013950061

ISBN 978-1-56726-440-1

Portions of this book have been adapted with permission from A Practical Guide to Earned Value Project Management, Second Edition, by Charles I. Budd, PMP, and Charlene S. Budd, PMP. © 2010 by Management Concepts, Inc. All rights reserved.

ABOUT THE AUTHORS

Charles I. Budd (Chuck) is a principal of Budd Management Systems in Atlanta, Georgia. His career began in computer programming and grew into executive management. He has been CEO of Financial Information Trust in Des Moines; president of International Computer Systems, Inc., in Akron; president of Technology Connections, Inc., in Atlanta; senior project manager for Softlab Enabling Technologies, also in Atlanta; and operations vice president for Intercontinental Computing, Inc., in Kansas City.

Chuck is a Project Management Professional and an Earned Value Professional. He currently is developing project management automation tools, consulting on information systems projects, conducting seminars, and writing with his coauthor, Charlene S. Budd. He has taught webinar classes and conducted workshops and presentations around the world. Some of his international consulting engagements included major system remediation projects in the United States, Germany, and South Africa, where he began using earned value management concepts.

Chuck is active in several civic volunteer organizations, the Project Management Institute, the Association for the Advancement of Cost Engineering, and information systems organizations. He is a graduate of Baldwin-Wallace College, has been certified a Systems Analyst by the Foundation for Administration Research, attended MBA classes at Drake University, and has a graduate degree from Baylor University.

Charlene Spoede Budd (Charli), PhD, is professor emeritus of accounting at Baylor University, where she has taught graduate management accounting and graduate project management classes. She has a PhD in business administration and holds certifications as a CPA, CMA, CFM, PMP, and all six professional categories of the Theory of Constraints.

Her research has been published primarily in practitioner journals, and she has been awarded three Certificates of Merit for articles (one of which explained why multi-project management is an essential skill for management accountants) published in Strategic Finance. She also has published in Today’s CPA, The Counselor, other journals, and many conference proceedings. She has authored or coauthored several accounting books.

Charli is active in several professional organizations, including the American Institute of CPAs (AICPA), the American Accounting Association, the Financial Executives Institute, and the Project Management Institute. She also has been an active member of the Finance and Metrics Committee of the TOC-ICO (Theory of Constraints International Certification Organization) and assisted the AICPA in developing questions and simulations for the Business Environment component of the computerized CPA examinations.

CONTENTS

PREFACE

CHAPTER 1 The Fundamentals of EVM

Earned Value Defined

EVM Adoption

Government-Required Use

The 32 EVMS Criteria Summarized

CHAPTER 2 EVMS Metrics

Primary Metrics

Reports and Comparison Metrics

Forecasting Metrics

Calculations Example

CHAPTER 3 Industry and Government Connections

DoD/Industry Links

Government Offices That Control or Influence EVMS

Other Relevant Agencies and Entities

DoD EVM Connections

Policies and Standards

Guidance and References

Additional Document Detail

CHAPTER 4 EVM Implementation and Verification

EVM Implementation Guide

DCMA Reviews

Integrated Baseline Review

Surveillance

Program Audits

CHAPTER 5 Reporting, Compliance, and Oversight

The Challenge of Meeting All Targets

Gaming the System

Reporting Requirements

CHAPTER 6 Overview of the Integrated Program Management Report

IPMR Formats

IPMR DID Adoption Phase-In

CHAPTER 7 An Introduction to IPMR Analysis

Report Analysis and the IPMR

Format 1: Work Breakdown Structure

Other Formats

APPENDIX I The 32 EVMS Criteria

APPENDIX II Glossary of Acronyms and Key Terms

INDEX

PREFACE

Thousands of articles and books are available on earned value management (EVM). Many, if not most, are directed to private industry. In this volume of The Government Manager’s Essential Library, we focus on directing the government manager toward a full understanding of U.S. government–required EVM, from the most basic calculations to how to find the most useful information online. We review the more relevant reports that contractors are required to submit to the federal government. Because the data submitted on reports do not translate automatically into recommendations for actions to be taken, we include information on how to analyze and evaluate contractor reports.

Our focus is the federal government’s use of the ANSI/EIA-748 standard for earned value in all of its versions—A, B, and the 2013 748-C, as well as the government’s supplemental data requirements. The standard contains 32 earned value management system (EVMS) guidelines, common terminology, and other sections that provide application and implementation principles that were originally adopted by the federal government in 1999. (Please note that we use the older term criteria and the newer term guidelines interchangeably when referring to the ANSI/EIA-748 standards.)

While the basic requirements of EVM have remained stable since 1999, implementation and intent guides have resulted in some subtle and some not-so-subtle changes in the 32 criteria. With the goal of improving project transparency and success, government and industry have expanded EVMS requirements through their respective contract management processes, recommendations, and guides.

Some of the information in this guide, updated for recent developments, is taken from our 2010 book, A Practical Guide to Earned Value Project Management, Second Edition, published by Management Concepts. That book is a comprehensive rendition of EVM and is a good reference for those who are interested in additional grounding in the subject.

Although EVM is a project management system, we do not focus on project management basics. Instead, we have targeted this text to government managers who oversee contracted projects or are seeking to expand their understanding of earned value management.

Because both industry and government entities are concerned with the EVM standard, the volume of data grows almost daily. Fortunately, most of this information can be found online. Unfortunately, much of the information is overlapping and intertwined. In this book, we provide the basic principles of EVM along with the additional detail government managers will need to analyze EVM reports. Throughout, we note the websites that we believe offer significant information and requirements.

Trying to document government procedures and policies at one point in time is rather like trying to compose a realistic painting of a colorful and fast-moving train. The EVM standard continues to evolve and grow more complex as government and industry components add varying interpretations for its use. Following all these evolving interpretations is traveling a long and tortuous highway;