What’s the future of your IT project?

OMB says that only your EVM results can tell you for sure

Earned-value management will no longer be just another requirement for agencies to check off halfheartedly when planning major IT projects. It will be the process by which IT projects will either advance or be revamped for a better chance of success.

The Office of Management and Budget in a recent memo to CIOs broadened its prescription for agencies to better manage IT projects’ cost, schedule and performance by applying EVM.

“As we continue to realize the value of good project management, room for improvement remains in the execution of our IT projects,” said Karen Evans, OMB’s administrator for e-government and IT, in the memo. “With the right tools and qualifications, managers will be better equipped to make decisions and carry out their missions.”

Earned-value management measures the value of work on a project against its cost. It integrates cost, schedule and technical performance measures in order to monitor and control project resources and compare a project’s results with one set of metrics.

“Having OMB’s additional instruction and emphasis on earned-value management really moves the federal government in the right direction, because it’s been proven that this can be an effective tool for managing cost, schedule and performance,” said David Powner, director of IT management issues for the Government Accountability Office.

Previously, OMB directed agencies to use EVM in planning major IT projects in Exhibit 300 cases and making plans to come within 10 percent of baseline goals for cost, schedule and performance. Now agencies must apply EVM to all IT projects, during implementation as well as planning, and so must their major contractors, Evans said.

And CIOs must apply EVM through a set of special templates to help improve high-risk IT projects.

Agencies also must independently validate their baseline goals for cost, schedule and performance before obligating fiscal 2006 funds to a project. Validations should be completed by March 31, 2006.

To get to green on the President’s Management Agenda scorecard, agencies must meet 90 percent of their goals for cost, schedule and performance, Powner said. EVM processes and software help agencies effectively track projects and measure whether they’re aligning with the stated goals.

The CIO Council by October will develop a model EVM policy for IT projects. Agencies must create their own comprehensive EVM policies by Dec. 31.
For the Environmental Protection Agency’s senior managers, enhancing the use of EVM is a maturation process.

The next step is to use EVM data to make decisions, said EPA CIO Kim Nelson. “EPA has already instituted EVM enough to earn green on the President’s Management Agenda.”

EPA also made a lessons-learned document on EVM available last year through the CIO Council.

The agency has an executive team that meets quarterly to review EVM data. Managers now are considering how to use the data not only reactively, so at the end of a fiscal quarter they can recognize whether a project is outside its parameters, but also in a more proactive sense, Nelson said.

Patterns and trends become evident when looking across an entire portfolio and could, for example, help identify a program area that’s close to crossing the line of unacceptable performance.

“That may give some managers pause to think through who’s managing that project and what kind of controls ... we have on that project,” Nelson said.

Close alignment

EVM is closely aligned with an agency’s investments, and the investment review process goes hand in glove with the budgeting process and how decisions are made about what projects get funded and continue to receive funding.

As much as EPA has embraced earned-value management, OMB’s new requirements present questions about what constitutes independent analysis and challenges about the cost benefit of applying EVM to already budgeted IT projects, Nelson said. Independent validation could mean an evaluation done by the CIO, the inspector general or an organization outside the agency. The cost of these evaluations could be significant.

“There are certainly benefits, but we have to come up with criteria as to where we apply these independent evaluations, given the cost and risk of the project,” she said.

Despite the cost concerns, agencies understand the reason for the reporting requirements because so many projects in the past have gone over budget and were not delivered on time.

“But if a project is already under way,” Nelson said, “and doesn’t have any room in its budget, because it wasn’t required before to do an independent validation, we have to figure out how we’re going to pay for it.”

For new projects, validation costs can be built in.

“I don’t look at these reporting requirements as burdensome. This is the kind of management controls and processes that you should have in place to ensure that you are delivering results,” Nelson said.

Beginning Sept. 12, agencies must use specific templates to document the performance of their high-risk projects on a quarterly basis for their oversight authorities, such as OMB, GAO or department IG.

Sound program management issues are usually key to why projects are deemed high-risk and require special oversight, GAO’s Powner said. Having earned-value management in place enables project managers to address some of their deficiencies.
“If you step back and look at the quarterly progress reports, hopefully those reports will be getting to the level of detail that disclose[s] cost schedule and performance and how the cost schedule performance is aligning with stated goals,” he said.

OMB also recommended EVM training for project managers, and guidelines and other resources available through the National Defense Industrial Association.

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