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Program Management Systems Committee

Joint Industry/Government Meeting

May 21, 2009

EVM for Service Contracts

Working Group

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Subcommittee Charter

• Problem Statement• EVMS is being applied to a variety of services type work

scenarios and there is no consistent guidance or policy on how EVMS should be implemented

• Charter for Subcommittee:• To develop and recommend policy, process guidance, and/or

training to support the implementation of EVMS on services type work

• Targeted Exit Criteria:• White Paper - “Guidance for Implementing EVMS on Services

Work

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Earlier Conclusions • EVM is useful for managing services work; however its application

should be scaled to balance the benefits of EVM with program risks and the cost of EVM implementation

• EVM is compatible with performance based services acquisition, • It’s important to seek ways to define objective methods for

measuring earned value of services• Over-reliance on LOE for services can mask progress on other

work• Recommend separate analysis of performance data for

development and service work• It may be more appropriate and beneficial to implement EVM at the

program level rather than at the individual contract level, e.g., staff augmentation (personal services) work

• More flexibility in EVM Systems may be required to enable optimal application of EVM to services contracts, e.g.,• Summary-level planning/shorter planning horizons • Allowances in the process for more frequent re time-phasing of

budgets

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Contract Element Required for EVM

• A discrete SOW, from which an end product-oriented work breakdown structure can be defined, and a schedule. From these, a time-phased, resource loaded plan for executing the required work within the timeframe specified in the contract can be developed.

• As stated in the NDIA PMSC EVMS Application Guide: • “Where work is discrete, EVM can be effectively employed. Where

work is T&M/LOE, performance must be evaluated using other means that are not related to schedule milestones or measurement of progress.”

• “For contracts issued in support of a program where the supplier does not control and manage the work scope and schedule (such as a staff augmentation contract), EVMS requirements should not be applied to the contract itself but at the program level where scope, schedule and cost are present.” (Source: NDIA PMSC EVMS Application Guide).

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PBSA - Contracting

• PBSA is a very disciplined way to write and manage service contracts

• Performance standards (SLAs) that define the performance level required to meet contract requirement, are measurable and permit assessment of supplier’s performance.

• Allow contractor maximum flexibility without government interference – Primarily FP Contracts

• Quality Assurance Surveillance Plan to measure each service

• Service measured during the payment period.• Service requirement starts over each payment period.

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PBSA Measurement of Performance (ITIL)

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EVM and PBSA May Apply on One Contract

• EVM and PBSA are management frameworks.• Both use the WBS process to define the work• Work is of two types• Project, the work is done over a period of time with the

benefit realized either at major milestone points during project execution or at the end of the project when the finished product is delivered. Use EVMS

• In service efforts, the work is done in a continuous, often repetitive manner and the benefit is realized as the service is performed. Use PBSA

• Projects can have a significant amount of service work.• Service programs can have significant project work.

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Original Scope Has Evolved

• Original – How can EVM be made to fit the management of service contracts.

• New – Select the management technique(s) best suited to the effort based on the characteristics of the work and the contractual elements present.

• Paper will contain recommendations for FAR Part 7, Acquisition Planning, changes.• Government use WBS to define the work and to identify the

appropriate project management method.• Contracts can specify more than one management method• Contracts must indicate what areas require EVM and what areas

require PBSA. • Proper use of EVM and PBSA will reduce LOE

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Analyze Solicitation or Contract; and Characterize

Effort

Is the Solicitation/Contract for a Project*?

Is the Solicitation/Contract for a Service(s)?

Is the Solicitation/Contract Scope Mixed?

Apply EVMS Clause; Use EVMS to Manage

Apply PBA*; Establish and Use Performance Based

Measures to Manage

List applicable clauses and CDRLs relevant to EVMS

List applicable clauses and CDRLs relevant to PBA

Establish Separate CWBS Elements, for development/project

Work and Services. Consider Need for Separate CLINs or

Task/Delivery Orders to Segregate Contract Types,

Funding, CDRLs, Standard and Special Clauses.

NoNo

No

Yes

Yes

Yes

Decision Process Diagram for Management Process Selection Applicable to a Capital or Other Major Acquisition

*A project is defined as a developmental effort or other discrete activity having the characteristics required to employ EVMS, i.e., discrete scope, schedule and technical requirements. Simply put, a project has defined deliverable products or services required on specific dates.

Is the Solicitation/Contract for T&M or LOE Support to a

program ?

Does the Supplier Control the Work Scope

and Schedule?

Do not apply EVMS to the Contract; EVMS applies at

the program level,and should be used by the customer’s

PMO to manage the program

Yes

NoNo

EVMS does not Apply to the Contract; Consider Use of performance standards,

instead, e.g.,

No

Apply Requirements to Developmental/Project Effort. Apply PBA to

Services via a PWS with Defined Performance

Standards

Reconsider Contract Type. Effort with Discrete Scope, Schedule and Technical Requirements

Should not be Acquired via T&M or LOE Contracts. If Using GSA

Schedule or GWAC, Apply EVMS Requirements to the Order

Yes

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Outline for Guidance Document

• Define, compare and contrast products vs. services• Provide guidance for selecting appropriate management

methods applicable to the contract scope of work• Many contracts are hybrids – both EVM and PBM could be used

on different WBS elements within a single contract• Methods may also vary by contract type

• Collect and describe characteristics of various types of services

• Provide WBS examples for service work• Write guidance for each, e.g., IT, logistics, depot

maintenance, program management, etc.• Provide guidance for contracting, i.e., to put

management requirements on contract correctly