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TRANSCRIPT
www.mtca.uk.com
shaping innovative enterprise solutions
A Business Case for EVM Process Discipline A Presentation to
The Romanian PMI Chapter February 2005
By
Lloyd L Carter Managing Director
About MTCA Ltd
MTCA is a United Kingdom company specialising in Performance Management Consulting, Project Management Staffing and related Training Services for United Kingdom and European clients. Our vision is to be recognised leaders in the furtherance of the performance management discipline, a customer’s first choice for the provision of performance management system solutions and to continually improve through the professional growth and active involvement of our people. Employing only specialist staff with extensive project based experience, MTCA’s primary aim is to assist organisations to plan, establish and control their project, program, portfolio and strategic enterprise level endeavours. We identify the performance objectives at each level and then focus on the value, timeliness, integrity and analysis of relevant measurement data. We ensure that an enduring performance management system results by addressing the leadership, technique and cultural changes required within the organisation. We provide advice on governance and teaming structures to meet various contracting scenarios, help to identify key performance indicators and to develop integrated performance reporting systems that assist the various management levels to better comprehend their project and business performance. MTCA offers consultants and staff who are uniquely acquainted with international commercial and government practices and requirements. Project work in both Government and Industry sectors includes experience in telecommunications, shipbuilding, construction, electronics, aircraft, space, military, energy and transportation, many with a software intensive focus. It is affiliated with the Carter Management Group, which provides international services in Performance Management. Current organisations under the Carter Group brand operate in the United Kingdom as MTCA Limited, the United States as EMTCo LLC and Australia as MTC AustralAsia Pty Ltd. The skills, intellectual property and personnel of each of the cooperating entities in the Group are available to all of the other members of the Group.
MTCA Services
1. Performance Management Consulting
MTCA assists government and commercial organisations in the use of best practice performance management systems that provide timely, reliable and meaningful management information to facilitate decision making. Our objective is to implement and maintain systems that meet the requirements of both our clients and their stakeholders to bring organisational endeavours in on time and within budget. For effective business operation an organisation’s project management system should be appropriately coupled with the financial, procurement, time recording and reporting systems. We can assist in the integration of existing business systems and ensure that efficient, timely and accurate performance and other management data is reported. This function is greatly enhanced by the use of wInsight, the tool of choice for integrated performance management assessment and reporting around the world.
MTCA can also assist with tender development and evaluations, business case reviews and in-project performance evaluations. We perform a detailed analysis of project data, interview key personnel to identify cost, schedule and technical risks and forecast the likely final cost and schedule. EVM Assurance Services. For those companies requiring an independent assessment of the maturity of their earned value based project performance management system, MTCA can perform such an assessment against any chosen Standard. It is also possible to arrange for a Formal Certification Audit at any location globally, through our association with SAI Global, assessing compliance against any recognised national or industry based earned value Standard.
2. wInsight Performance Data Analysis System
MTCA is the sole United Kingdom distributor of the wInsight family of software which has become the tool of choice for integrated performance management assessment and reporting around the world. Amongst a myriad of other functions, wInsight has the capability of aggregating data from disparate sources such as several organizational elements and presenting it in a normalized, real time manner. It can connect to the leading commercially available earned value management and/or scheduling software. Such functionality is unrivalled and provides considerable advantage to an organisation attempting to manage its internal management and external supplier performance regardless of the geographical location of the source data. This can be achieved via industry standard X12 data transfer, xml or for more progressive organisations via wIsight web.
3. Training Services
MTCA provides tailored training services in association with its consultancies and staff placements. In addition we are able to offer stand-alone courses in acquisition management, project management, project planning and project accounting. MTCA staff have been providing training in Earned Value Management techniques for over a decade in the USA and Australia and more recently in the UK and other European countries. In addition, MTCA can perform a training needs analysis across your organisation, identifying critical tasks and associated organisational and staff proficiency. We are able to structure a training program to meet your proficiency needs and later re-assess staff proficiencies to measure effectiveness. We also offer ongoing coaching and mentoring programs.
