A complete toolkit for implementation of Earned Value Management

Performance-Based Earned Value uniquely shows project managers how to effectively integrate technical, schedule, and cost objectives by improving earned value management (EVM) practices. Providing innovative guidelines, methods, examples, and templates consistent with capability models and standards, this book approaches EVM from a practical level with understandable techniques that are applicable to the management of any project.

Clear and unambiguous instructions explain how to incorporate EVM with key systems engineering, software engineering, and project management processes such as establishing the technical or quality baseline, requirements management, using product metrics, and meeting success criteria for technical reviews. Detailed information is included on linking product requirements, project work products, the project plan, and the Performance Measurement Baseline (PMB), as well as correlating technical performance measures (TPM) with EVM. With straightforward instructions on how to use EVM on a simple project, such as building a house, and on complex projects, such as high-risk IT and engineering development projects, it is the only book that includes excerpts from the PMI®'s Project Management Body of Knowledge (PMBOK®), CMMI, the EVM System standard, systems engineering standards, federal acquisition regulations, and Department of Defense guides.

Performance-Based Earned Value allows both novices and experienced project managers, including project manager of suppliers and customers in the commercial and government sectors; software and systems engineering process improvement leaders; CMMI appraisers; PMI members; and IEEE Computer Society members to:

• Incorporate product requirements and planned quality into the PMB
• Conduct an Integrated Baseline Review
• Analyze performance reports
• Perform independent assessments and predictive analysis
• Ensure that key TPMs are selected, monitored, and reported
• Identify the right success criteria for technical reviews
• Develop techniques for monitoring and controlling supplier performance
• Integrate risk management with EVM
• Comply with government acquisition policies and regulations

Written by Paul Solomon and Ralph Young, internationally recognized industry experts, Performance-Based Earned Value is constructed from guidance in standards and capability models for EVM, systems engineering, software engineering, and project management. It is the complete guide to EVM, invaluable in helping students prepare for the PMI®-PMP® exam with practical examples and templates to facilitate understanding, and in guiding project professionals in the private and public sectors to use EVM on complex projects.

(PMI, PMBOK, PMP, and Project Management Professional are registered marks of the Project Management Institute, Inc.)

Table of Contents v

Foreword xv

Preface xvii

Acknowledgments xix

1 Overview of PBEV 1

Introduction 1

What is PBEV? 1

PBEV Characteristics 2

Reputation of Earned Value Management 3

Lessons Learned 3

Inadequate Early Warning 4

Poor Implementation of EVMS 4

Reliable, Valid Information 4

Product Requirements and Quality 4

Processes 5

Measures 5

Snapshot of EVM 5

EVMS History and Limitations 6

EVMS History 6

EVMS Limitations 6

Customer Expectations for Performance-Based Management Systems 8

U.S. Federal Policy 8

U.S. Department of Defense Policies 8

Integrating Systems Engineering with Earned Value Management 9

National Defense Industrial Association 9

Standards and Capability Models 10

Customer Demand for Excellent Processes 11

CMMI as a Framework for Process Improvement 11

Customer Needs for Reduced Cycle Time and Evolutionary Acquisition 11

Increasing Utilization of EVM 12

PBEV and Agile Methods 13

Enterprise Demand for Cost-Effective Processes 13

Evolution of PBEV 13

Comparison of PBEV with EVMS 15

PBEV Process Flow 16

About this Book 16

Summary 18

References 18

2 Principles and Guidelines of PBEV 21

Introduction 21

EVMS Guidelines 21

PBEV Principles and Guidelines 21

PBEV Principles 21

PBEV Guidelines 22

First Principle 22

Product Scope 22

Product Requirements 22

Development of Product Requirements 26

Guideline 1.1 26

Guideline 1.2 26

Guideline 1.3 27

Second Principle 27

Performance 28

Base Measure 28

Guideline 2.1 29

Guideline 2.2 30

Guideline 2.3 31

Guideline 2.4 32

Guideline 2.5 33

Guideline 2.6 33

Guideline 2.7 33

Guideline 2.8 34

Guideline 2.9 34

Third Principle 35

Guideline 3.1 36

Guideline 3.2 36

Fourth Principle 37

Guideline 4.1 37

Guideline 4.2 37

Summary 38

References 38

3 Product Requirements Baseline 39

Introduction 39

What are the Requirements Baseline and the Technical Baseline? 40

What are Allocated Requirements? 41

High-level Requirements to Lower-Level Requirements 41

Engineering Approach 42

Performance Requirements 45

Early Validation 46

Requirements Validation Process 47

Requirements Traceability 49

A Case Study 52

Conversion of Customer Needs, Problems, and Requirements to Product Requirements 54

