GAO releases guide to monitor program costs

The Government Accountability Office has released an early draft of its GAO Cost Assessment Guide, a compendium of best practices intended to establish a consistent methodology governmentwide for estimating and managing program costs. In development for two years, the 333-page guide “helps fill a gap in federal government guidance and paves the way for agencies to be accountable for their program costs and outcomes,” said Karen Richey, a senior cost analyst at GAO. In addition to identifying best practices, the guide offers “transparency into how GAO will conduct an audit of a program’s cost estimate or [earned value management] data,” she said. The first 17 chapters of the guide address the importance of cost estimating and best practices for creating credible cost estimates, which establish the basis for measuring actual performance against an approved baseline plan, using an EVM system, the document states. The Office of Management and Budget requires agencies to use EVM, a project management tool, in their performance management systems. Three chapters in the guide address the details of EVM, which is designed to integrate cost estimating, system-development oversight and risk management. Linking EVM and cost estimating results in a better view of a program and gives managers a greater understanding of program risks, according to the guide. EVM plays a critical role in empowering agencies to improve their management decisions, said Joel Koppelman, chief executive officer of Primavera and co-author with Quentin Fleming of the book “Earned Value Project Management.” The release of GAO's guide is a step in the right direction, Koppelman said. “To put this EVM guidance into action, federal leadership needs to digest the guide, embrace and endorse the approach, and make sure to implement EVM in letter and spirit,” he said.GAO will collect comments for about a year before issuing a final version of the guide, the agency said.