Why Do Projects Fail? Getting Ready for EIA 748 – Earned Value Management (EVM)

© Unanet
Why Do Projects Fail? Getting Ready
for EIA 748 - Earned Value
Management (EVM)
Speakers:
Paul Bolinger – Director Humphrey’s & Associates
Kim Koster – VP Unanet
Why do Projects Fail and How EVM Can Help Avoid or Mitigate Problems

©Humphreys & Associates, Inc. 1979-2018
This material is copyrighted by Humphreys & Associates, Inc. 1979 – 2018.
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

Pick a Number – Almost Any Number
• 5 reasons
• 7 reasons
• 9 reasons
• 10 reasons
• 101 reasons
3
Project Failure
Sched
Tech
Cost

Win/Lose
• Success – A project delivers expected product or
payback at a planned cost within the defined
timeframe.
• Failure – A project that did not meet or exceed
expected goals of performance, cost, and/or
schedule.
• Reported by PMI chapter from Standish Group – 71%
of projects failed or were challenged – 29% were
successful
4

Cancelled
• Marine One
• CG(X) – USN Cruiser $200,000,000
• Kinetic Energy Interceptor - $1.3 B
• Crusader – mobile cannon - $2 B
• TSAT – satellite network - $3.2 B
• Expeditionary Fighting Vehicle – late and 270% overrun - $3.3 B
• Airborne Laser - $5 B
• Polar Env. Satellite – 25% over and 5 years behind
• Tactical Radio System - $6 billion
• Comanche - $6.9B
• Future Combat System - $19 B
5

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
6

So what?
• How could a failure to communicate be so damaging?
– Goals – we don’t know what is expected
– Risks – we are quiet about danger
– Schedules – we don’t know when to do what
– Budgets – we don’t know how much we have
– Status – we don’t know where we are
– Forecasts – we don’t know where we are going
– Assumptions – we wish we had known
– Rules of the road – how we play the game safely
7

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……………………

Management Controlling
12922
Measure Analyze Act
While organizing, planning, and directing
go on continuously, most of the management
time will be expended in controlling.

Management System
• Policies
• Procedures
• Hardware
• Software
• People
Humphreys & Associates Executive IMS Overview 16026
The components necessary to collect and process
data into information for use in managing the project.

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

We Postulate…
• It is possible to but in place a management
system that will greatly improve the probability
of success on projects where the system is
properly constructed and diligently employed
by the project management team.
12

©Humphreys & Associates, Inc. 1979-2018 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

EIA-748
14
EIA-748 = Common Sense Project Management
EIA-748 in USG arena = Common Sense
Under the Microscope
EIA-748 = the core 80% of
Project Management Institute PMBOK

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
15

Some Benefits of a System
• Documented methodology
• Documented roles and responsibilities
• Discipline in organizing, planning, measuring,
analyzing, controlling
• Forced communication
• Scope, schedule, and budget plans integrated in
baseline and current plan
• Near-constant forecast outcome updates (time & $)
in the current plan
16

Communications &EVMS
17
GOALS PATH
FORWARD
STRUCTURE
RESPONSIBILITY
SCOPE PROGRESS
& STATUS
FORECAST
RISKS
SCHEDULE BUDGET

SCOPE CREEP
18
SMALL UNAUTHORIZED AND
POSSIBLY UNNOTICED CHANGES
TO THE SCOPE OF THE PROJECT.
CAN SEEMINGLY GOOD IDEAS LEAD TO BAD OUTCOMES?

IMPLEMENTATION COMPLEXITY
19
Simplest = labor only with all personnel in-house
More Complex = labor, outside labor, and limited material
Most Complex = labor, material, subcontractors in a project
that requires design - build - buy- assemble - test
Consider:
• Your current state of readiness
• If you have on-going projects to convert

Operational Cost Drivers
• Decision you make can increase complexity and cost
of system and operation (you should have an advisor)
• Cost level at which value work in the system
– Hours only
– Direct costs
– Indirect costs
• Depth of WBS
• Size and number of control accounts
• Processes & Procedures
20

HOW LONG?
21
From scratch – 9 months to a year
Partly there already – 3 to 6 months
Already moving fast – lucky you!
Consider that baselining and holding the IBR
on a new major project can take up to 180 days.

HOW MUCH?
22
1 ½ to 2 ½% of CTC
1 to 2% of CTC
1+ % of CTC
Start from scratch is most costly.
Adding to what you have.
On-going: Some have 748 as standard
process so no identifiable cost.

