FAA commits to implementing EVM System
During the 2004 federal budget cycle, OMB reduced the FAA’s funding by $450 million due to its inability to demonstrate the performance level of its IT programs. In order to restore this funding, as well as to address the demand for improved and more efficient automation systems and to support the upgrade necessary to the FAA’s National Airspace System, the FAA in 2005 committed to OMB that it would implement ANSI/EIA-748 compliant EVM as a program management tool for all major programs. The FAA also committed to supplying additional performance reporting to its management, making it faster and easier to monitor program progress related to cost, schedule and performance.
FAA faces immediate challenges in Earned Value Management System implementation
The FAA soon realized that in order to achieve these goals it needed to implement EVM on existing programs, which was known to be extremely expensive and historically difficult. Another challenge was that while the FAA already had many programs requiring contractor EVM reporting, those contractors not previously requiring it would incur significant added cost when renegotiating their contracts.
The FAA also wanted to implement ANSI/EIA-748 compliant EVM in a manner that was integrated with program management processes to ensure it was effective and less costly to maintain. The challenge here was that the FAA currently did not have an ANSI/EIA-748 compliant EVM model. Although the U.S. Department of Defense (DOD) EVM model was available, it did not meet the FAA’s unique program requirements. Rather, the DOD’s EVM model was designed for large-scale complex programs that were cost reimbursable contracts—not firm-fixed-price contracts like many programs used by the FAA. Furthermore, the FAA recognized that it had not achieved the EVM maturity level to impose the DOD model, nor did it have the resources to provide the costly oversight required by this highly detailed and disciplined approach. Ultimately, it became clear that the FAA needed to develop a modified approach within the flexibility provided by the ANSI/EIA-748 standard and shift from a focus on contract management to a focus on program management.
Turning challenges into opportunity
Wishing to speed the time it would take to realize value from its EVM system, the FAA partnered with KMSG to transform these challenges into opportunity. KMSG leveraged its experienced consultants who not only possess extensive EVM experience at the enterprise level, but who also understand the FAA and its programs. Recognizing that each organization is unique, KMSG tailored its proven EVM methodology to include ANSI/EIA-748 standard guidelines. This customized methodology—Flight Check—retained its rapid assessment and gap analysis capability even with the addition of the developed criteria from each of the 32 ANSI/EIA-748 EVM guidelines. This approach allowed for firm-fixed-price contracting using performance-based payments, as well as also for government resources—both of which are not commonly used with EVM. An approach was developed for existing programs to implement EVM at the program level without renegotiating the supplier contracts.
Using the Flight Check methodology, KMSG helped the FAA assess the first 26 programs within 9 months and develop POAMs for full implementation of EVM based on the guidelines outlined in ANSI/EIA-748. In addition, it helped the FAA develop a set of metrics for portfolio/program performance management that included cost, schedule, technical, resources and overall program summary status
Earned Value Management - Providing a foundation for transformation
With KM Systems Group’s support, the FAA was able to achieve its goal of program implementation of ANSI/EIA-748 compliant EVM within two years. Integrating EVM across all of the FAA’s programs has assisted in the identification of potential cost and schedule problems well before they become unmanageable or unrecoverable. In addition, having easy access to EVM reporting metrics has helped to facilitate comparison of program performance, enabling managers to make better, more informed decisions. The FAA now has the ability to continuously measure the quantity and value of work completed and is able to forecast reliable estimates for future performance. With so much at stake as the FAA transforms the National Airspace System to meet the challenges of the 21st century, its EVM system provides a solid foundation for ensuring its resources and program portfolios are maximized to their greatest benefit.
