Project Forecasting from the Perspective of an EVMS and EIA-748
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EIA-748 guidelines, as interpreted for major U.S. Government projects, require that project managers develop and maintain bottoms-up estimates of the cost and schedule outcomes of their projects. There is a requirement for a comprehensive bottoms-up forecast to be done at least annually. That is supported by a requirement for a monthly update to the forecast, including best-case, worst-case, and most-likely outcomes for the project estimated final total cost. This webinar covers these requirements and common associated processes and methods for developing the forecasts. Included in the discussion are the topics of risk and opportunities management and their relationship to the EVMS; especially focused on the development of the risk/opportunities informed forecasts. Rather than the development of three potential outcomes for the project timeline, the schedule portion of the discussion focuses on building and maintaining an Integrated Master Schedule (IMS) that meets the Generally Accepted Scheduling Principles (GASP) and the use of that IMS in establishing the probability of meeting the end date based on Schedule Risk Analysis (SRA) techniques. The discussion ends with the topic of independent evaluations of the forecast using the Independent Estimate-at-Complete (IEAC) analysis process. Download the presentation to learn more or visit us at www.unanet.com.
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Project Forecasting from the Perspective of an EVMS and EIA-748
- 1. © Unanet Project Forecasting from the Perspective of an EVMS and EIA-748 Richard Hayden VP of Marketing, Unanet Paul Bolinger Engagement Director at Humphreys & Associates
- 2. © Unanet Poll 1 My company has, or anticipates having, contracts with EIA 748 Requirements? a) Yes b) No c) What is EIA 748?
- 3. ©Humphreys & Associates, Inc. 1979-2020 This material is copyrighted by Humphreys & Associates, Inc. 1979 – 2019. Portions of this material are also copyrighted by Arthur Andersen & Co. 1980 - 1981. All rights reserved. No portion of this material covered by the copyrights hereon may be duplicated, reproduced, distributed, or copied in any form, or by any means - graphic, electronic, or mechanical, including photocopying, recording, taping, printing, or information and retrieval systems without written permission of Humphreys & Associates, Inc. 9910 Research Drive Irvine, CA 92618 (714) 685-1730 (Phone) (714) 685-1734 (Fax) Email: humphreys@humphreys-assoc.com http://www.humphreys-assoc.com Cover
- 4. ©Humphreys & Associates, Inc. 1979-2020 0003 EIA-748-D Government-accepted, Industry-wide standard for Earned Value Management Systems • The EVMS Guidelines set forth the capabilities that a good Earned Value Management System should possess • Contractors internal systems must meet these guidelines to be considered acceptable by the procuring agency Earned Value Management System (EVMS) Guidelines
- 5. ©Humphreys & Associates, Inc. 1979-2020 EIA-748 USG APPLICATION • Dept of Energy • Dept of Defense • Homeland Security • Health & Human Services • FAA • Dept of State • BARDA • FBI • Social Security 5
- 6. ©Humphreys & Associates, Inc. 1979-2020 Forecasts 6 $ TIME SOLD WORK = EXISTING PROJECTS PROPOSED AND POTENTIAL WORK EIA-748 PROJECT MANAGEMENT FOCUS
- 7. ©Humphreys & Associates, Inc. 1979-2020 PROJECT FORECASTS 7 PERFORMED WORK HERE INVOICED HERE RECEIVED PAYMENT HERE EIA-748 & PROJECT TEAM FOCUS SPENDING FORECAST
- 8. ©Humphreys & Associates, Inc. 1979-2020 CONSIDERATIONS • TYPE OF CONTRACTS – COST PLUS – FIXED PRICE – T&M • PROJECT RISKS • CUSTOMER RISKS • SUPPLIER RISKS • INDIRECT RATE RISKS 8
- 9. ©Humphreys & Associates, Inc. 1979-2020 Top Reasons for Project Failure 1. Inadequate or poor communications 2. Poor change control (scope creep) 3. Inaccurate cost/budget estimates 4. Poor risk/opportunity management • 5. Poor customer support 6. Poor duration estimates/unrealistic deadlines 7. Inadequate resource forecasting 8. Limited resources/resource dependency • 9. Project management inexperience • 10. Team member issue 9
- 10. ©Humphreys & Associates, Inc. 1979-2018 The Process of Management 12922 Organize Plan Direct Control RE-ORGANIZE RE-PLAN RE-DIRECT Project Management is the process of management applied to a project. ………………….….MANAGEMENT FUNCTIONS……………………
- 11. ©Humphreys & Associates, Inc. 1979-2020 Management Controlling 12922 Measure Analyze Act While organizing, planning, and directing go on continuously, most of the management time will be expended in controlling.