Range of Services
wInsight Products
wInsight
wInsight Adminstrator
CS Glue
CS Glue Viewer
wInsight Connect
wInsight Web
Briefing Wizard
Risk+ for MS Project
Training Services
Training Courses
Project Management
Earned Value Management
Performance Based Contracting
Performance Management
Scheduling
Training Programs
Training Needs Analysis
Proficiency Profiling
Coaching and Mentoring
Performance Management Consulting Performance Management Techniques
Earned Value Management
Integrated Management Systems
Integrated Reporting Systems
Management System Documentation
Project Initiation and Planning
Integrated Baseline Reviews
Project Performance Evaluations
Governance and Teaming Structures
wInsight Implementation, Training and Technical Support
Business Case Reviews
Tender Preparation
Tender Response Evaluation
Experience
MTCA has extensive experience assisting organisations to develop, implement, document and support management control systems throughout the world. Our staff have between 10 and 35 years experience in both Defence and commercial industry working in a diverse range of projects and environments.
The following is a partial list of the organisations that our staff have assisted. European organisations are highlighted in bold print. ACT Electricity and Water Aerojet General AirServices Australia ATT Atlantic Research Corporation Augusta Westland Australia Graduate School of Engineering Innovation Australian Defence Industries Ltd Australian High Commission - London AWADI BAE Systems-UK Bell Helicopter Boeing Company Boeing Australia Borg-Warner Automotive Bureau of Meteorology Business Excellence Australia CelsiusTech Australia Pty Ltd Australian Department of Defence Department of Infrastructure (Victoria) Department of Workplace Relations Djimindi Alliance Eaton Corporation Fairchild Republic Ford Aerospace and Communications Corp. Ford Motor Co General Dynamics Corporation General Electric Company Gould, Incorporated GTE-Sylvania Harris Corporation Helitech Hercules, Inc Honeywell, Inc. Honeywell Ltd - Space & Aviation Division Hughes Aircraft Corp. ITT Litton Industries Lockheed Corporation M/A-COM Linkabit Corporation Martin Marietta Marconi GEC McDonnell Douglas Corporation
Ministry of Defence - United Kingdom Monsanto Motorola, Inc National Aeronautics & Space Administration Northrop Corporation NQEA Pty Ltd NSW RTA Pacific Access Perth Water Philips MEL Raytheon Australia RLM Systems Rockwell International Rockwell Systems Australia Rolls Royce, UK Rust Construction Services SAI-Global Science Applications International Corp Singer, Inc. Sperry Univac Stanilite Pty Ltd Storage Technology Corporation Strahan & Henshaw-UK Telecom, ATS Telstar, Pty Ltd Telstra, IS Telstra, Retail Telstra, IBU Telstra, CPO Tenix Defence Systems Thales Sensors – UK Thales Underwater Systems The Magnavox Company Transfield Amecon United States Air Force United States Army United States Defense Systems Management College United States Department of Energy United States Department of Transportation United States Navy VT Shipbuilding Westinghouse Electric Corporation Williams International Wormald
Contact Details:
MTCA Limited 1 Henbury Road
Westbury-on-Trym Bristol BSO 3HQ United Kingdom
Tel: +44 (0) 117 310 1266 Fax: +44 (0) 117 310 1267 Email: [email protected]
Web: www.mtca.uk.com
1
Slide 1Copyright MTCA 2005
A BUSINESS CASE FOR EVM PROCESSDISCIPLINE
Project Performance Management Using Earned ValueRomania PMI Chapter-February 2005
Slide 2Copyright MTCA 2005
Learning Outcomes
Comprehension of the
principles of Earned
Value Management and
its application in Project
Performance Measurement and
Performance Based Contracting
(for reliable and objective
project analysis)
2
Slide 3Copyright MTCA 2005
The Carter Management GroupLloyd Carter
Chairman
EMTCUS
Tom McCannChief Executive Officer
MTC AustralAsiaAsia
Stuart WilsonManaging Director
(Acting)
MTCAEurope
Lloyd CarterManaging Director
Slide 4Copyright MTCA 2005
Who’s Here Today
• Experience in Project Management? • Current knowledge of
Earned Value?
