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Performance-Based Earned Value
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Table of Contents

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

About the Author

PAUL J. SOLOMON, PMP, is an internationally known consultant and author on Earned Value Management (EVM), and founder of his firm, Performance-Based Earned Value(r). Mr. Solomon led the use of EVM on programs at Northrop Grumman Corporation, including the B-2 Stealth Bomber and the F-35 Joint Strike Fighter. He is a coauthor of EVM standards, including the national standard, ANSI/EIA-748 (for which he received the U.S. Department of Defense David Packard Excellence in Acquisition Award) and the PMI Practice Standard for EVM. He was a visiting scientist at the Software Engineering Institute (SEI) and wrote an SEI report on CMMI(r) and EVM. Mr. Solomon frequently speaks at industry and government conferences and is a tutor concerning EVM, systems engineering, and software engineering in the U.S. and India. RALPH R. YOUNG, DBA, is Director of Engineering Process Improvement, Systems and Process Engineering, Defense Group at Northrop Grumman Information Technology. Dr. Young helped lead his former business unit (Litton PRC) to CMM Level 5 and his current business unit to CMMI(r) Level 5. Northrop Grumman Corporation's Defense Group was the first organization in the world to be evaluated a second time at CMMI(r) Level 5. Dr. Young supports continuous improvement for both internal and external projects, to make process improvements, implement effective requirements practices, and develop innovations to facilitate project management.

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