- 12. ©Humphreys & Associates, Inc. 1979-2020 Common EVM System Architecture Humphreys & Associates Executive IMS Overview 16027 IMS EV Engine (forProject) Misc Tools (Risk Assessment) Unanet Cost Collection Procurement Finance/Billings Analytics (Empower) Performance Analytics EV IMS Variance Analysis Corrective Action Tracking Compliance Metrics Rate Calculations EV Performance Measurement Baseline Change Control ETC / EAC Forecasting Critical Path Scheduling Resource Loading/Leveling Risk Register Probabilistic Simulation
- 13. ©Humphreys & Associates, Inc. 1979-2018 All Elements of Cost • Labor (internal and purchased) • Material (high value, low value, critical) • Subcontracts • Other Direct Costs • Indirect Costs 13
- 14. ©Humphreys & Associates, Inc. 1979-2020 EIA-748 BASIC DATA • PLANNED – THE TIME PHASED BASELINED VALUE OF WHAT WE PLAN TO ACCOMPLISH • EARNED – HOW MUCH OF THE PLANNED WORK IS DONE • SPENT – WHAT DID IT COST FOR THE EARNED WORK • TO GO – FORECASTED TIME-PHASED VALUE OF WHAT IS LEFT TO DO AT ESTIMATED VALUE 14
- 15. ©Humphreys & Associates, Inc. 1979-2018 Estimate At Completion 0274 Actual Costs (ACWP) $ Time Time Now EAC Estimate To Complete (ETC) Estimated Completion Date (ECD)
- 16. ©Humphreys & Associates, Inc. 1979-2018 EAC Comparisons 2339 MostLikely(ECD) $ ACWP BCWP TIME TIME NOW IEAC (If cum CPIE continues and average EV continues in time) EAC (worst case) BCWS ScheduledCompletion BestCase(ECD) IECD WorstCase(ECD) BAC EAC (best case) EAC (most likely)
- 17. ©Humphreys & Associates, Inc. 1979-2020 How Often? • Annual comprehensive bottom-up • Monthly updates • Whenever issues require focus 17
- 18. ©Humphreys & Associates, Inc. 1979-2018 Control Account Control Account Control Account Control Account Responsibility Assignment Matrix and Control Account Structure 0106 Control Account Stator Assembly Rotor Assembly Case Assembly Fan Assembly Full Scale Fan Rig Minor Fan Rig Fan Compressor Turbine Engine Training Contract Contract Work Breakdown Structure Manufacturing Design Company Test Dual Spool Compressor Rig Engineering Work Packages Planning Packages Control Account Control Account Organization Breakdown Structure Drafting and Checking Analytical Design Mechanical Design SystemAnalysis
- 19. ©Humphreys & Associates, Inc. 1979-2020 Verify Scope • Check that 100% of the scope is in the IMS and will be forecasted • Verify that no “unauthorized” effort is included • Is the corrective action planning included? • Is there any impact on TPMs? 19
- 20. ©Humphreys & Associates, Inc. 1979-2018 Work Definition 0091 WBS DICTIONARY Work Breakdown Structure
- 21. ©Humphreys & Associates, Inc. 1979-2018 Analyze Risks • Has risk analysis been performed? • Have risk mitigations been established? • Has a Schedule Risk Analysis been conducted? • Have opportunities been identified? 21
- 22. ©Humphreys & Associates, Inc. 1979-2018 IPMR DID (EACs) • EAC must consider anticipated risk areas • EAC must consider planned risk reductions • Most Likely EAC must consider known factored risks • Most Likely EAC must consider probable future conditions • Differences shall be explained in Format 5 in terms of risk and opportunities…. 22
