m EARNED VALUE MANAGEMENT SYSTEMS INTERPRETATION HANDBOOK EVMSIH (2.0) The Mission of the Energy U.S. DEPARTMENT OF ENERGY Department is to Ensure OFFICE OF PROJECT MANAGEMENT America’s Security and OVERSIGHT AND ASSESSMENTS (PM) Prosperity by Addressing WASHINGTON, D.C. Its Energy, Environmental and Nuclear Challenges AUGUST 2016 through Transformative Science and Technology Solutions This page is intentionally blank. II TABLE OF CONTENTS 1.0 INTRODUCTION ................................................................................................................. 1 1.1 EVMS Policy and Intent ....................................................................................................... 1 1.2 Purpose of the EVMSIH ....................................................................................................... 2 1.3 EVMS Compliance ............................................................................................................... 4 1.4 Materiality ............................................................................................................................ 6 1.5 Content and Format of the EVMSIH ..................................................................................... 6 1.6 Approach to Terminology ..................................................................................................... 8 1.7 General Topics to Understand Guideline Intent ................................................................... 9 2.0 ORGANIZATION ................................................................................................................ 11 Guideline 1 – Define the WBS ........................................................................................................ 13 Guideline 2 – Define the Project OBS ............................................................................................. 17 Guideline 3- Integrate Subsidiary Management Processes ............................................................ 19 Guideline 5 ‐ Integrate WBS/OBS to Create Control Accounts ..................................................... 21 3.0 PLANNING, SCHEDULING, AND BUDGETING ............................................................. 25 Guideline 6 – Scheduling Work ..................................................................................................... 28 Guideline 7‐ Identify Products and Milestones for Progress Assessment ..................................... 49 Guideline 8 ‐ Establish the Performance Measurement Baseline (PMB) ....................................... 51 Guideline 9‐ Authorize and Budget by Cost Elements ................................................................... 57 Guideline 10 ‐ Determine Discrete Work and Objective Measures ............................................... 61 Guideline 11 ‐ Sum WP/PP Budgets to Control Account ................................................................ 71 Guideline 12 ‐ Level of Effort (LOE) Planning and Control ............................................................ 72 Guideline 14 ‐ Identify MR and UB ................................................................................................ 74 Guideline 15 ‐ Reconcile to Target Costs ....................................................................................... 77 4.0 ACCOUNTING CONSIDERATIONS ................................................................................. 79 Guideline 16 ‐ Record Direct Costs ............................................................................................... 80 Guideline 17 ‐ Summarize Direct Costs by WBS Elements ............................................................. 87 Guideline 18 ‐ Summarize Direct Costs by OBS Elements .............................................................. 89 Guideline 20 ‐ Identify Unit and Lot Costs ...................................................................................... 91 Guideline 21 ‐ Track and Report Material Cost/Quantities ........................................................... 93 5.0 ANALYSIS AND MANAGEMENT REPORTS .................................................................... 98 Guideline 22 ‐ Calculate Schedule Variance and Cost Variance ................................................... 99 Guideline 23 ‐ Analyze Significant Variances .............................................................................. 104 Guideline 25 ‐ Summarize Performance Data and Variances for Management Reporting ......... 107 Guideline 26 ‐ Implement Corrective Actions ................................................................................ 108 Guideline 27‐ Maintain Estimate At Completion .......................................................................... 111 III 6.0 REVISIONS AND DATA MAINTENANCE .................................................................... 118 Guideline 28 – Incorporate Changes in a Timely Manner ............................................................. 120 Guideline 29 – Maintain Baseline and Reconcile Budgets ............................................................ 124 Guideline 30 – Control Retroactive Changes ................................................................................ 132 Guideline 31 – Prevent Unauthorized Revisions ........................................................................... 136 Guideline 32 – Document PMB Changes ...................................................................................... 138 7.0 INDIRECT CONSIDERATIONS ...................................................................................... 139 Guideline 4 ‐ Identify Overhead Management ............................................................................. 140 Guideline 13 ‐ Establish Overhead Budgets ................................................................................. 143 Guideline 19 ‐ Record/Allocate Indirect Costs ............................................................................. 145 Guideline 24 ‐ Analyze Indirect Cost Variances............................................................................ 147 APPENDIX A – ACRONYMS AND ABBREVIATIONS ................................................................. 149 APPENDIX B – DEFINITIONS AND SOURCES ......................................................................... 151 APPENDIX C – REFERENCES ................................................................................................... 162 APPENDIX D – TABLE OF QE LOIs (Numerical Order) .......................................................... 163 IV LIST OF FIGURES Figure 1 - EIA-748 EVMS Guidelines by Management Area Plus Indirects .................................. 3 Figure 2 - EIA-748 EVMS by Management Process ....................................................................... 5 Figure 3 – Companion Document: EVMSIH Test Objectives by QE LOI ....................................... 8 Figure 4 - Sample WBS .................................................................................................................. 16 Figure 5 - Construction Sample WBS ............................................................................................ 16 Figure 6 - WBS and OBS Integration and Control Account .......................................................... 22 Figure 7 - Single Numbering Schema ............................................................................................ 32 Figure 8 ‐ Resource Allocation ...................................................................................................... 48 Figure 9 - EVMS Requirements – Source PM EVM Training Snippet 1.1 .................................... 50 Figure 10 - Time Phasing the PMB ............................................................................................... 52 Figure 11 - Baseline Hierarchy ..................................................................................................... 53 Figure 12 - IPMR/CPR Format 1, Column 13 Reprogramming Adjustments ............................... 55 Figure 13 - Element of Cost Vertical Alignment ........................................................................... 59 Figure 14 ‐ QBD Example ............................................................................................................. 69 Figure 15 ‐ Estimated Actuals Example ........................................................................................ 83 Figure 16 - Example Revisions and Data Maintenance Process ................................................ 119 Figure 17 - Freeze Period Changes ............................................................................................ 125 Figure 18 - Single Point Adjustment Approaches ....................................................................... 135 Figure 19 - Example thresholds for indirect pool variance analysis .......................................... 148 V DOCUMENT CHANGE CONTROL VERSION DATE BRIEF DESCRIPTION OF UPDATES 1.0 September 30, 2015 • Initial Release 1.1 (DRAFT) January 07, 2016 • Break Fix Changes • Test Formula Updates • Define Thresholds for Automated Tests • Clarifications • Not formally released but used to guide analysis/ testing during Roadside Assist Visits and Compliance Assessments during V2.0 development 2.0 August 31, 2016 • Moderate Content Changes • Consolidate Duplication and Redundancy • Separate Out QE LOI Testing Protocols in Companion Document • Streamline and Formatting Changes VI 1.0 INTRODUCTION 1.1 EVMS POLICY AND INTENT Earned Value Management (EVM)