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Increasing the probability of project success using Earned Value Management


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Increasing the probability of project success using Earned Value Management

  1. 1. Increasing the Probability of Program Success, using the Principles of Earned Value Management This document describes the offerings needed to deliver value to clients. 4 3 4 7 P e b b l e B e a c h D r i v e , N i w o t C o l o r a d o 8 0 5 0 3 + 1 3 0 3 2 4 1 9 6 3 3 1 1 / 1 5 / 2 0 1 1 Glen B. Alleman Earned Value is a fundamental measurement of a program’s performance but far from sufficient for the program’s success. Integration of risk, technical performance measures, and systems engineering processes are needed to increase the probability of program success. Success starts with a winning proposal, installing the right tools and work processes, establishing a credible Performance Measurement Baseline, identifying and handling programmatic and technical risk, and through program execution a variety of technical, operational, and staffing processes are needed and based on Earned Value Management processes.
  2. 2. Increasing the Probability of Program Success, using the Principles of Earned Value Management Copyright ©, 2011, Glen B. Alleman, 4347 Pebble Beach Drive, Niwot, Colorado 80503 Increasing the probability of program success requires the application of 5 simultaneous program management processes. These 5 processes are inter-related, dependent, and supportive of each other. Earned Value is at the heart of each of these 5 processes with the focus on measures needed to forecast the future, rather than just reporting past performance. Capabilities Needed For The Success Deployment Of An Earned Value Management Based Consulting Practice Program Success Depends On Integrating 5 Critical Work Processes With Earned Value Management Identify Needed System Capabilities Establish Requirements Baseline Establish the Performance Measurement Baseline Execute the Performance Measurement Baseline What capabilities are needed to fulfill the project mission or business goals? What technical & operational requirements are needed to produce these capabilities? What is the schedule and cost to deliver products or services that meet the requirements? What are the periodic measures of physical percent complete? Define the set of capabilities needed to achieve the project objectives or the particular end state for a specific scenario. Using the Concept of Operations (ConOps), define the details of who, where, and how this capability is to be accomplished, employed, and executed. Define the technical and operational requirements for the system capabilities to be fulfilled. First, define these requirements in terms isolated from any implementation details. Only then bind the requirements with technology. Build a time–phased network of work activities describing the work to be performed, the budgeted cost for this work, the organizational elements that produce the deliverables, and the performance measures showing this work is proceeding according to plan. Execute work activities, while assuring all performance assessment represent 100% completion before proceeding. This means – No rework, no forward transfer of activities to the future. Assure all requirements are traceable to work & all work is traceable to requirements  Define capabilities as operational concepts  Define capabilities with Use Cases and Scenarios  Assess needs, costs, and risks of the capabilities simultaneously  Define explicit, balanced, and feasible alternatives.  Perform fact finding  Gather and classify requirements  Evaluate and rationalize requirements  Prioritize requirements  Integrate and validate requirements  Decompose scope into Work Packages  Assign responsibility for deliverables  Arrange Work Packages in logical order  Develop BCWS for Work Packages  Assign Work Packages measures of performance  Set Performance Measurement Baseline  Perform authorized work  Accumulate and report Work Package performance  Take corrective management action  Maintain the Performance Measurement Baseline Perform Continuous Risk Management What are the impediments to success and how are they being handled? Apply Continuous Risk Management to each of the 4 process areas to: Identify, Analyze, Plan, Track, Control, and Communicate programmatic and technical risk associated with each of the outcomes of the 4 processes.