- 23. ©Humphreys & Associates, Inc. 1979-2018 IPMR/CPR Format 1 0806 CLASSIFICATION (When Filled In) INTEGRATED PROGRAM MANAGEMENT REPORT/CONTRACT PERFORMANCE REPORT PENDING UPDATE TO FORMAT 1 - WORK BREAKDOWN STRUCTURE DOLLARS IN: OMB No. 0704-0188 The public reporting burden for this collection of information is estimated to average 3.1 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing the burden, to Department of Defense, Washington Headquarters Services, Directorate for Information Operations and Reports (0704-0188), 1215 JeffersonDavis Highway, Suite 1204, Arlington, VA 22202-4302. Respondents should be aware that notwithstanding any other provision of law, no person shall be subject to any penalty for failing to comply with a collection of information if it does not display a currently valid OMB control number. PLEASE DO NOT RETURN YOUR FORM TO THIS ADDRESS. SUBMIT COMPLETED FORMS IN ACCORDANCE WITH CONTRACTUAL REQUIREMENTS. 1. CONTRACTOR 2. CONTRACT 3. PROGRAM 4. REPORT PERIOD a. NAME a. NAME a. NAME a. FROM (YYYYMMDD) b. LOCATION (Address and ZIP Code) b. NUMBER b. PHASE b. TO (YYYYMMDD) c. TYPE d. SHARE RATIO c. EVMS ACCEPTANCE NO YES (YYYYMMDD) 5. CONTRACT DATA a. QUANTITY b. NEGOTIATED c. ESTIMATED COST OF AUTHORIZED d. TARGET e. TARGET f. ESTIMATED g. CONTRACT h. ESTIMATED CONTRACT i. DATE OF OTB/OTS COST UNPRICED WORK PROFIT/FEE PRICE PRICE CEILING CEILING (YYYYMMDD) 6. ESTIMATED COST AT COMPLETION 7. AUTHORIZED CONTRACTOR REPRESENTATIVE MANAGEMENT ESTIMATE CONTRACT BUDGET VARIANCE a. NAME (Last, First, Middle Initial) b. TITLE AT COMPLETION BASE (1) (2) (3) a. BEST CASE c. SIGNATURE d. DATE SIGNED b. WORST CASE (YYYYMMDD) c. MOST LIKELY 8. PERFORMANCE DATA CURRENT PERIOD CUMULATIVE TO DATE REPROGRAMMING ADJUSTMENTS AT COMPLETION ACTUAL ACTUAL ITEM BUDGETED COST COST VARIANCE BUDGETED COST COST VARIANCE WORK WORK WORK WORK WORK WORK COST SCHEDULE BUDGETED ESTIMATED VARIANCE SCHEDULED PERFORMED PERFORMED SCHEDULE COST SCHEDULED PERFORMED PERFORMED SCHEDULE COST VARIANCE VARIANCE BUDGET (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12a) (12b) (13) (14) (15) (16) a. WORK BREAKDOWN STRUCTURE ELEMENT b. COST OF MONEY c. GENERAL AND ADMINISTRATIVE d. UNDISTRIBUTED BUDGET e. SUB TOTAL (PERFORMANCE MEASUREMENT BASELINE) f. MANAGEMENT RESERVE g. TOTAL 9. RECONCILIATION TO CONTRACT BUDGET BASE a. VARIANCE ADJUSTMENT b. TOTAL CONTRACT VARIANCE UPDATE FROM DD FORM 2734/1, MAR 05, PENDING APPROVAL LOCAL REPRODUCTION AUTHORIZED CLASSIFICATION (When Filled In)
- 24. ©Humphreys & Associates, Inc. 1979-2018 Risk Strategies • Accept – part of doing business • Transfer – insurance or subcontract • Mitigate – develop a detailed and resourced plan • Avoid – alternate plan or “no bid” 12731
- 25. ©Humphreys & Associates, Inc. 1979-2018 Risk Items in IMS 25 RISK ID Risk items (mitigation tasks) from the risk management process must be included in the IMS and specifically identified.