3
Slide 5Copyright MTCA 2005
Growth of EVMS
• Genesis in the US DOD Cost/ Schedule Control Systems Criteria requirements
• Evolved over the years to applications both government and commercial, in the US as well as internationally.
• Successfully applied to a wide range of size and project domains (e.g. communications, construction, mining, finance etc)
• ‘Best practice’ for project performance management incorporated into the PMI Project Management Body of Knowledge (PMBOK).
• Many companies have implemented EVM as a basic discipline of their project performance management process.
Slide 6Copyright MTCA 2005
Project Performance Project Performance Measurement Using EVMeasurement Using EV
12
16
20
$24
2 4 6 8 10 12 14 16 18
4
8
TIME AXIS20
Planned Value
TIMENOW
SCHEDULE VARIANCE ($)
COST VARIANCE
22PLANNED
END
CO
ST A
XIS
Actual Cost Earned Value
CURRENTSCHEDULE
SLIP
1. WORK SCOPE
100
4060
1525
3030
2. SCHEDULE
3. BUDGET
4
Slide 7Copyright MTCA 2005
QUESTION METRIC ACRONYM
How much work was PLANNED VALUE PVplanned for in the budget? (Budgeted Cost of (BCWS or S)
Work Scheduled)
How much work has been EARNED VALUE EVdone to date? (Budgeted Cost of (BCWP or P)
Work Performed)
How much has been spent ACTUAL COST ACto get the work done? (Actual Cost of (ACWP or A)
Work Performed)
What was the total job’s BUDGET AT COMPLETION BAC budgeted cost?
What’s the expected cost ESTIMATE AT COMPLETION EACof the total job now?
5 Basic Performance Metrics
Slide 8Copyright MTCA 2005
Widget Example
• Task:– Build 10 widgets– Unit Planned Cost=$1,000– Budget at Completion=$10,000– Scheduled Rate=1 widget/month
5
Slide 9Copyright MTCA 2005
Widget Project Progress, 5th Month
• Task:– Build 10 widgets
– Unit Planned Cost=$1,000
– Budget at Completion=$10,000
– Scheduled Rate=1 widget/month
• Performance Data– Budget=$5,000
– Actual cost=$4,000
– How are they doing?
Slide 10Copyright MTCA 2005
Widget Project Progress, 5th MonthNow with Physical Progress
• Task:– Build 10 widgets
– Unit Planned Cost=$1,000
– Budget at Completion=$10,000
– Scheduled Rate=1 widget/month
• Performance Data– Budget=$5,000
– Actual cost=$4,000
– How are they doing?
• Three widgets have been completed, none are in progress
6
Slide 11Copyright MTCA 2005
Widget Project Progress, 5th MonthNow with Physical Progress
• Task:– Build 10 widgets
– Unit Planned Cost=$1,000
– Budget at Completion=$10,000
– Scheduled Rate=1 widget/month
• Performance Data– Budget=$5,000
– Actual cost=$4,000
– How are they doing?
• Three widgets have been completed, none are in progress
– Earned value = 3 widgets x the budgeted cost=$3,000
Slide 12Copyright MTCA 2005
Widget Project Progress, 5th MonthNow with Physical Progress
• Task:– Build 10 widgets
– Unit Planned Cost=$1,000
– Budget at Completion=$10,000
– Scheduled Rate=1 widget/month
• Performance Data– Budget=$5,000
– Earned Value=$3,000
– Actual cost=$4,000
Schedule Variance= -$2,000
Cost Variance= -$1,000
7
Slide 13Copyright MTCA 2005
BLISSFUL IGNORANCE, UNTIL ITS TOO LATE!
12
16
20
$24
2 4 6 8 10 12 14 16 18
4
8
TIME AXIS20
Planned Value
TIMENOW
22PLANNED
END
CO
ST
AX
IS
Actual Cost
I’m savinga fortune!
