the new management revolution: integrating contractor ... integrating contractor performance with...
TRANSCRIPT
![Page 1: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/1.jpg)
The New Management Revolution:Integrating Contractor Performancewith Agency Budgets
Mr. Wayne AbbaOUSD(A&T)API/PM
ASMC PDI ‘97
Earned Value
![Page 2: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/2.jpg)
REPORT DOCUMENTATION PAGE Form Approved OMB No.0704-0188
Public reporting burder for this collection of information is estibated to average 1 hour per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completingand reviewing this collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burder to Department of Defense, WashingtonHeadquarters Services, Directorate for Information Operations and Reports (0704-0188), 1215 Jefferson Davis Highway, Suite 1204, Arlington, VA 22202-4302. Respondents should be aware that notwithstanding any other provision oflaw, 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 THE ABOVE ADDRESS.
1. REPORT DATE (DD-MM-YYYY)01-06-2002
2. REPORT TYPEBriefing
3. DATES COVERED (FROM - TO)xx-xx-2002 to xx-xx-2002
4. TITLE AND SUBTITLEThe New Management Revolution: Integrating Contractor Performance with AgencyBudgetsUnclassified
5a. CONTRACT NUMBER5b. GRANT NUMBER5c. PROGRAM ELEMENT NUMBER
6. AUTHOR(S)Abba, Wayne ;
5d. PROJECT NUMBER5e. TASK NUMBER5f. WORK UNIT NUMBER
7. PERFORMING ORGANIZATION NAME AND ADDRESSOUSD(A&T)API/PMxxxxxxxxxx, xxxxxxx
8. PERFORMING ORGANIZATION REPORTNUMBER
9. SPONSORING/MONITORING AGENCY NAME AND ADDRESSOUSD(AT&L)Acquisition Resources & Analysis/Acquisition Management,
10. SPONSOR/MONITOR'S ACRONYM(S)11. SPONSOR/MONITOR'S REPORTNUMBER(S)
12. DISTRIBUTION/AVAILABILITY STATEMENTAPUBLIC RELEASE,13. SUPPLEMENTARY NOTES14. ABSTRACTSee report.15. SUBJECT TERMS16. SECURITY CLASSIFICATION OF: 17. LIMITATION
OF ABSTRACTPublic Release
18.NUMBEROF PAGES34
19. NAME OF RESPONSIBLE PERSONhttp://www.acq.osd.mil/pm/paperpres/paperpres.html,(blank)[email protected]
a. REPORTUnclassified
b. ABSTRACTUnclassified
c. THIS PAGEUnclassified
19b. TELEPHONE NUMBERInternational Area CodeArea Code Telephone Number703767-9007DSN427-9007
Standard Form 298 (Rev. 8-98)Prescribed by ANSI Std Z39.18
![Page 3: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/3.jpg)
Outline
l Review - Earned Value Conceptl Acquisition Reform Legislationl Office of Management & Budget
» Circular A-11 Part 3– Principles of Budgeting for
Capital Asset Acquisitions– Capital Programming Guide
l Relationships & Summary
![Page 4: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/4.jpg)
The Punchline
l General consensus:
The FederalGovernment needsto better manage theplanning, budgetingand acquisition of fixedassets, includinginformation technology
Before weget into allthe details let’s talk basics
![Page 5: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/5.jpg)
Purpose of Earned Value:Effective Management
Spend Plan» Planned $1M/week» Planned $3M to date
» Actual cost $2M» $1M favorable???