- 26. ©Humphreys & Associates, Inc. 1979-2018 Scrub, Check, Validate • Employ any objective measures to review and validate the forecast –Non-advocate reviews –Software checking –IMS Analysis –Manual scrubbing with leadership –Delta from last ETC analysis 26
- 27. ©Humphreys & Associates, Inc. 1979-2018 TIME ACTUALS REVISED FUNDING FORECAST CURRENT AUTHORIZED FUNDING TIME NOW EAC ETC EARNED VALUE BUDGET D O L L A R S Funds Versus ACWP + ETC 0154
- 28. ©Humphreys & Associates, Inc. 1979-2019 Performance Indices Comparison 0303 CPIE Performance to date 0.875 For every $1.00 of actual cost we earned $0.875 worth of work planned TCPI Projected performance .93 For every $1.00 of cost we estimate to earn $.93 worth of work planned to finish on EAC
- 29. ©Humphreys & Associates, Inc. 1979-2019 Testing Realism of Estimate 29 AUTOMATED PROJECTIONS OF OUTCOMES BASED ON VARIOUS ASSUMPTIONS PROVIDES BOUNDARY CONDITIONS FOR ASSESSING REALISM OF THE TEAM’S ESTIMATE. Spending efficiency to date = 90% Forecasted spending efficiency = 103% Projecting $741K overrun at completion. In no case does the forecast fit within the computer-generated estimates. The jump from 90% to 103% is unrealistic. The forecast must be challenged.
- 30. © Unanet Integrates with 3rd Party Payroll Providers Plan Execute Monitor Invoice Account • CRM & Pipeline Mgmt • Purchase Requisition • Budgeting & Revenue Forecasting • Resource Scheduling • Skills Mgmt • Scenario Planning • Pricing • Timesheets • Expense Reports & Per Diems • Purchase Orders • Approvals • Collaboration and Notes • Contract Mgmt • Real-Time Dashboards & KPIs • Project Status, Utilization, & Burn Rate • Open Commitments • Gross & Net Margin • % Complete & EVM • Backlog • GAAP Compliance • Billing & Invoicing • T&M, FP, and CP • Revenue Recognition – As Worked, % Complete & Schedules • General Ledger • Accounts Payable • Accounts Receivable • Cost Pools • Indirect Rates • PO Match: 2-Way or 3- Way Match Purpose-built ERP for Professional Services Firms
- 31. © Unanet Formal EVMS Requirement? • Full-featured EVMS solution from forProject Technology (www.forproject.com) • Modern user interface - easy to learn and use • Integrates with Unanet™ for comprehensive EVMS and formal (EIA-748) EVMS compliance and reporting • Direct schedule integration with Microsoft Project™, Project Server™/Project Online™ and Primavera P6™ • Over 40 EVMS metrics and KPIs • Built-in EVMS reports and charts, including government IPMR reports and UN/CEFACT XML exports • Integration with Empower™ from Encore Analytics
- 32. © Unanet 2020 GAUGE Report Survey As a leader in the government contracting community, Unanet invites you to take part in our fourth annual benchmarking survey. Your responses are confidential and will be compiled to create the 2020 GAUGE Report that focuses specifically on compliance, program management, business development, accounting and financial management in five major categories: Government Contract Compliance, Accounting, Utilization, Growth, and Efficiencies. Take the 2020 GAUGE Survey: unanet.com/gauge
- 33. © Unanet If you are ready to jump to a new pond, contact: Richard Hayden rhayden@unanet.com Paul Bolinger paul.bolinger@humphreys-assoc.com
Hinweis der Redaktion
- Welcome everyone to our webcast on Project Forecasting from the Perspective of an Earned Value Management Systems ands EIA-748. In prior webinars we have covered the basics of Earned Value and today we’re going a little deeper into project forecasting. I am Richard Hayden with Unanet and am here today with Paul Bollinger, Engagement Director with Humphreys and Associates. Humphreys and Associates have been recognized as leading experts in EVMS for over three decades. I think I first met and worked with Gary Humphries, President and CEO of Humphries & Associates in about 1990. Paul is going to present the content here today, but before we get started I wanted to cover a couple of housekeeping items. We want you to submit any questions you have throughout the webcast via the gotowebinar dialog on the right of the screen. We will answer those questions if we have time at the end or via follow up email afterwards. Also you will receive a copy of this presentation and the recording within 48 hours.
