Keep Management Updated

Part of agency capital planning and investment control is reporting updated program EACs to management during senior executive program reviews. With EVM data, a variety of EACs can be generated solely for this purpose. In addition, continual management reviews of the EVM data not only allow insight into how a specific program is performing but also help depict a company’s financial condition accurately for financial reporting purposes.

Cost and schedule performance trends derived from the CPR are objective data that allow management to identify where potential problems and cost overruns can occur. This information should be presented at every program manager review, since it is essential for managing a program effectively.

In addition, DOD requires contractors to submit a quarterly contract funds status report that provides time-phased funding requirements and execution plans and identifies requirements for work agreed-to but not yet under contract. Other agencies require a similar document. For example, NASA requires form 533 that reports data necessary for projecting costs and hours to ensure that resources realistically support program schedules. The form also evaluates contractors’ actual cost and fee data and compares them to the negotiated contract value, estimated costs, and budget forecast data. Data from these types of reports are important for determining whether the government has adequate funding to complete the program, based on the contractor’s historical performance trends. Therefore, these reports and the CPR should be used regularly to monitor contractor performance and update the cost estimate. Doing so will provide valuable information about problems early on, when there is still time to act. It also makes everyone more accountable and answerable to basic program management questions, such as:

Can the EVM data be trusted?
Is there really a problem?
How much risk is associated with this program?
What is causing a problem and how big is it?
Are other risks associated with this problem?
What is likely to happen?
What are the alternatives?
What should the next course of action be?
Who is responsible for major parts of the contract?
What were the major changes since the contract began?
How long have similar programs taken?
How much work has been completed and when will the program finish?
When should results start materializing?

Perhaps the greatest benefit of EVM is the discipline of planning the entire program before starting any work. This planning brings forth better visibility and accountability, which aid program managers and contractors in identifying risks and the possible need for over target baselines. Further, EVM offers a wealth of data and lessons that can be used to project future program estimates. To reap these benefits, however, EVM requires a validated system and continuous surveillance of the system to ensure successful completion of a program.