November 17, 2016
Department of Energy Contractors’ Implementation of Earned Value Management
The Department of Energy uses Earned Value Management (EVM) as a project management tool to measure the value of completed work against the planned work schedule and estimated cost. The Office of Management and Budget requires Government EVM systems to comply with the guidelines found in the Electronic Industries Alliance (EIA) publication 748. The Department’s Office of Project Management Oversight and Assessments (PM) is responsible for ensuring that contractors’ EVM systems comply with EIA-748 guidelines. PM uses the Department’s Project Assessment and Reporting System (PARS II) as the Department’s central repository and system of record for contractor’s EVM cost and schedule performance data. Contractors also use their own corporate project management systems from which they feed data into PARS II through electronic uploads on a monthly basis. As of July 2015, the Department’s contractors had 29 post Critical Decision (CD) 2 capital asset projects worth approximately $25 billion that were required to use EVM systems to track and manage project performance.
To its credit, PM has identified deficiencies with the contractors implementing EVM. During our audit, we observed that reviews of some contractors’ EVM systems were delayed; however, we noted that PM was taking corrective actions. PM officials told us that two contractors did not have certified EVM systems because their EVM systems were deemed significantly noncompliant with EIA-748 based on reviews for cause (RFC). In addition, despite having certified systems, two contractors were reporting what is potentially incomplete and unreliable EVM data to the Department.
We also noted that PM was late in performing surveillance reviews for the EVM systems of six contractors with projects that had over $100 million in total project costs. PM did not perform the reviews within the timeframes that were in effect at the time of our audit as specified in DOE Order 413.3B, Program and Project Management for the Acquisition of Capital Assets. However, in May 2016, the Department modified DOE Order 413.3B, removing the requirement for reviews every 2 years and replacing the reviews with a “risk-based, data-driven” assessment. When discussing our concerns regarding delays in performing surveillance reviews, PM officials stated that, in practice, they began implementing the risk-based, data-driven approach prior to the revision of the DOE Order, consistent with a Secretarial policy direction issued in June 2015. In addition, we found PM was taking steps to improve project reporting by upgrading the PARS II database; the upgrades are scheduled for completion in 2016.
The deficiencies we observed, if not corrected, could significantly affect the Department’s ability to properly manage its projects. Without certifying compliance with EIA-748 and conducting surveillance reviews to ensure that contractors properly implement their certified EVM systems, the Department cannot ensure that the EVM data it receives from the contractors are reliable. Granting concessions from EVM reporting to troubled projects further impedes Department decision makers.
Topic: Management and Administration