- To start we’d like to get a sense of how many of you are exposed to formal earned value according to EIA-748
- Earned Value Management (EVM) is based upon some widely accepted guidelines. These guidelines evolved from government mandated specifications for management systems, to the government’s set of Guidelines a management system had to meet to be considered acceptable to the government, and finally to an industry-wide set of standards for earned value management systems – the EIA-748-D Standard for EVMS. The EVMS Guidelines are intended to serve as standards for measuring the adequacy of a management control system. Contractors are free to organize in the manner best suited to their individual environments and management philosophies, and may select the internal methods and procedures of their choice. In other words, there are probably as many ways to design a system to satisfy these guidelines as there are organizations that use them. However, the resulting system must provide the data and possess the capabilities specified in the guidelines in order to be acceptable. Subcontractors may also be required by their prime contractors to satisfy the guidelines and provide reports that directly support prime contractor reports with similar data.
- Based on our research we generated this list of reasons for project failure. Let’s talk about them and out them in perspective. If you have had any experiences with these, please share with the other attendees as the instructor covers them. As we go through the workshop, we will periodically refer back to the causes of failure pointing out how a properly implemented and managed EVMS can help mitigate or eliminate failure. The instructor should cover each bullet. Note that two following charts deep dive into communications and scope creep.
- The feedback loops are the important aspects of this process map. The manager does not organize once, does not plan once, and does not direct just once. Those steps are on-going and result from the control step. Discuss – if we see a failure or weakness in communications then we do….. Discuss – if we detect scope creep then we do…. And so on….with the issues of project failures.
- The manager spends most of his time in the control mode or step. The actions that can be taken are re-organizing, re-planning, and re-directing so those steps are repeated as needed. But each period during the project we take measurements, decide what they mean, and take action to correct our efforts to get back on plan. The EVMS is perfect for this step because it provide large amounts of project information about plans progress in terms of budgets, accomplishments, and actual costs. It requires forecasts also. It is in the area of planning and forecasting where most decisions are made. Each time we detect a movement toward failure then we act.
- This is a common architecture for an EVMS. The Integrated Master Schedule (IMS) is built in a tool like Primavera, Open Plan, or Microsoft Project. The information about plans, progress, and forecasts begins in the IMS. The EV engine is where budget rates and forecast rates are kept and where all the informational elements are brought together to generate the management information. The ERP system of the company is the source of information on actual costs and things like material receipts and issues as well as manufacturing. Many companies use a viewer/analyzer tool to help them go through the data and see the significant issues. There are special topic tools used along side the main tolls to do things schedule risk analysis. It is in these adjunct tools where computer simulations of the decisions and outcome will usually be done.