  3. 3. Increasing the Probability of Program Success, using the Principles of Earned Value Management Copyright ©, 2011, Glen B. Alleman, 4347 Pebble Beach Drive, Niwot, Colorado 80503 Program success starts with the engaging with the right program in a way to mutually supports the goals the program. There can be bad business choices made, where the wrong program or the wrong engagement style is chosen. This choice starts with the business development process, seeking good programs to work. Knowing how to seek the right program is part of the Earned Value Management practice. Qualifying potential clients, knowing the culture, the history, and the current work processes is critical to writing a winning proposal, but also critical to proposing the right method and approach to success after the win. Once these themes have been established the Earned Value Management practices can be tailored to suit the needs of the client and increase the probability of success of the engagement as well as the probability of success for the program itself. Business Development Proposal Development Capture Support Thought Leadership Training And Development  Trained proposal writers with specific experience in program controls and the methods needed to increase the probability of success.  Apply a proprietary program management method to increase the probability of success, with field proven success.  Sales presentation materials showing beneficial outcomes of program management methods.  Membership and leadership in professional organization memberships – NDIA, EFCOG, PMI  Invited speaker on topics critical to the program success.  Board membership for the recognized contribution to the improvement of the industry.  Recognized contributor to guides and standards.  Course development with measureable benefits to students and their work environment.  Journal papers on EVM, Risk Management, IMP/IMS Development.  Books or chapters on EVM, Risk, and Program Controls, Earned Value Management Business Process Model EV Readiness Review  Systems Description and Work Instruction cross reference to ANSI-748B.  Cost, schedule, and resource management systems capabilities assessment.  PMB, IMS and data reporting integrity assessment.  Risk based assessment of 32 criteria compliance. EVMS Corrective Actions  System Description and Work Instruction creation or improvement.  IMP/IMS creation or improvement.  PMB creation or improvement.  Program staff Earned Value development. EVMS Deployment  Establish a credible PMB, IMS, and execution processes.  CAM mentoring, training, and oversight.  Assure EV reporting processes provide valid data to decision makers.  Internal surveillance processes. DCMA Validation Lifecycle  Self-assessment scoring.  PAV readiness assessment.  EVMS Validation road map using SSOM and SSP guidance. Program Planning and Controls Operational  Improve managerial decision making.  Repeatable monthly business rhythm to produce credible CPRs.  Risk adjusted EAC, ETC, and IEAC.  Control Account and Work Package performance reporting.
  4. 4. Increasing the Probability of Program Success, using the Principles of Earned Value Management Copyright ©, 2011, Glen B. Alleman, 4347 Pebble Beach Drive, Niwot, Colorado 80503 The selection, installation, deployment, and operation of an Earned Value Management System is a complex endeavor. It involves standalone Information Technology, integration of this technology with other systems, development and deployment of new or changed work procedures, validation that those procedures effectively deliver the expected value, and most importantly the changes needed to the behaviors of the staff to produce this expected value. It is the latter activity that puts any Earned Value Management System at risk. Like all change, the human element is the least predictable, most volatile, and most difficult to manage. Any practice that deploys Earned Value must have an explicit change management offering to support the technology and procedure changes. Change management is a practice in itself and must be the basis of all other practices. With this in mind the activities below address the mechanical activities needed to introduce Earned Value Management to an organization or a program in that organization. This involves most aspects of the business. From IT, the purchasing, the training, to senior and intermediate level management. An integrated approach to deploying Earned Value Management must include all these processes in a tightly coupled delivery system. Earned Value Management Systems Deployment EV Engine Selection And Standup PMB Development IBR Preparation DCMA / DCAA Processes CAM Training  Selection process based on measureable ability to comply with ANSI-748-B.  Deep knowledge of software systems and integration with ERP and Cost Accounting.  Deployment planning for small, medium, and large systems.  Tight integration of the IMS to the EV engine through database, verification, and validation of data integrity.  Connect Control Account and Work Package performance to the EV Engine reporting processes.  PMB development aligned with CAS compliant account system to the Work Package level.  EV Engine processes developed to the Work Package level.  CAM interview questions and training developed to ensure successful IBR.  Hands on coaching mentoring, and training and CAMs and Program Control management.  PAV work processes and preparation activities.  EVM Systems Description development and deployment in DOD, DOE, NASA, and Federal Civ domains.  Work instruction and desk instruction development and training.  CAS system integration.  CAM training, materials, classroom instruction and hands on mentoring and coaching using the selected EV Engine.  CAM Notebook development and deployment with manual or electronics media.