Earned Value» Planned $1M/week» Planned $3M to date» Earned $1M (66% behind)» Actual $2M (100% overrun)» EAC $8M, 8 weeks late
Contract: 4 miles of railroad track in 4 weeks for $4 million.Status: After 3 weeks, only $2 million has been spent.Question: How are you doing (and how do you know)? *
* Source: GAO Report May 97
![Page 6: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/6.jpg)
Earned Value:Integrated Management
EVMS
Cost
Schedule Technical
Fully FundedPrograms
![Page 7: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/7.jpg)
Integrated Management
Work Breakdown Structure
Airframe Propulsion Air Vehicle Applications S/W
Air Vehicle Systems Engrg/Program Mgmnt
System Test &Evaluation
Aircraft System
Program “Dictionary” (defines the program)
![Page 8: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/8.jpg)
J F M A M J J A S O N D
8
14
12
Budget 6
10
12
8
12
10
8
Control Account Budget = 100BCWS = 38
Control Account Budget = 100BCWS = 38
Earned Value ConceptBudgeted Cost for Work Scheduled (what you planned to do)
BCWS 6
8
7*
6*
5*
6*
* 50-50 method used for work in process
![Page 9: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/9.jpg)
J F M A M J J A S O N D
8
14
12
Budget 6
10
12
8
Control Account Budget = 100BCWS = 38BCWP = 33“Schedule Variance” = - 5
Control Account Budget = 100BCWS = 38BCWP = 33“Schedule Variance” = - 5
* 50-50 method used for work in process
Earned Value ConceptBudgeted Cost for Work Performed (Earned Value-what you did)
BCWP 6
4*
7*
6*
0
6*
4*
Work progressingbehind schedule
Work progressingbehind schedule
Work progressing ahead of schedule
Work progressing ahead of schedule
12
10
8
![Page 10: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/10.jpg)
Earned Value ConceptActual Cost of Work Performed (what it cost to do what you did)
Actual Costof Work
Performed(ACWP)
Actual Costof Work
Performed(ACWP)
3737
Budgeted Costfor Work
Performed(BCWP)
Budgeted Costfor Work
Performed(BCWP)
3333
Budgeted Costfor Work
Scheduled(BCWS)
Budgeted Costfor Work
Scheduled(BCWS)
3838
ScheduleVariance
ScheduleVariance - 5- 5
CostVariance
CostVariance - 4- 4
Control Account Budget = 100
Estimated Cost at Completion = ?
![Page 11: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/11.jpg)
The Earned Value ConceptSummary
![Page 12: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/12.jpg)
Earned Value Management:Origins
1960s-• Complex Programs• Multiple Customers• Need for Improved Management
PERT COST• Resource-loaded networks• 10 versions by ‘64
Industry Issues:• “How-to-manage”• Inefficiency
![Page 13: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/13.jpg)
Earned Value Management:Origins (cont’d)
Industry BestPractices
Government Requirements
Criterion-based Management• Brief statements of attributes• Not “how-to”• Not a system• Minimum acceptable standard
1967: DoD Instruction 7000.2Cost/Schedule Control Systems
Criteria (C/SCSC)
1997: DoD Regulation 5000.2-REarned Value Management
Systems (EVMS) Criteria
![Page 14: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/14.jpg)
Earned Value Policy:DoD 5000.2-R, Appendix VI
l 32 Criteria:» Organization» Planning, Scheduling &
Budgeting» Accounting Considerations» Analysis & Management
Reports» Revisions & Data
Maintenance
l Mirrors Industry Guidelines
IndustryStandardGuidelines
ADPA/NSIAAIA, EIA
ASA, SCA
![Page 15: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/15.jpg)
DoD Earned Value Policy
l Reaffirmed-» ADL Study - 1984» TQM Report - 1991» DoDI 5000.2 - 1991» DoDIG Report - 1993» C&L/TASC - 1994» DoD 5000.2-R - 1996» OMB Circular A-11
Part 3 - 1996» GAO Report - 1997
E V M S
![Page 16: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/16.jpg)
Reform Legislation
l GovernmentPerformance and ResultsAct (GPRA), 1993
l Federal AcquisitionStreamlining Act (FASA),(Title V), 1994
l Information TechnologyManagement Reform Act(ITMRA), 1996» “Clinger/Cohen”
Acquisition Reform is connected to 3 federal acts
Is therean inter-mission ?
![Page 17: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/17.jpg)
Purpose of the Acts
Provides for establishment andevaluation of performance standardsand goals for expenditure of theFederal budget
GPRA
Requires reporting of cost, scheduleand performance goals for asset management and evaluation of progress
FASA(V)
Requires reporting of performance ininformation systems acquisition
ITMRA
![Page 18: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/18.jpg)
Circular A-11, Part 3: Planning,Budgeting & Acquisition of Fixed Assets
So what is thiscircular and whatimpact DOES it have?
Note:“Fixed Asset” hassince changed to“Capital Asset”
![Page 19: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/19.jpg)
A-11 Part 3 Objectives
• provide guidance and identify requirementsfor planning, budgeting and acquisitionmanagement of fixed assets
• unify guidance for the collection of agencyinformation that FASA and ITMRA requireOMB to report to Congress
• ensure that acquisition plans support themission statements, performance goalsand plans developed per GPRA
It is designed to
![Page 20: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/20.jpg)
Capital Assets: Definition
l Capital assets are» Land, Structures, Equipment» Intellectual property (including software)» Useful life of two years or more» Additions, improvements, replacements
l Capital assets may be acquired by» Purchase, construction, manufacture» Lease-purchase or other capital lease» Operating lease
![Page 21: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/21.jpg)
Capital Assets: Examples
l Office buildingsl Hospitals, schoolsl Laboratoriesl Prisonsl Dams, power plantsl Furniture, elevatorsl Printing pressesl Motor vehicles
l Airplanes, shipsl Satellitesl Space exploration
equipmentl Info. technology
hardware/softwarel DoD weapons systemsl etc…..