Without EV Data
Slide 14Copyright MTCA 2005
INSIGHT, PROMPTING EARLY ACTION
12
16
20
$24
2 4 6 8 10 12 14 16 18
4
8
TIME AXIS20
Planned Value
TIMENOW
SCHEDULE VARIANCE ($)
COST VARIANCE
22PLANNED
END
CO
ST
AX
IS
Actual Cost Earned Value
CURRENTSCHEDULE
SLIP
I need todo something
about this!
With EV Data
8
Slide 15Copyright MTCA 2005
COST VARIANCE = Earned Value – Actual Cost = $15k - $16k = -$1k
12
16
20
$24
2 4 6 8 10 12 14 16 18
4
8
TIME AXIS20
TIMENOW
COST VARIANCE
22PLANNED
END
CO
ST
AX
IS
Actual Cost $16kEarned Value $15k
I’m actuallyoverspent by $1k
Using EV - How is the Cost?
Slide 16Copyright MTCA 2005
SCHEDULE VARIANCE = Earned Value – Planned Value = $15k - $18.5k = -$3.5k
Using EV - How is the Schedule?
12
16
20
$24
2 4 6 8 10 12 14 16 18
4
8
TIME AXIS20
Planned Value $18.5k
TIMENOW
SCHEDULE VARIANCE (-$3.5k)
22PLANNED
END
CO
ST
AX
IS
Earned Value $15k
CURRENTSCHEDULE
SLIP
I should havedone a lot more
}
9
Slide 17Copyright MTCA 2005
Identification of Cost & Schedule Variances
PlannedValue
Earned Value
Actual Cost
TIME
svcv
$
schedule variance = EV - PV = negative numbercost variance = EV - AC = negative number
behind schedule,over cost
Earned Value
Slide 18Copyright MTCA 2005
USING THE DATA TO FORECAST FORWARD PERFORMANCE
Predicting the Future
10
Slide 19Copyright MTCA 2005
WHAT INFORMATION DO WE HAVE TO SUPPORT THIS?
12
16
20
$24
2 4 6 8 10 12 14 16 18
4
8
TIME AXIS20
Planned Value
TIMENOW
PM’sFORECAST
22PLANNED
END
CO
ST
AX
IS
Actual CostEarned Value
I’ve goteverything
under control
Given the current progress, when will we finish?
Forecasting-Project Manager Estimate
Slide 20Copyright MTCA 2005
WHAT INFORMATION DO WE HAVE TO SUPPORT THIS?
12
16
20
$24
2 4 6 8 10 12 14 16 18
4
8
TIME AXIS20
Planned Value
TIMENOW
PM’sFORECAST
22PLANNED
END
CO
ST
AX
IS
Actual CostEarned Value Does Anybody
have this under control?
Given the current progress, when will we finish?
Forecasting-Independent Estimate
11
Slide 21Copyright MTCA 2005
PHASES:CONCEPT DEFINITION IMPLEMENTATION CLOSE
OUTConstructiveOpportunity
DestructiveIntervention
AccomplishPlanPROJECT LIFE CYCLE
TIME
OPPORTUNITY
DECREASING
COST
INCREASING
Opportunityto
add
valuecost to
change
THE LATER YOU FIND OUT, THE MORE IT COSTS TO FIX!
You Need Early Warning
Slide 22Copyright MTCA 2005
Early Stages!
• over 800 military programs show that ......
no program has ever improved performance better than the following EAC calculation
EAC = BACCPI
at 15% complete point in program
no one pays enough attention in the
USA Survey says…..