IMPLEMENTATION FINANCING*
• Some costs usually classified “indirect cost”
– Tools for example
• Other costs can be project related direct costs
– Training
– Data preparation
– Data collection and entry
– Operation
*see your cost accounting disclosure documents
23

EIA-748 EVMS (Formally)
24
RFP Contains Requirement
Contract Contains Requirement
– Tailored for Size and Risk
You Provide a Plan
In Response to
Requirement
Scope and People Plan
Integrated Master Schedule
Lump Sum &
Time-phased
Budget Plan
Measure – Analyze - Act

Program Work Breakdown Structure
Consistent with Military Standard 881
0073
Program
Title
System
Engineering/
Program
Management
Training
Peculiar
Support
Equipment
Data
Systems
Test and
Evaluation
Common WBS Elements to all Weapon Systems
Unique
WBS
elements
for weapon
systems in
Appendices
A - L
Training
Prime
Mission
System
System
Engineering/
Program
Management
Peculiar
Support
Equipment
Operational
Site
Activation
Initial Spares
and
Repair Parts
Industrial
Facilities
Common
Support
Equipment
Data
Systems
Test and
Evaluation

Contract SOW vs. WBS Matrix
0090
To Ensure All Contract
Work Is Covered By the
Work Breakdown Structure
Electronics
System
Prime Mission
Equipment
Training
Program
Management
Hardware Software
System
Integration
Equipment Facilities
System
Engineering
Project
Management
Statement
Of Work
Paragraph
2.0
Paragraph
3.0
Paragraph
4.0
Paragraph
2.1
Paragraph
2.2
Paragraph
3.2
Paragraph
4.1
Paragraph
4.2
Paragraph
2.1.1
Paragraph
2.1.2
Paragraph
3.1.1
Paragraph
3.1.2
Paragraph
3.2.1
Paragraph
3.2.2
Paragraph
4.1.1
Paragraph
4.1.2
Paragraph
4.2.1
Paragraph
4.2.2
Paragraph
3.1

Responsibility Assignment Matrix
and Control Account Establishment
0100
WBS
X X
X X
X
X
X
X
X
X
X
X
X
X
X
Project
Organization
X
X
X
X
X
X
X
X
X X

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

Time-phased Budget Plans
Activity January February March Total
A 1 2 3 4 5 4 3 2 24
B 4 4 4 4 4 4 4 4 4 36
C 5 5 5 5 5 5 5 5 40
•Weekly 1 2 3 8 9 8 12 11 9 9 9 9 5 5 100
•Cumulative 1 3 6 14 23 31 43 54 63 72 81 90 95 100

Budget Controls
Hybrid of Functional Organizations & Integrated Product
Teams (IPTs)
5 14 19
12 14 26
4 4
3 12 15
2 2
8 8
10 10
Org. C 1 1
8 4 14 8 12 10 14 15 85
5
90
10
100
Management Reserve (MR)
Contract Budget Base (CBB)
WBS Element Budgets
Undistributed Budget (UB)
1.2.3
Organization B1
1.3.1
Integrated Product Team A
Integrated Product Team F
Organization
Budgets
Organization B2
1.1 1.2 1.3
Organization A1
Organization A2
Organization A3
Performance Measurement Baseline (PMB)
1.0 Total Program
1.1.1 1.1.2 1.1.3 1.2.1 1.3.21.2.2
Organization C1
TopLevelOrganization
Org. A
Org. B
Work Breakdown
StructureFunctional
Organizations/
IPTs

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)

Estimate At Completion
0274
Actual Costs
(ACWP)
$
Time
Time Now
EAC
Estimate To
Complete (ETC)
Estimated Completion
Date (ECD)

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)

Recap
• Define your policies and procedures
• Implement a tool-rich management system that can
support projects
• Train your people – especially in the discipline of your
system
• Have a plan that will work – and communicate it
• Establish clear scope/schedule/budget goals –
document and systematically communicate them
• Have a schedule that does the job – and communicate
it
34

Recap
• Work to improve your duration and budget estimating
accuracy
• Execute a robust risk management process – integrated
with the project planning and control system
• Execute a stable detailed monthly business rhythm
• Develop frequent forecasts and monitor your accuracy
• Understand what leads to poor decisions and work to
improve your decision-making skills
• Implement strict baseline change control
• Communicate – communicate – communicate
35

© 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

© Unanet
Summarize
performance by
WBS, OBS and
other structures
Over 40 EVMS
metrics and KPIs
Easy-to-use Microsoft Office-
style user interface

© Unanet
19 different styles of EVMS
reports and charts, including
government IPMR reports
Export to UN/CEFACT XML and
integration with Empower™
from Encore Analytics

© Unanet
Empower Benefits
• Complete program analytics and reporting
solution
• Designed to engage all program stakeholders
• Purpose-built for ease-of-use
• Best-in-class cost/schedule analytics
• VAR collection with integrated workflow and alerts
• Corrective action tracking with integrated
workflow and alerts
• Data-driven audit support
• Configurable dashboards
• Leverage current EVM and IMS software tool
investment
• Accelerated business rhythm
• Lower total cost of ownership (TCO)
• Cloud-ready
• No client-side install (100% browser-based)
• Single integrated tool

© 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
Unanet – The One Software for Projects,
People & Financials

© Unanet
Contact Us
Paul Bollinger
Consulting Engagement Director at Humphreys &
Associates
paul.bolinger@humphreys-assoc.com
Gary Troop
President of Encore Analytics
gary.troop@encore-analytics.com
Glenn Gallop
President of forProject
glenn.gallop@forproject.com
Kim Koster
VP of Corporate Strategy
kkoster@unanet.com

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