  5. 5. Increasing the Probability of Program Success, using the Principles of Earned Value Management Copyright ©, 2011, Glen B. Alleman, 4347 Pebble Beach Drive, Niwot, Colorado 80503 Managing program risk means managing cost, schedule, and technical risks with activities that either retire those risks or handle them in sufficient time so they do not become issues. Once a risk becomes an issue, the program is usually over budget and behind schedule, since time and money must be used to remove the issue. There are four attributes for managing risk. The measures of these attributes must be determined in order to properly respond with a risk tolerant approach to reducing or eliminating risk. 1. The State of the Project – Maturity assessment point provide not only a review of the progress to date, but also an assessment of the readiness of the project to proceed to the next step. The fidelity of a design, a fabrication or an operational capability can be assessed at each project Event. 2. The State of the Product – the accomplishments to date define the increasing maturity of product elements. These are explicitly stated in quantitative terms. 3. The State of the process – exit criteria for the work and processes that produce the outcomes from the work. These exit criteria are how state of product is measured. These are explicitly defined as the conditions of completion for each accomplishment. 4. Work delivery – Only those tasks that support the completion of the exit criteria are defined in the plan. They are discrete work. All other work is defined as level of effort, since it has not specific defined outcome The Risk Management activities are guided by the steps below, which are in turn guided by industry and agency Risk Management handbooks and directives. Integrating this guidance with good program management practices and Earned Value’s measures of physical percent complete is the basis of increasing the probability of program success. Programmatic And Technical Risk Management DoD/DOE/NASA Risk Management Risk Management Tools and Processes DID 81650 IMS Development Technical Performance Indicators  Development of Risk Management Handbook for a variety of business and technical domains.  Technical risk categories for software, hardware, systems, designed for specific domains.  Cardinal risk management processes.  Risk tool integration and use: Active risk manager, MITRE Risk Management, Risk Radar, and Monte Carlo tools: Risk+  Bayesian statistical risk estimating with integration of Cost, Schedule, and Technical Performance measures.  Estimating processes for schedule and cost, using Category Theory and Anchoring and Adjustment.  Credible IMS development based on technical performance measures, probabilistic cost and schedule risk.  Connection of Technical Performance Measures with IMP / IMS processes.  Development of TPM management processes to assure credible forecast of program performance.  Integrate Risk Management and Technical Performance Management with PMB to produce a credible, risk adjusted, Estimate at Completion management.
  6. 6. Increasing the Probability of Program Success, using the Principles of Earned Value Management Copyright ©, 2011, Glen B. Alleman, 4347 Pebble Beach Drive, Niwot, Colorado 80503 The proposal must describe not only the technical solution, by the work processes needed to build the technical solution, and the program controls processes used to manage the work, assure the work is executed in the proper order, and measure the physical progress of this work toward successful completion of the project. Success of the programmatic elements of the proposal starts with a program architecture, in the same way there is a technical architecture. The development of both these architectures is a Systems Engineering role during the proposal phase. The Programmatic Architecture starts with an Integrated Master Plan (IMP), showing how the delivered products or services increase in their maturity as the program progresses. The measures of maturity include Measures of Effectiveness (MoE) and Measures of Performance (MoP). The Measures of Effectiveness are operational measures of success that are closely related to the achievements of the mission or operational objectives evaluated in the operational environment, under a specific set of conditions. The Measures of Performance characterize physical or functional attributes relating to the system operation, measured or