12
Slide 23Copyright MTCA 2005
The EVM Lifecycle
Accounting, Analysing, Reporting, Acting, Revising and Maintaining
EXECUTING
Organising, Planning, Scheduling, Resourcing, Budgeting and Baselining
PLANNING
Set LifecycleAnd EstimateSet LifecycleAnd Estimate
• Incremental program
• 500 Function Points
• 10,000 Person Hours
• 12 Months
Effort, Mat, EVTfor each WP
Effort, Mat, EVTfor each WP
WP 1.1 Analysis
WP 1.2 Design
WP 1.3 Code & Test
Perform WorkClaim EV
Perform WorkClaim EV
MaintainPMB
MaintainPMB
Contract changes
Convert PPs to WPs
Distribute UB
Create WBS,OBS & RAM
Create WBS,OBS & RAM
WBS
OBS $$
$$
$$$$
$$$$$$
DevelopSchedulesDevelop
Schedules
1.1
1.2
1.3
Set thePMB
Set thePMB
121216162020
$24$24
22 44 66 88 1010 1212 1414 1616 18184488
TIMETIME2020
PV, EV, AC
Time
Dol
lars
Accum ActualsReport Perf
Accum ActualsReport Perf
TakeActionTake
Action
Reassign work
Prioritise resource
Address risk
AnalysePerformance
AnalysePerformance
1.0.9
1.1
“GO
OD
”“B
AD
”
1.2
.8
CPI
SPI
TIME
1.1
1.2
1.3
60%
Forecasts
Slide 24Copyright MTCA 2005
SCOPE MANAGEMENTCOST MANAGEMENTSCHEDULE MANAGEMENT RISK MANAGEMENT HUMAN RESOURCE MANAGEMENTCOMMUNICATIONS MANAGEMENT
Interdisciplinary Relationship of Processes Initiatives
CONTRACT MANAGEMENTPOLITICAL MANAGEMENTRESOURCE ACQUISITION ++QUALITY MANAGEMENT
PROJECTMANAGEMENT (EVM)
TRAINING SUPPORTMAINTENANCE SUPPORTSUPPLY SUPPORTTRANSPORTATIONPHST
INTEGRATEDLOGISTICSSUPPORT
RELIABILITYAVAILABITYMAINTAINABILITYSUPPORTABILITYENGINEERING SUPPORT
REQUIREMENTS ENGINEERING SYSTEM ANALYSIS AND SYNTHESIS SYSTEM VERIFICATION AND VALIDATION CONFIGURATION MANAGEMENT EXTERNAL INTERFACE MANAGEMENT SPECIALITY ENGINEERING
(SAFETY, SECURITY, HUMAN ENGINEERING, EMC/EMI, TESTABILITY, PRODUCEABILTY)
SYSTEMSENGINEERING
++ RESOURCE ACQUISITION- Acquisition Planning & Management- Supplier Evaluation & Selection - Transition to Support
13
Slide 25Copyright MTCA 2005
• ‘Non-recurring costs to implement a criteria-compliant system for the first time range from 2.5 to 4.0% (of the contract cost)’
• ‘The cost of EMS ranked third among the top ten cost drivers, and was estimated to be about 0.9 percent of the value added costs’
• ‘EVMS costs were in the areas of engineering/program management (65%) and finance (35%)’
• DOD working group estimated that EVMS cost can be reduced to 0.6percent of the value added costs (eg excessive documentation, excessive detail in the WBS, overuse of written variance analysis reports)
David S Christensen, The Costs and Benefits of the Earned Value Management Process, Acquisition Review Quarterly, Fall 1998
0.6% OF VALUE ADDED COSTS PER PROJECT
Earned Value Management
How much does it cost to implement?