- EAC is graphically displayed in a picture is like this. This chart shows resources on the vertical axis, time on the horizontal axis, and a vertical line extending from the Time axis to represent Time Now. This shows that actual costs have been collected through Time Now. Next is to figure out what the EAC is. So what needs to be done? The answer is to figure out how much work is remaining to be done and then estimate how much that work is going to cost. Now the difference between what has been spent already and the EAC is called the Estimate To Complete. People have a tendency to get the two terms Estimate At Complete and Estimate To Complete confused. The real meat of the exercise is to figure what remains to be done and then re-estimate it just as was done at the beginning of the project. And of course, once the ETC is determined, by adding it to what was already spent (ACWP), the end result is the EAC. The BCWP value is a key element in evaluating the remaining effort to be completed. This chart shows the EAC picture. Note how it shows that the Estimate At Completion is a dollar value at a point in time and is composed of the actual costs to date plus the estimated cost to complete the work.
- This is the picture of what we have been saying. Vertical is resources, horizontal is time. Here is the full plan, the BAC, and this is the original expected (contractual) completion date. Our earned value has not quite been what we had hoped some are - SV. And our actual cost has exceeded our work completed by a significant amount. The Contractor project manager has to provide the best case, worst case, and most likely case EACs. Then the customer project manager calculates the straight-line IEAC and puts that in here. That’s where the project is projected to operate in the future as it has operated in the past. If that is how the project operates, this is where it will be at the end.
- Here is an expanded illustration of the WBS/RAM and the resultant Control Account, which exists to capture scope of work measured in effort; materials; equipment; or any other resource consuming work. However, the control account is not the lowest level at which planning takes place. A control account is further divided into work packages and planning packages. Work packages are near term efforts that can be planned in sufficient detail to enable meaningful performance measurement. Planning packages represent work in the future about which not enough is known to do detail planning. (More on Planning Packages later.) Both work packages and planning packages contain a scope of work and time-phased budgets that sum to the control account’s time-phased budget. Work Packages are usually decomposed to measurable activities, each of which consumes time and resources as we already defined them. Level of detail parameters--also a product of the planning process we already defined--will govern the size of each Control Account's resources, both in time and monetary units. You and your company--working with the customer--will decide on the size of the Control Accounts.
- Data Item Description DI-MGMT-81334C places the Work Breakdown Structure and the associated dictionary on contract. As stated previously, the first three levels of the WBS are usually fixed by the procuring agency. The contractor is then required to further refine the Work Breakdown Structure and develop definitions for each WBS element by compiling the dictionary.
- The data item description for earned value reporting has some very specific requirements earning the estimate at complete. This is one area where the data item description demands that risks and opportunities be considered the development of the project forecast. In fact, the use of risks and opportunities in developing these forecasts should be explained in the project report
- This is the Integrated Program Management Report (IPMR) Format 1. It is delivered monthly and is essentially the same as the CPR Format 1. Some of the block sizes are different such as Block 5.h. and Block 6. Column (1).
- There are four responses or strategies to risk: Some risks are part of doing business. We have a lot of experience in our company and we know how to be prepared for most events we encounter because we have seen them before. Having a detailed plan and schedule is a risk acceptance strategy. The risk may be more consequential than project funding can absorb. Therefore, we purchase insurance for certain risk events. If the event occurs, we have the resources to cope with the event. Likewise, engaging a specialty contractor to perform a specific function (like X-rays of welds) is also a risk reduction tactic: engage the organization that does the specialty task for a living. Some risks require a specific plan that may include active participation by other organizations. Jobsite accidents or breaches of security can be catastrophic, so an aggressive safety and security program can minimize risks and lost time associated with those types of events. Excluding the risk includes contract language like Force Majeure. The massive tornado, the earthquake, a wildfire, etc., are classified in Contract language as Force Majeure events for which schedule relief is provided if the event occurs.