estimated under specific conditions. The Technical Performance Measures (TPM) are attributes that determine how well a system or system element is satisfying or expected to satisfy a technical requirement or goal. Each of the activities shown below must address these three measures as the tangible outcome of the work effort. Capabilities Needed For The Success Deployment Of An Earned Value Management Based Consulting Practice Proposal Support Program Architecture Management Volume Cost Volume Risk Volume Color Team Review  Value Stream Flow Of Increasing Maturity Of Deliverables  Modeling Of “Process Improvement” To Increase The Probability Of Program Success Using Technical Performance Measures  IMP Development Using Tools For Microsoft Project To Capture, Manage, And Maintain The Integrity Of The IMP From Proposal To Program Execution.  Increasing The Probability Of Program Success By Showing How Technical Development And Program Controls Are Integrating In The Systems Engineering Manner Into A Single Seamless Work Process.  Development Process For IMP/IMS Guided By Specific Work Instructions Developed Over A Decade Of Hands On Experience  Work Package Based Cost Baseline Connected With IMP Through A Value Stream Map Showing The Increasing Maturity Of Each Deliverable Measured In Units Meaningful To The Decision Makers Through Technical Performance Measures  Probabilistic Cost Models Attached With Each Major Deliverable.  Risk Retirement Connections To The IMP And IMS  Probabilistic Risk Retirement Processes Described In The Program Management Plan  IMS Credibility  Cost Credibility  Risk Management Credibility
  7. 7. Increasing the Probability of Program Success, using the Principles of Earned Value Management Copyright ©, 2011, Glen B. Alleman, 4347 Pebble Beach Drive, Niwot, Colorado 80503 Successful program execution starts with fine grained measures of physical percent complete. A fundamental question must be continually answered if how long are you willing to wait before you find out you are late? Measures of physical percent complete need to be performed at intervals sufficiently short to take management action to correct performance. With the opportunity to take this corrective action, the program’s performance to reach a point where attempts to correct will have little or no effect on the outcome, the project will be late and over budget. For a CPR based program, this period of measurement should be weekly. Earned Value on a weekly basis appears to be overkill. But without measures of physical percent complete, waiting the minimum one month reporting period provides no opportunity to be GREEN on the month end. Capabilities Needed For The Success Deployment Of An Earned Value Management Based Consulting Practice Program Execution Management PMB Business Processes Risk Management Processes CPR Business Rhythm Program Performance Management  Rolling Wave development by partitioning IMS on logical boundaries around IMP events  Assure tangible deliverables are produced for each rolling wave with measureable physical outcomes  Work Package performance measures using single deliverables with Technical Performance Measures.  Compliance With DID 81650 IMS Levels Through Integrated Tools  IMS Development Using Tools For Microsoft Project To Maintain The Integration With The IMP  Connection Of SA And AC Narratives With Technical Performance Measures And IMS EV Performance Metrics To Increase The Probability Of Program Success Using OSD Guidance  Integrated Risk Management With IMS.  Each Risk Has A “Handling Plan” In The IMS.  Each Risk Connected To The Risk Management System With A Unique ID.  Risk Management processes guided by DOD, DOE, and NASA risk frameworks with adjustments to forecast to cost and schedule.  Weekly EV measurement using physical percent complete with pre-defined measures of performance.  Monthly performance with EAC built from physical percent complete measures of the weekly performance meetings.  cost performance using probabilistic models refined weekly from past performance  Reference Class estimating built from systems architecture, past performance, and systems engineering processes.  Probabilistic modeling of all work activities  Cruciality of activities to reveal coupling and cohesion in the activity network.  Domain specific Technical Performance Measures integrated with the IMS.  Risk adjusted performance with Monte Carlo or Method of Moments statistical analysis.