Allocation of Product Requirements to Product

Component Requirements 55

Development of the Product Component

Requirements 56

Defining the Technical Performance Measures 63

Summary 65

References 66

4 Maintain Bidirectional Traceability 69

Introduction 69

Project Plans and the Performance Measurement Baseline 69

Integration of Product Scope and Project Scope 70

Work Products 70

System Definition Stage 72

EIA 632 Engineering Life Cycle Phase Work Products 72

Design Stage 72

Work Products and Work Packages 72

Synthesis 75

Design Verification 76

Test Stage 77

Summary 77

References 78

5 Progress Toward Meeting Product Requirements 79

Introduction 79

Guideline 2.1 80

When Product Requirements are Not Measurable 82

What If Measurement is Not Needed? 82

Guideline 2.2 83

Work Products 83

SE Process Work Products 83

Measures of Progress 84

Guideline 2.3 85

Guideline 2.4 86

Success Criteria 86

Summary 87

References 87

6 Establish Planned Values and Allocate Budget 89

Introduction 89

Guidelines 2.5 and 2.6 90

Trade Studies 90

Allocated Requirements 90

Allocated Requirements with Rework Examples 91

Technical Performance Measurement 92

TPM Flowdown Procedure 93

Evidence of Achieving Planned TPM Values 95

Planning for Rework 95

Summary 95

7 Variance Analysis 97

Introduction 97

Variance Analysis 98

Scenarios 98

Scenario 1: TPM Schedule Variance 99

Scenario 2: Software Behind Schedule in Meeting Requirements 100

Scenario 3: Systems Engineering Behind Schedule in Requirements Management 101

Scenario 4: Trade Study Behind Schedule 102

Variance from Critical-To-Quality Parameters 102

Summary 103

References 103

8 Level of Effort 105

Introduction 105

Guideline 2.8 105

Measurable But Not Practical to Measure 105

Exception to Guideline 2.8: Planned Process Improvements 106

Arbitrary Limits to LOE 107

Guideline 2.9 107

Commingling LOE with Discrete Work Packages 107

Solution: Quarantine LOE Performance 109

Summary 109

References 109

9 Integrate Risk Management with EVM 111

Introduction 111

Guideline 3.1 112

Guideline 3.2 113

Summary 114

10 Changes to the Performance Measurement Baseline 115

Introduction 115

Causes of Change to Product Requirements 116

Quality Factors 116

Example 10.1: Trade-off of Product Requirements, Project X 117

Example 10.2: House Project Revised Product Requirement 118

Summary 119

References 119

11 Agile Methods 121

Introduction 121

Business Environment 121

Agile Methods 122

Guidance for Tailoring Contract Performance Reports 123

Tailoring the Implementation of EVM 124

Tailor by WBS Element 124

Tailor by Project Phase 124

Extreme Tailoring of EVM 124

Summary 125

References 125

12 Requirements and Earned Value 127

Introduction 127

Requirements Status 127

Early Validation 128

Ways to Accomplish Validation 128

Select a Verification Method for Each Requirement 129

Trace the Requirements to the Verification Document 130

Revised/Recommended Requirements Statuses 130

Discrete Measurement of Requirements Management and Tracing 130

Use the RTM to Develop the Plan 131

How to Measure Progress 132

How to Determine EV 132

RTM Example 132

Total Requirements Management EV 134

Reasonableness Check 135

Summary 135

References 135

13 Using PBEV to Manage Software-Intensive Development 137

Introduction 137

Characteristics of Software Project Management 137

Functionality and Requirements 138

Functional Requirements 138

Grouping and Traceability of Requirements 139

Recommended Base Measures by Phase 140

Software Requirements and Analysis Phase 140

Code and Unit Test Phase 141

Test Phase 141

Software Rework 142

Deferred Functionality: Deviation from Plan 145

Technical Performance Measurement 148

Capacity and Response Time Requirements Issues 148

Capacity or Performance Requirements 149

