Agencies see value in EVM, but struggle to cash in on it

With deadline approaching, many will fall short of validating baselines

GAO finds agencies are falling short on EVM

A recent Government Accountability Office report tracking 29 IT business cases at five agencies in fiscal 2005 found:

  • All 29 business cases contained documentation weaknesses.

  • 21 business cases required use of earned-value management to track project milestones and expenditures; only 6 did.

  • 75 percent of the investments did not address OMB categories on risk assessment.

  • Actual cost data was 'unreliable' because it did not derive from cost-accounting systems with adequate control.

Compiled from GAO's January 2006 report Information Technology: Agencies Need to Improve the Accuracy and Reliability of Investment Information. Agencies covered are the Agriculture, Commerce, Energy, Transportation and Treasury departments.

Although the government for the most part is embracing the concept of earned-value management, some agencies are going to be hard-pressed to meet upcoming Office of Management and Budget deadlines this month.

OMB officials are optimistic that most agencies will be able to meet the March 31 requirement to independently validate current cost, schedule and performance baseline reviews for all ongoing major IT projects. But some are still far behind in comprehending and using EVM as a project management tool, federal officials said.

'A lot of agencies are saying this is relatively new to them,' said David Powner, director of IT management issues at the Government Accountability Office. 'I think it's acknowledged that agencies need more training on this.'

Several government officials said that although most agencies see the benefits of EVM, some do not have the resources, education or incentives from top agency officials to fully embrace the concept.

Earned-value management is a project management tool that, in theory, lets project managers track money spent on a project almost in real time and measures that expense against milestones and deadlines.

Adopting the practice

The Defense Department has been using EVM for years, and recently OMB has been pressuring civilian agencies to adopt the practice.

OMB in August required agencies to develop a model EVM policy for major IT projects by Dec. 31, 2005 [GCN, Nov. 21, 2005, Page 45], and begin independently verifying the cost, schedule and baselines on these projects by March 31.

Stacie Boyd, policy analyst in OMB's E-Government and IT Office, said last month at an EVM conference in Washington sponsored by the Digital Government Institute of Bethesda, Md., that the administration believes most agencies will comply with the March 31 deadline, although she noted that some agencies are having trouble.

Another OMB official, who requested anonymity, said the administration is working with several agencies that sought additional guidance on conducting the independent verification reviews.

One official at a large department who asked to remain anonymous said many agencies could be intimidated by the amount of time and money that goes into training employees in EVM standards.

This official, who received EVM training, said the 'fairly involved' process lasts seven to eight months, with classes one week a month, with a five-hour exam. 'It's an educational thing,' the official said. EVM 'is not a snap to implement.'

A senior government executive who also did not want to be identified added that top management must embrace EVM for it to have any chance of taking hold throughout an agency.

'EVM requires more than just the CIOs getting involved,' this executive said. 'You need the CFO, the procurement shop and others getting involved. Some agencies have very differentiated authority and it's hard to meet the EVM goals' that way.

OMB will get an early report on how agencies are using EVM on the most troubled IT projects.

Agencies are submitting their quarterly high-risk IT reports to OMB, GAO and their agency inspectors general, an OMB official said.

In the reports, agencies must show that they have completed their independent validation reviews. Agencies that have not completed the reviews must provide corrective actions for completing the assessment, the OMB official said.

Mixed progress

Agency progress has been mixed so far, OMB said.

Boyd said that 32 percent of all agencies fully complied with the Dec. 31 deadline, while 56 percent partially met the goal. Only 12 percent, she said, fell short. The results were reflected in the E-Government portion of the President's Management Agenda scorecard, released in February.

GAO's Powner pointed to a recent audit agency report on federal IT spending and concluded that agencies struggled to adequately use EVM to better manage their IT investments.

The January report tracked business cases'or exhibit 300s'for 29 projects at five agencies over fiscal 2005 and found that of the 21 projects that were required to use an EVM system compliant with OMB and American National Standards Institute requirements, only six actually did.

'EVM progress is mixed,' Powner said. 'You're probably going to get more agencies that aren't up to speed with EVM' than those who are.

Still, he said, practically everyone in government realizes that some changes are needed to improve IT project management.

'I think it's pretty well established across the government that there's been problems with IT project management,' he said. 'I think it is very encouraging that OMB is levying the requirements because you've got to have clear milestones in place.'

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