APPENDIX F

DEPLOYMENT OF EVM SYSTEMS

F.1.1 Introduction

Earned value management (EVM) has evolved to be a global best practice in performance management systems. The methodology is being applied across a wide spectrum of endeavors in many different nations and in many different industries. Yet, in any environment other than the U.S. Government, U.S. Department of Defense (DoD), and the defense departments of some other countries, guidance in the application of EVM is generally lacking. This appendix provides practical guidance to those individuals wishing to apply earned value management principles and methodologies, but uses a more results-oriented, rather than a process-oriented approach. It addresses the application of EVM systems from a project management life cycle perspective. That is, it applies project management principles to the application of an EVM system.

As mentioned in the first few chapters of this practice standard, there is a wealth of information available that defines and explains earned value management. This appendix does not seek to duplicate any of that information. Rather, it is written to assist those who are charged with establishing an EVM system (EVMS). The premise contained herein is that EVM is most effective when the EVMS is tailored to suit each organization's specific performance management environment, objectives, and goals.

To provide for an enduring application of an EVMS, an EVMS deployment must also take into consideration the cultural acceptance of the system. Such an approach best delivers the business benefits expected and ensures a continuing return on the investment applied. This appendix provides a framework within which to achieve those goals.

F.1.2 Success Factors—Performance Management Framework

F.1.2.1 The Framework

The framework and components for the application of performance management methodologies are illustrated in Figure F1. The three major components are leadership, methodology and cultural change. Note that EVM is just one of several performance management approaches that may be employed. Additionally, all of the approaches are driven by some perceived need to do so. The main body of this practice standard addresses the specific methodology of EVM. This appendix is concerned primarily with the other components of perceived need, leadership, and cultural change. These essential components deal with the culture of the organization. Further, they provide guidance to the organization on how to adapt the culture to embrace the chosen methodology. For our purposes here, we shall focus on employing the performance management framework components to implement earned value management not only through its unique methodology, but to embed the basic concepts of earned value management within and throughout the entire organization.

The adoption of any performance management methodology must necessarily be preceded by a perceived need to do so. The need is generally predicated on the belief that the system will prevent problems, enhance performance, or possibly overcome past deficiencies. For a perceived need to drive a new initiative, it must be visible, it must be compelling, it must be actionable, and it must be viewed as producing business benefits.

The successful transition of an organization's project management process to incorporate the earned value methodology is directly dependent upon the visible support it receives from senior organizational leaders. The methodology itself can be developed, documented, and rolled out to staff in a well-planned and executed deployment, but without a highly visible mandate and publicly stated expectations from senior leadership, the initiative is likely to flounder painfully for a very long time. The project management community will only embrace a new initiative if they see tangible evidence from senior leadership that the initiative is a business imperative. Senior leadership must clearly identify the expected new behaviors. If senior leadership expectations do not visibly change to the new paradigm, there will be little or no resultant change in tactical project management behaviors.

Performance management leadership is comprised of decision leaders, deployment (or implementation) leaders and methodology leaders. Decision leaders exist at various levels in the organization and are charged with managing the projects undertaken by the organization. They will use the EVMS to help them manage their projects. Deployment leaders are those individuals charged with the responsibility to manage the deployment of the EVMS. Methodology leaders, by virtue of their experience and expertise in the particular system being implemented, that is, EVM, are the subject matter experts who assist the deployment leader to successfully deploy the new system.

At the other end of the spectrum are cultural change enablers. There are six enablers:

• Management involvement drives the change, and without it not much changes.
• The system must be user friendly, that is, easy to use, intuitive, and simple.
• The system must add value to anyone who interfaces with the system.
• Training and support must be provided for the initiation of the system and to new staff as they join the project.
• As the system matures and changes over time with continuous improvements, change management processes must be applied to ensure that the changes are incorporated in an organized manner.
• Finally, the deployment of the EVMS itself must be treated as a project in and of itself. Thus, it must be managed with a disciplined approach consistent with project management principles.

Leadership will impose knowledge requirements on the methodology. The methodology will provide process discipline and information infrastructure, which through the cultural change enablers, promote cultural acceptance of the methodology. In turn, decision leadership receives valid and timely forecasts and feedback, which guide programmatic decisions.

F.1.2.2 Attributes of the EVM System

Earned value management (EVM) is truly a state of the art methodology for project performance management. Knowledge of EVM exists worldwide. Most commercially available project management software contains an earned value module. Nonetheless, in spite of its appeal, the use of earned value management as a disciplined, process-oriented, and sustained approach to project endeavors exists principally, in fact, almost exclusively, in those environments where its use is mandated by a buyer upon a seller that is providing project management services and products.