2/13/2005Slide 26Copyright MTCA 2005
Process Improvement Business Case
• Benefits of Continuous Process Improvement– Improved understanding of how the organization develops
and delivers software-intensive systems– Increased control of costs, schedule & product quality
• Reduced development cycle time by reducing rework• Reduced schedule variance• Increased predictability and control of software and product quality• Enhanced risk management decisions based on quantitative data
– Improved environment for management and workforce• Ability to make cost-benefit tradeoffs of applicable technologies/processes• More time available to spend on problems requiring creative energy• People feel more empowered to propose process improvements for
organization-wide benefit
– More competitive organization– Satisfied customers
14
Slide 27Copyright MTCA 2005
Source: Presentation by Joe Jarzombek, Lt Col, US Air Force Director, Embedded Computer Resources Support Improvement Program, Ogden Air Logistics Center, Hill AFB, Utah 17 Nov 99
Process Improvement Business Case
• Software Process Improvement (SPI)• Based on USAF AFMC ALCs’ Experience• SPI efforts quantifiably justify funding (based on several projects)
– Demonstrated Return on Investment of 4:1 - 19:1– Earlier detection of software defects from 22% - 90%– Reduction in post-release defects from 39% - 84%– Reduction in schedule time from 19% - 23%– Reduction in projected schedule variance down to 2%– Increased productivity (less rework) of 35% - 75%– Reduced sustainment costs by 30% - 55%
• Several programs have improved their capabilities based on the Software Capability Maturity Model (CMM);
– Enabled effective communication between separate business units;– Reporting improved customer satisfaction
Slide 28Copyright MTCA 2005
Business Case for Process Improvement
• US Data & Analysis Center for Software (DACS) State-of-the-Art Report• Report Title - “A Business Case for Software Process Improvement -
Revised: Measuring Return on Investment (ROI) from Software Engineering and Management,” 30 Sep 99
• Internet URL for PDF copy - http://www.dacs.dtic.mil/techs/roispi2/• Report documents that many organisations have reported a 7:1 ROI• Report demonstrates that sound application of software engineering
methods provides a competitive edge and increases profitability:– Reduces development and maintenance costs– Reduces post-deployment defects; thus improves customer satisfaction – Reduces schedule cycle time by 30% - 40%– Increases products sales through higher quality software– Increases repeat business– Improves professional staff morale and retention (less overtime, less crisis, less
employee turnover with less need for retraining)
15
Slide 29Copyright MTCA 2005
.
0 %
140%
-140%
....
.
..
. ...
..
. .
. . . .
.. . .
. .
.
.
. . . .. .. . . . . .... . . .. ..
. .. ..
.
..
. .. .. ...... . .. . ... . .. . .. ..
Without Historical Data With Historical DataVariance between + 20% to - 145% Variance between - 20% to + 20%
(Efforts = Labor Hours)
(Mostly Level 1 & 2) (Level 3)
Ove
r/Und
er P
erce
ntag
e
.
(Based on 120 projects in Boeing Information Systems)
.. . .
.
.. .
...
. .
. ..
.. .
..
.. .. . .. . . . . .. . . . . .. .
... . .. . . . . . .. . . .. . . . .
. . . . .. . . . .. . . . . .. . . . .. . . . . .
. . . . . .. . . . . . . .
. . .. . . . .
. . . . . . . . .
. . . . . .. . . . . .
. . . . . .
John Vu, Boeing, keynote talk at SEPG ‘97, “Software Process Improvement Journey (From Level 1 to Level 5)”
Software Estimates
Slide 30Copyright MTCA 2005
15
10
5
0Ave
rage
Num
ber o
f Def
ects
/Klo
c
Level 1 Level 2 level 3
(Based on 120 projects in Boeing Information Systems)
TimeJohn Vu, Boeing, keynote talk at SEPG ‘97, “Software Process Improvement Journey (From Level 1 to Level 5)”
Post-release Defects
16
Slide 31Copyright MTCA 2005
Level 1 Level 2 level 3
(Based on 120 projects in Boeing Information Systems)
Time
100
80
60
40
20
0
Ave
rage
Num
ber o
f Hou
rs
36% Faster
John Vu, Boeing, keynote talk at SEPG ‘97, “Software Process Improvement Journey (From Level 1 to Level 5)”
Cycle Time
Slide 32Copyright MTCA 2005
100
75
50
25
0
1992 1993 1994 1995 1996
- 26%
- 38%
- 62%
(Based on 120 projects in Boeing Information Systems)
- 12%
Reduced Staff Support per System = Increased Productivity
Increased Productivity
Perc
ent o
f Sta
ff Su
ppor
t per
Sys
tem
Level 1 Level 2 Level 3John Vu, Boeing, keynote talk at SEPG ‘97, “Software Process Improvement Journey (From Level 1 to Level 5)”
Productivity
17
Slide 33Copyright MTCA 2005
But what about project cost growth?
