Managing Costs from the Inside

OMB and Congress are demanding agencies to rein in spending. Is there a way to do more with less? According to a new IBM Center report, the answer may be “yes.”

 

In their report, “Project Management in Government: An Introduction to Earned Value Management (EVM),” professors Young Hoon Kwak and Frank Anbari say EVM “is a management methodology for integrating the oversight of the scope, schedule, and cost of projects, and for objectively measuring project progress and performance. . . it give the manager the ability to visualize a project’s status at various points. . .”

 

Why is this important? Just a few days ago, OMB Director Peter Orszag froze spending on about $3 billion in ongoing technology projects because of fears the projects were off the rails. In addition, Defense Secretary Robert Gates says he wants to cut contract spending by $100 billion. And, just a few weeks ago, a congressional report noted that only 16 percent of technology projects were completed on time and on budget.

 

So there should be a demand for methods that keep project spending on track. EVM has been around for over a decade. In fact, OMB has mandated its use for large projects, in both government and contractor work. But Kwak says it is not being used consistently, or applied correctly in many cases.

 

Kwak and Anbari highlight NASA in their report as a federal agency using EVM effectively. But it was not easy. EVM is data-intensive and requires a real commitment from mid-level managers to use as the way they do their business. NASA made several attempts before it became integrated into their culture. They’ve developed an on-line handbook to help. Beginning in 2008, NASA required its use for all projects above $20 million, but the authors recommend its use for smaller projects as well, in order to create a standard way of doing business.

 

Other agencies are making progress as well. For example, the Defense Contract Management Agency has created a guidebook for its customers to use, as well. Kwak says EVM is most frequently used in engineering and construction projects. But other areas, such as information technology and weapons systems development, are potential areas for wider use.

 

The Kwak and Anbari report offers a quick overview of what is EVM as well as definitions and key resources, so if you’re ready to learn more, they offer a painless overview!