Earned value management is different from many of the other existing performance management techniques. EVM is a distributed, collaborative, inclusive (integrated) management system. For example, in a typical major construction project, the project control is frequently accomplished solely in the project management trailer located on the construction site with relatively little input from the hands on constructors, that is, those performing the work. When an EVM system is deployed, the performers must be included in the management process and, therefore, must take responsibility to plan and control and report on their portion of the program. Consequently, the performers, as well as the decision leadership, must understand and communicate performance using the earned value methodology. As a result, this mandates intensive training for everyone. Additionally, the system must be tailored to fit the organization's legacy infrastructure. It requires substantial bottom-up organization and operation, with top-down drive and oversight. In the absence of a customer-mandated requirement, an intensive, concerted effort must be employed. In such an environment, the key to success is molding the organization's culture to embrace the new methodology. While project need must drive project management system application and executive management involvement, and support must be visible, consistent, and real, it is the enterprise's culture that must embrace the usage of the system at all management levels. Lacking a customer mandate, commercial environments are particularly challenging. Constraining factors for deployment of a new management system include the following:

(1) It must use minimal capital resources to develop and deploy;

(2) It must use minimal operational resources to use and maintain; and

(3) It must be simple, comprehensive, understandable, and produce useful management information on a rapid and timely basis.

F.1.3 Initiating the Project

An initiative in a commercial enterprise, as in any organization, starts with an idea, a perception of a need. This need, if justified, will migrate to a business requirement by means of some institutional process and be developed into a formal requirement and justification for the allocation of funds. In most private enterprises, any substantial endeavor requiring allocation of funds is precipitated by a business case.

F.1.3.1 Developing the Business Case

F.1.3.1.1 Business Benefits

The initiation process must establish the business benefits of the project and relate it to the original perceived need. Further identifying the business improvement sought through EVM will validate the need and be the beginning of the business case. For an EVMS deployment project to provide enduring business improvement, the improvements must first be identified and quantified in the business case and then presented to management in a rational, objective manner. If this cannot be accomplished within the existing business constraints, there is little likelihood that management will embrace or be committed to the deployment. During deployment, the progressive achievement of the business benefits should be presented to management. Also, after a period of operation, the business benefits should be validated. Frequently cited benefits of EVM are:

(1) Better scope definition

(2) Accurate project estimating

(3) Thorough up-front planning

(4) Effective project accounting

(5) Accurate performance reporting

(6) Early identification and analysis of problems and risks

(7) Realistic forecasting

Simply stating these benefits does not generally result in management supporting the deployment. To gain their perception of the organization's current proficiency in attaining the cited benefits, decision leaders should be systematically surveyed. EVM needs to satisfy an identified business capability shortfall in order to gain senior management support. If management believes the organization is currently performing well in these areas, there is little to be gained by the deployment of an EVM system, and management will not support the initiative. Conversely, if there are known deficiencies, it is necessary to obtain management consensus of that fact. If such consensus exists, it can be effectively identified and clarified through structured interviews.

F.1.3.1.2 Scope

The EVM deployment project scope should be fully defined and documented to attain a comprehensive understanding of the work content and objectives of the project. The scope should address the project cost components in terms of the type of resources that will be required, for example, type of labor, material, other direct costs, and/or overhead resources. The manner of rolling out the system to projects, divisions, or departments should be clearly documented. The integration of performance management tools with the legacy infrastructure should be addressed. In addition, the identification of the standard of deployment that will be utilized to judge the acceptability of the deployment should be identified. The standard may an internal, national, international, or professional organization standard.

F.1.3.1.3 Schedule

The schedule contained in the business plan is the master schedule for the deployment effort. It should contain high-level pivotal milestones.

F.1.3.1.4 Budget

The budget should contain the sum total of the elements of cost that are identified in the scope. The cost associated with process development, tools, expert assistance, meetings, travel, and deployment of team labor should be identified to the maximum extent possible.

F.1.3.1.5 Priority

The deployment of an EVM system may require the involvement of many divisions within an organization. Business leaders need to endorse the implementation timeline and supporting resources. The deployment of EVM may coincide with other business change projects, and the respective priorities need to be clearly defined and agreed upon.

F.1.3.1.6 Organization

The organization section of the business case should identify the various roles and responsibilities to be assumed during the deployment, as well as operational phases of the system. This includes the executive steering committee, project management, system design, documentation and development, project control, and project performers.

F.1.3.1.7 Deliverables

The overall objective of the deployment project should be spelled out in a tangible and measurable way. One of the desirable attributes of implementing project management using an EVM system is that there are several discrete outputs that can be identified. These include the tools and products of EVM such as a work breakdown structure (WBS), a schedule, a performance measurement baseline (PMB), and performance reports, to name a few. The ultimate objective is an operating system which produces information that the decision leadership actively uses to make programmatic decisions.