Slide 34Copyright MTCA 2005
1978 GAO REPORT ON USA WEAPONS
SYSTEM COST GROWTH
INFLATION
EST ERRORS
CHANGINGRQMTS
CHANGING REQUIREMENTS
49%
INFLATION31%
ESTIMATINGERRORS
20%
TOTAL COST GROWTH 47% (39% LESS INFLATION)
18
Slide 35Copyright MTCA 2005
COST GROWTH TRENDS1978 - 1999 LESS INFLATION
• 1978 -147 MAJOR PROGRAMS
• 1991 - 183 MAJOR PROGRAMS
• 1999 - ALL MAJOR PROGRAMS
0%5%
10%15%20%25%30%35%40%
1978 1991 1999
LESSINFLATION
Slide 36Copyright MTCA 2005
Perceived Need
Technology Software
Performance Management Framework
Technology
Leadership
Cultural Change
Product
Process Management(Progress)
TPMPSM
CMMsEVM
CPMPERT
BalancedScorecard
SixSigma FPA
RiskMgmt
ImplementationLeadership
DecisionLeadership
TechnologyLeadership
User Friendly
Training& Support
Change Mgmt
Value Added
Mgmt Involvement
PM3
Acceptability
Forecast & Feedback
Knowledge Rqmts
Process Disciplines&
Information Infrastructures
19
Slide 37Copyright MTCA 2005
Track Record
• No statistics on success• Empirical Observations
– Any given implementation-• Substantial schedule delays• Substantial cost overruns• Fails to give management the kind of knowledge
they need or want– But, overall-dramatic organisational
improvements over time
Slide 38Copyright MTCA 2005
Track Record- Common Reasons for Failure
• Failure to ascertain management information needs
• Lack of management support• Complexity• Failure to recognise cultural change issues
20
Slide 39Copyright MTCA 2005
Lack of Management Support
• Lack of direction/unclear goals as in an emerging organisation
• "Get-on-with-it-itis”-it is simply viewed as unnecessary
• Management ego-technical superiority is all that is necessary (Heros)
• Lack of Skilled Resources or people with the desire to do it.
• Reactive management culture• Short term perspective rather than long term
investment
Slide 40Copyright MTCA 2005
Track Record-Consequences of Failure
• Perpetuation of “business as usual”• Projects for which the systems are
designed continue to fall short of expectations
21
Slide 41Copyright MTCA 2005
Earned Value Management Systems
• EVMS is Project Management with an Attitude!!!!!!
• Implementation has a measurable end point!!!!
Slide 42Copyright MTCA 2005
The End Point
• Valid, reliable, timely data is being produced by the system
• The system becomes background management infrastructure
• Management uses the data
22
Slide 43Copyright MTCA 2005
Performance Based Contracting
• Supply Chain– Performance Based Contracting Approach– Scalable Supplier Performance Management
Systems– 3rd Party Certification– wInsight
Slide 44Copyright MTCA 2005
Seven Steps to Performance-Based Contracting*
*Reference: www.acqnet.gov/Library/OFPP/BestPractices/pbsc
23
Slide 45Copyright MTCA 2005
Benefits of Performance-Based Acquisition
• Increased likelihood of meeting mission needs• Focus on intended results, not process• Better value and enhanced performance• Less performance risk• No detailed specification or process description needed• Contractor flexibility in proposing solution• Better competition: not just contractors, but solutions• Contractor buy-in and shared interests• Shared incentives permit innovation and cost effectiveness• Less likelihood of a successful protest• Surveillance: less frequent, more meaningful• Variety of solutions from which to choose
Slide 46Copyright MTCA 2005
What is it?
• A collective responsibility that involves representatives from budget, technical, contracting, logistics, legal, and project offices.
• Involves a clear answer to three questions: – what do I need, – when do I need it, and – how do I know it's good when I get it?
• The challenge is to shift the paradigm from traditional "acquisition think" into:– collaborative performance-oriented teamwork– focus on program performance and improvement, – not simply contract compliance
24
Slide 47Copyright MTCA 2005
Comprised of seven simple steps
1. Establish an integrated solutions team2. Describe the problem that needs solving3. Examine available solutions4. Develop a performance work statement (PWS) or
statement of objectives (SOO)5. Decide how to measure and manage
performance6. Select the right contractor7. Manage performance
Slide 48Copyright MTCA 2005
Performance Based Contracting-A Different Mind Set
• Experience can result in a narrow view point
• The “right way” is the way we have always done it
• Results in a closed mind set• Open your mind to new ideas!