COTS Considerations 150

Summary 151

References 151

14 Supplier Acquisition Management 153

Introduction 153

Contractual Considerations 153

Industry Standards 154

Contractual Technical and Management Deliverables 155

Integrated Baseline Review 155

Monitor Supplier’s Adherence with Periodic Reviews 156

Utilize and Analyze Supplier’s Performance Reports 157

CMMI Acquisition Module 158

Project Monitoring and Control 159

Solicitation and Contract Monitoring 159

Requirements Management 159

Summary 160

References 160

15 Moving Forward 161

Introduction 161

Why Implement Process Improvement? 161

Setting the Stage for Success 162

How to Implement a Process Improvement Program 162

Policies for Integrating Systems Engineering and Risk Management 163

Example 15.1: Integrate Organizational Processes with Systems Engineering Standards 164

Excerpt from NGIS Procedure: Systems Engineering 164

Example 15.2: Integrate Risk Management with Earned Value Management 164

Excerpt from NGIS Procedure: Manage Risk 164

Implementation of PBEV 164

Summary 165

References 166

Appendices: 167

A. Fundamentals of Earned Value Management 167

Introduction 167

Why use EVM? 168

EVM principles 168

Planning and control processes 169

Product scope and quality 170

Work Breakdown Structure 170

Organizational Breakdown Structure 171

Control Accounts and Control Account Managers 171

Work packages and planning packages 171

Base measures 172

Performance Measurement Baseline (PMB) 172

House Project 173

Controlling a Project with EVM 183

Technical or Quality Variances 183

Schedule variances 184

Cost variances 184

Variance analysis 185

Cost Performance Index 186

Restatement of earned value 189

Rework 189

Maintaining the integrity of the PMB 191

Summary 192

References 192

B. Detailed Planning Guidance 193

Introduction 193

Detailed Planning of the Project 193

Detailed Planning of a Work Package 194

Work Products 194

Completion Criteria 195

Earned Value Methods 195

Technical Performance Matrix Worksheet Templates 195

Replan for Change in Number of Base Measures 200

Rework 204

Minimize Number of Work Packages 208

C. American National Standards Institute (ANSI)/Electronics Industries Alliance (EIA) Standard-748, Earned Value Management Systems Guidelines 213

Guidelines by Major Category 213

References 216

C-1 Excerpts from NDIA PMSC ANSI/EIA 748-A, Standard for Earned Value Management Systems Intent Guide 219

D. Federal Acquisition Regulations (FAR) Rule on EVMS 227

PART 2—Definitions of Words and Terms 228

PART 7—Acquisition Plans 228

PART 34—Major System Acquisition 229

PART 52—Solicitation Provisions and Contract Clauses 231

E. Enabling Work Products 235

Example E.1: Typical Work Products in CMMI 235

Example E.2: Enabling Work Products from Project X 235

F. Trade Studies 239

Trade Study Progress 242

Example F.1: Evaluate Trade Study Candidates 242

Example F.2: Trade Sudy Evaluate Candidates Activity 243

Example F.3: Trade Study from Project X 243

G. Allocated Requirements 247

Allocated Requirements 247

Requirements Development 248

Design Phase 249

Rework 253

Testing 254

Deferred Requirements 256

Software Development 256

References 256

H. Technical Performance Measures 257

TPM Work Products: Evidence of Achieving Planned TPM Values 257

Concept of Basing EV on TPMS 257

TPM: Planned Value for Physical Qualities 258

TPM: Software Quality 262

I. Success Criteria 265

Event-driven Entry and Exit Criteria for Success 265

Example I.1: Entrance and Exit Criteria for Critical Design Review (CDR) 266

Example I.2: Success Criteria for Completion of Detailed Design, Project X 270

Example I.3: Success Criteria and Technical Baselines from the Defense Acquisition Guide 271

Glossary 277

About the Authors 287

Index 291