F.1.3.2 Needs Assessment

A needs assessment is the process of identifying the difference between the “as is” and the desired “to be” of existing policies, processes, and practices. The assessment must address the cultural aspects of the organization as well as the documentation and infrastructure aspects. Specific needs assessment tasks include a review of the roles and responsibilities of various management levels and practices, and a review of documented policies, procedures, manuals, and other relevant documentation, as well as a review of the management infrastructure and supporting IT tools and practices.

F.1.3.3 Scaling the Application

This practice standard provides guidance about the EVM processes and practices that make up the totality of a disciplined EVMS. As the specifics of the deployment of an EVMS in a commercial environment can vary widely, the application of this practice standard's guidance must be tailored to fit an organization's individual needs. For instance, the management of internal projects is significantly different from the management of a contract-based project. A contract-based project requires all costs to be encapsulated for reporting, whereas it may not be possible or feasible to accumulate all of the costs of internal projects. Likewise, a construction project has significantly different management requirements than a software development project. Care must be taken to profile the EVM requirements to the individual situation from the beginning. To do otherwise would result in requiring adherence to requirements which have no management value, and this diminishes the cultural acceptance and business value of the system.

F.1.3.4 Project Bounds

A determination must be made of the extent and type of project to which EVM will be applied. For an organization that is yet to establish an EVM approach, the initial deployment may be used to prove its usefulness in one project, then spread to other projects within that organizational unit, and finally to projects at successively higher organizational levels throughout the company. A determination should also be made as to the size and/or type of projects that are considered amenable to the EVM approach. Another consideration is to determine at which point in the stage of the project life cycles when it may no longer be advantageous to apply EVM. Such determinations should be made in conjunction with the scale of the deployment as discussed in F.1.3.3.

F.1.4 Executing the EVMS Project

F.1.4.1 Performance Management of the Deployment Effort

The deployment of an EVMS is, in and of itself, a project with the full complement of project attributes. As a consequence, the management of the deployment should follow the applicable EVM principles delineated in previous sections of this appendix, scaled to the parameters of the specific deployment.

F.1.4.2 Leadership Aspects

The successful transition of an organization's project management process to incorporate the earned value methodology is directly dependent upon the visible support that it receives from executive management. The technique itself can be developed, documented, and rolled out to staff in a well-planned and executed deployment. However, without a highly visible mandate and expectation from executive management, it is likely to flounder. Before they will embrace it, the project management community will expect their management team to have determined that the earned value approach is a business imperative. If management expectations do not visibly change, there will be no resultant change in project management behavior. A major challenge for the deployment team is to obtain and maintain the executive management expectations. To this end, it is necessary to approach this challenge at the onset of the deployment effort by conducting structured interviews with executive management to ascertain their knowledge and expectation of EVM. The results of the interviews should then be presented back to executive management. Properly conducted, structured interviews are very effective in enacting the cultural acceptance of an EVM system.

F.1.4.3 System Design

The EVMS documentation should be merged into existing organizational processes and include a full life cycle depiction. Most organizations will already have a quality management system (QMS) in which their organization's policies and practices are documented, including their project management and governance processes. Such organizations must decide if they will blend the additional earned value methodology needs into existing process documents, write completely new and separate process documents, or construct a combination of both.

F.1.4.3.1 Story Boards

Within the resultant process document set, there should be an outline of the complete EVMS approach with clear identification of the responsibilities across the organization. This can be achieved through the development of a high-level process flow chart or “storyboard.” The storyboard depicts the manner in which the EVM planning and execution documentation relate to each other and the responsibility roles (e.g., contracts, project manager, control account manager, project controller, etc.). This aids in the system design and provides an ideal training and communication device.

F.1.4.3.2 Focus Groups

The system design activity should not occur independently of the ultimate users. In order to obtain acceptance of the system by the project teams, the teams should be a part of the design effort. This can be accomplished by conducting focus groups where the system design draft is presented to the project teams for the purpose of obtaining their opinions and recommendations.

F.1.4.4 Training and Mentoring

As mentioned previously, EVM is a distributed, collaborative, inclusive management methodology. Its principles must be understood and embraced by all project management personnel and decision leaders. This can be accomplished both by formal classroom training and one-on-one mentoring. The mentoring should continue until each and every member of the team demonstrates a proficiency in the performance management tasks. Given that change is a predominant characteristic and change includes staff, training and mentoring is a continual process throughout the project life cycle.

F.1.4.5 Validating the Deployment

The deployment should be considered as accomplished when the objectives or deliverables, as contained in the business case, are obtained. EVM has a distinct advantage over alternative project management methodologies in that many of the outputs are tangible and measurable. But the most relevant desired output is a strong performance management culture with an involved and proactive management team.

Independent verification of the successful deployment of an EVMS may be desirable simply from an achievement standpoint or to enhance an organization's ability to declare performance management competency to existing or future stakeholders and customers. Verification may be performed internally by an EVM center of excellence, by personnel from other organizational units, or by external sources, such as customers or EVM consultants.