25
Slide 49Copyright MTCA 2005
A Mind Test
• Count the "F”s in the following text:
–FINISHED FILES ARE THE RESULT OF YEARS OF SCIENTIFIC STUDY COMBINED WITH THE EXPERIENCE OF YEARS
Slide 50Copyright MTCA 2005
A Mind Test
• Count the "F”s in the following text:–1?–2?–3?–4?–5?–6?–7?
26
Slide 51Copyright MTCA 2005
A Mind Test
• Count the "F”s in the following text: –FINISHED FILES ARE THE RESULT OF
YEARS OF SCIENTIFIC STUDY COMBINED
WITH THE EXPERIENCE OF YEARS
Slide 52Copyright MTCA 2005
Scalable Performance Mgmt!Scalable Performance Mgmt!
CLOSE
REVISIONS AND DATA MAINTENANCEMaintain the Baseline
Take Management ActionANALYSIS AND MANAGEMENT REPORTS
Analyse Project Performance Data
Accumulate and Report Performance Data
CONTROL
ACCOUNTING CONSIDERATIONSAuthorise and Perform the WorkEXECUTE
Set the Performance Management Baseline
Assign Objective Measures of Performance
Develop Time-Phased BudgetPLANNING, SCHEDULING AND BUDGETING
Schedule the Work
Assign ResponsibilityORGANISATION
Decompose the Project Scope
PLAN
INITIATE
(32 Guidelines)(54 Requirements)(9 Knowledge Areas)5 Categories11 Steps5 Process Groups
ANSI/EIA 748&APM EVM GuidelinesAS4817-2003PMBOK 2000
27
Slide 53Copyright MTCA 2005
The better business people
International EVMS International EVMS Assurance ServicesAssurance Services
(Project Performance Management program)
Slide 54Copyright MTCA 2005
EVM Assurance Services
• Project Performance Management – using Earned Value principles
• The Standards - PMBOK, AS4817 and ANSI/EIA 748
• The benefits of compliance with EVM standards
• The introduction of independent assessment and certification services
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PMI PMBOK RECOGNISES EVM AS ‘BEST PRACTICE’
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•• Establishes a means to formally assess conformityEstablishes a means to formally assess conformity•• Provides the incentive to Provides the incentive to ‘‘take it seriouslytake it seriously’’ –– achieve a defined achieve a defined
outcomeoutcome•• Enables an organisation to declare its performance Enables an organisation to declare its performance
management competencymanagement competency•• Signifies management commitment to potential customers Signifies management commitment to potential customers •• Provides customers with greater confidence in project reportingProvides customers with greater confidence in project reporting•• An enabler for more open customerAn enabler for more open customer--client relationship (client relationship (egeg risk risk
share)share)•• Includes continuing surveillance to ensure enduring applicationIncludes continuing surveillance to ensure enduring application•• Provides a far greater probability of Provides a far greater probability of realisationrealisation of the benefitsof the benefits
Certification leads to enduring, realised benefits.A positive return for the investment!
Benefits of EVM certification
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wInsight
Tool of choice for integrated performance management assessment and reporting around the would.
Aggregates data from disparate sources and locations
Interfaces with the vast majority of leading project management tools
Provides analysis in a normalised, real time manner
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wInsight Product Range
wInsight Briefing Wizard
wIsight Administration Risk Plus
wInsight Web C/S Glue
wInsight Connect
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• Where• United States (97.5%)• United Kingdom (.5%)• Australia (1.0%)• Other (1.0%)
• Who
• Industry
• Government
wInsight Users
• Numbers• Hundreds of Sites• Over 40,000 current
users• Types of Users
• Government (30%)• Aerospace Industry
(55%)• Other (15%)
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Current European Clients
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Earned Value Metrics
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BaselineSchedule
CurrentSchedule
Drop-Dead Date
ConsecutiveSlips
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Summary and Questions
• There are lessons to be learned out there ….
• There is growing evidence to support initiatives….
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Any Questions ?
Thank You