![Page 22: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/22.jpg)
A-11, Part 3 (cont’d)
A-11 also addressesissues regarding fullfunding, a new ideafor some agencies.
![Page 23: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/23.jpg)
Principles of Budgeting forCapital Asset Acquisitions
l Planning» Supports core mission» ROI > alternative uses
of public resources» Risk is understood
l Costs & Benefits» Including life-cycle» Cost/Sched/Perf
goals measurableusing EVMS
l Principles of Financing» Fully funded
l Risk Management» Analyzed & managed» Appropriate allocation
– Government– Contractor
» Controlled & monitoredusing EVMS
» Formal review process
![Page 24: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/24.jpg)
Performance Measures
StrategicGoals
PerformanceGoals
PerformanceIndicators
• Mission• Long-term Goals
• Annual goals• Specific element of a strategic goal
• A measure of progress toward a performance goal - quantity - quality - timeliness - cost - outcome
“Three Pesky Questions:”
1. Is function tied to agency mission?2. Could another entity do it better?3. Have processes been reengineered to give best performance at lowest cost?
![Page 25: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/25.jpg)
Performance-basedManagement: The Key?
l Shift focus to programexecution
l Provide for regular andsystematic measurementof program performancecompared to goals
l Emphasize results(outcomes and outputs)
EVMS
![Page 26: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/26.jpg)
Baseline Goals
l Cost and ScheduleGoals
l Performance Goals
So what getsreported to OMB?
![Page 27: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/27.jpg)
Cost and Schedule Goals
l Cost» Total project cost» Timephased by stage
l Schedule» Total duration» Significant interim
milestones
&
Nothing new to DoDhere, but...
![Page 28: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/28.jpg)
Cost and Schedule VarianceReporting
l If cost or schedule is10% or more aboveor behind plan,respectively» Analyze variances» Discuss corrective
actions» Propose revisions if
goals can’t be met
![Page 29: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/29.jpg)
Performance Goalsl These should clearly
define the technical orother results expected
l Wherever possible, theyshould be quantitative
l Describe the probabilityof accomplishment, i.e.what is the degree of
Risk
![Page 30: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/30.jpg)
Performance Goal VarianceReporting
l If there is any*deviation from thebaseline plan forperformance goals» Analyze variances» Discuss corrective
actions» Propose revisions if
goals can’t be met
* 10% for DoD
![Page 31: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/31.jpg)
Management Alternatives
l Find the resourcesl Adjust program to stay within resources
» Must meet baseline goals unless OMBapproves revisions
» Proposed revisions must be justified, withan estimated probability of achievement
l Cancel?
![Page 32: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/32.jpg)
Earned Value Managementand A-11 Part 3
l A-11 requires a descriptionof the performance-basedmanagement system usedby contractors
l Asks whether it is an EVMSsystem and, if not
l Explain how the systemprovides measures ofaccomplishment vs plannedschedule and actual cost
A-11 sees a key role for EVMS
![Page 33: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/33.jpg)
Earned Value and A-11, Part 3
Earned Valuefrom EVMS
Cost&
ScheduleGoals
PerformanceGoals
Quantitative
Qualitative
Whataboutthis?
![Page 34: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/34.jpg)
The Next Steps
l OMB Capital Programming Guide» Basic reference» Replaces OMB A-109» Not prescriptive
l OMB trainingl Continue Cooperation
» American ProjectManagement Forum
l Reporting/contract types?
Capital Assets• EVMS
![Page 35: The New Management Revolution: Integrating Contractor ... Integrating Contractor Performance with Agency Budgets Mr. Wayne Abba OUSD ... Budgeted Cost for Work Scheduled ... Criterion-based](https://reader034.vdocuments.us/reader034/viewer/2022052608/5ae366a77f8b9ae74a8da628/html5/thumbnails/35.jpg)
In Conclusion
l A-11 Part 3 officially extendsDoD-pioneered performancemeasurement to all agencies-and applies to DoD
l It effectively mandates EarnedValue Management as thebasis for performance-basedmanagement systems
l Earned Value Home Page: http://www.acq.osd.mil/pm
So, maybe there is somethinghere for me.