  8. 8. Increasing the Probability of Program Success, using the Principles of Earned Value Management Copyright ©, 2011, Glen B. Alleman, 4347 Pebble Beach Drive, Niwot, Colorado 80503 When programs get in trouble direct intervention is needed to get back to GREEN. Getting back to GREEN starts with an assessment of the program and the firm’s commitment to perform and its ability to perform. With these commitments and abilities, the Root Cause of the non-performance must be identified in order to define the corrective actions. A Root Cause Analysis (RCA) reveals the sources that require corrective actions. With the corrective action plan in place, the PMB is then reconstructed guided by NDIA, DCMA, and agency program performance management directives. There ten (10) steps needed to recover a project from RED: 1. Stop – halt the work activities and assign a team to start the triage 2. Assign An Evaluator – recruit and external professional to lead the triage process. 3. Evaluate The Project Status – to establish the true and unvarnished facts. 4. Evaluate The Team – to identify problems that may have contributed to the current state. 5. Define The Minimum Goals – that will reduce the project to the smallest size achieves only the essential goals. 6. Determine Of The Minimum Goals Can Be Met – analyze the feasibility of the minimum goals and determine if they can reasonably be achieved 7. Rebuild The Team – based on the recovery goals, rebuild a competent team that can execute the project using the approved processes. 8. Perform A Risk Assessment – with the new goals and the rebuilt team, identify process and personnel risk and provide corrective actions. 9. Revise The Plan – produce a new IMS, BOE, and Risk Management Plan that includes the corrective action from the previous approach. 10. Install An Early Warning System – put a system in place to ensure the project does not slip back into its old ways. Capabilities Needed for the success Deployment of An Earned Value Management Based Consulting Practice Program And Project Triage Assess Existing Baseline Rebaseline WBS Rebaseline IMS Reestablish PMB  WBS assessment  SOW/SOO/ConOps connections  EVMS-SD Review  Develop candidate WBS and Program Events  Training, Mentoring, Coaching  MIL-STD-881A Compliant WBS  IMP elements that describe increasing program maturity  DID 81650  EVMIG and other EV guidance  Work Packages and Planning Packages to increase maturity  Resource loaded, risk adjusted WP/PP.  Foot and Tie the new Basis of Estimate to the Work Packages.  Integrate a DoD, DOE, NASA or other agency compliant Risk Management System.  Perform the needed Probabilistic risk analysis on the schedule and cost baseline to assure a credible PMB.  Vertical and Horizontal integration WP/PP to Program Events  Programmatic and technical risk impacts.  Define Technical Performance Measures for each Work Package, Measures of Effectiveness (MoE) and Measures of Performance (MoP) at least at the Control Account level, and the measures to be used to provide visibility to the progress to plan of all planned work.
  9. 9. Increasing the Probability of Program Success, using the Principles of Earned Value Management Copyright ©, 2011, Glen B. Alleman, 4347 Pebble Beach Drive, Niwot, Colorado 80503 Applying Earned Value Management and its supporting system to projects and programs must answer these 5 Immutable questions in units of measure meaningful to the decision makers. These answers are: 1. What does done look like? – An Integrated Master Plan and Integrated Master Schedule, with Work Packages, each with Technical Performance Measures and a Cost (BCWS) baseline. 2. How do we get there? – A logical network of Work Packages, with their Tasks, the cost and schedule margin derived from a risk model, and defined measures of physical percent complete. 3. Do we have enough time, resources, and money to get there? – a credible BCWS spread at the Work Package level, derived from a resource loaded IMS, and sufficient cost and schedule margin, derived from a probabilistic model of the work processes. 4. What impediments will we encounter along the way? – An integrated Risk Management system, where risks and their retirement are integrated with the IMS, with budget for risk retirement on the baseline or in the management reserve. 5. How do we know we are making progress? – Each Work Package and its tangible deliverable have pre-defined performance measures. Either Measures of Effectiveness or Measures of Performance, including Technical Performance Measures in units meaningful to the decision makers.
  10. 10. Increasing the Probability of Program Success, using the Principles of Earned Value Management Copyright ©, 2011, Glen B. Alleman, 4347 Pebble Beach Drive, Niwot, Colorado 80503 Glen B. Alleman Niwot Ridge Consutling 4347 Pebble Beach Drive Niwot, Colorado 80503 +1 303 241 9633