2008 Watch List: EVM for everyone

Once an obscure project-management tool used mostly by Defense Department agencies, earned value management is making its way into mainstream program oversight. That trend will continue this year. There is little doubt that EVM is becoming tightly woven into the management fabric at government agencies. A recent report from the Congressional Research Service concluded that EVM is of “increasing salience” in government project management practices. The management technique measures progress against cost, schedule and performance baselines, and it is designed to raise red flags when a project is in trouble. At its simplest, it lets managers identify a problem early and take corrective action. “The easiest way I explain it, especially to senior managers, is that EVM measures your actual performance against your planned activity,” said Karen Evans, administrator of e-government and information technology at the Office of Management and Budget. “I think it really gets to the execution [of a project]. It’s about delivering results.” OMB’s requirement that agencies adopt EVM has helped spread its use governmentwide. Since 2004, OMB has required agencies to develop policies for using EVM to establish and validate performance measurement baselines against cost, schedule and performance goals. Agencies must use the technique for major new IT projects, a policy aligned with the President’s Management Agenda. When OMB gives an agency a PMA score card rating, it takes into account whether the agency is using EVM to plan and manage its IT investments. To receive a green score, a project cannot vary from its cost, schedule and performance benchmarks by more than 10 percent. Without an OMB mandate for agencies to adopt EVM, its use would probably not be as widespread, said David McClure, a research director at Gartner’s Government Group. “That’s still the driver — getting compliance, showing that you are using EVM and that your contractors have EVM in place.” OMB has no plans to alter its EVM policy this year. “I think the policy is fairly sound, and the criteria are very measurable,” Evans said, adding that most agencies are faring well on implementing EVM. “Some agencies have been very aggressive and have implemented EVM above and beyond what’s required in the policy, and some agencies are still struggling with the basic [policy] requirements,” Evans said. “OMB plans to work aggressively this year with noncompliant agencies to make sure they have a robust [EVM] policy in place,” she said. Officials will work through the CIO Council’s Best Practices Committee to share lessons learned with those agencies. They will also help agencies work through high-risk projects so they can see the value of EVM, embrace it and take it agencywide, she added. On the contractor side, companies are developing ways to include EVM in their project management procedures. EVM is destined to be the difference between winning and losing government contracts, officials at GTSI said. EVM could also be a useful congressional oversight tool, according to the Congressional Research Service report. Clinton Bass, an analyst of government organization and management at CRS’ Government and Finance Division, wrote in the report that metrics generated by EVM are of growing value to Congress as lawmakers weigh decisions about the authorization and funding of capital projects. Karen Richey, senior cost analyst at the Government Accountability Office’s Center for Technology and Engineering, said her group has used EVM for audits published in more than 20 GAO reports since 2003. “We definitely view EVM as a wonderful oversight tool for our audits” she said. EVM can show the status of a major capita l investment as a snapshot in time, Bass said. “The story that EVM tells can be a significant one,” he added. “Once the basic jargon and concepts are understood, EVM provides a visually simple picture on a periodic basis of whether or not a project is on track with plans. For oversight purposes, EVM can thereby flag outliers and signal the potential need to ask further questions.” However, Bass said EVM doesn’t necessarily tell the whole story. Without further evaluation of a project, “EVM metrics might tell only a partial story,” he wrote. “For example, even when EVM metrics are accurately captured and portrayed, the metrics typically will not reveal why a project might be experiencing schedule or cost variances.” Furthermore, EVM data might not accurately represent the cost and schedule that are most conducive to a project achieving a particular functionality, Bass wrote. Evans agreed that EVM is not a panacea. “This is just one of many tools that the CIO needs to have to be able to manage the portfolio,” she said. “It’s a nice, standardized, quantitative way for agencies to demonstrate that they’re performing. But you’ve got to use it with other tools.”