- One of the requirements the integrated Master schedule data item description is that efforts identified in the risk mitigation planning area of the risk management register should be contained in the integrated Master schedule and identified with their relationship to the risk management register. This example shows coding the integrated Master schedule that provides that relationship back the risk management register. Is coding by the way for the schedule to be grouped and sorted by risk items instead of the normal sort by to ask or date or other structure such as the work breakdown structure. Having a schedule group and sorted and displayed by risk item is a powerful way to be able to communicate the project risk situation and plans for mitigation.
- As a project progresses and actual events and costs do not follow plan (the third certainty after death and taxes), funding requirement’s will change if the desire is to complete the scope of work within the original schedule. As the situation changes, companies must continually monitor the elements that make up the funds requirement. If material commitment are falling behind schedule, funds may not be needed as soon as planned. If actual costs are exceeding the budget plan, funds may be needed sooner than planned. Note that we did NOT say “actual costs are exceeding earned value” – this is the only instance in earned value management where expenditure variance (actuals versus budget) is important. The project’s Estimate To Complete considers these possibilities and replaces the budget profile as the basis for forecasting funding requirements. In the example, the red line depicts a revised funding forecast based on the actual costs to date, the ETC, and the other factors previously mentioned that exceeds the current authorized funding. If the customer can support the revised profile, the ETC/EAC process is complete. However, if the customer cannot support this profile, a new ETC plan must be developed to bring the funding requirements within the customer’s capability. Usually, this results in a schedule delay because the customer cannot get the required additional funds until a following year.
- What it is basically saying is this. Cumulative to date, from the inception of the project to the present reporting period, the project has been operating at an efficiency of .875 (87½% efficiency). For every dollar spent, 87.5 cents of earned value was accomplished. The To Complete Performance Index (TCPI) says to bring the job in for 230,000, for every dollar spent, $.93 of work must be accomplished (earned value). What information is required before answering that question? Well, one important question is how much work is there left to do? How far along is the project? What is the % complete? In this example, the work remaining is about 140,000. So, for the first third of the project, the cost efficiency was about 87.5%. For the last two thirds, the project will have to operate at about .93% cost efficiency to bring the job in on budget at 230,000 dollars spent. Government studies of over 500 contracts indicate that the CPIe almost never improves after a contract is 20% complete. Dr. David Christensen, who was then at the Air Force Institute of Technology, found in a study of 155 contracts between 1971 and 1991 that the cumulative CPIe stabilizes at the 20% complete point. At the 50% complete point, variances from the efficiency at the 20% complete point were found to be only +/- 8%. Common reasons for this are front loading of budget and depletion of management reserve in early phases of the contract. On production contracts the receipt of firm fixed price material can give artificially favorable contract CPIe’s in early contract stages. On R&D efforts, costs accelerate after early contract stages when testing problems occur and the pressure of behind schedule delivery situations start to impact costs. So how can this newfound information (that the CPI never gets better after the project is 20% complete) be used? It can be used to calculate an IEAC.
- As Paul showed on an earlier slide, an EVMS comprises different elements when it comes to supporting software tools. A fundamental piece is the ERP system that does cost collection, procurement, finance & billings and feeds these actuals to the EV engine. Unanet provides all the capabilities shown here managing projects people and financials to support this. Covering planning, execution, monitoring, invoicing and accounting.
- Where our customers have a formal EVMS requirement we have worked with forProject that delivers all the capabilities needed in an EV Engine in conjunction with Unanet in order to satisfy EIA 748 requirements, including schedule integration with leading scheduling tools, and additional reporting as needed.
- And before we get to answer any questions that have been submitted, here is one public service announcement: every year we publish an industry benchmark working with a leading accounting firm. We’d appreciate it if you can complete our survey at the link shown here, and also we welcome you to visit Unanet.com where you can download the 2019 report from the website home page. It’s packed with great metrics and trends to help you manage your business.
- On behalf of Unanet and Humphreys Associates we thank you so much for attending our webcast and please reach out to Paul or myself if you have any questions that were not covered today. We hope you all have a great day.