Posted by Utilization of EVM metrics and data in the development of Life Cycle Cost Estimates and Cost Benefit Analyses.
Earned Value Management/Schedule Track
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Abstract:
This paper will help define and examine the challenges and opportunities of using EVM in the development of Life Cycle Cost Estimates (LCCE) and Cost Benefit Analyses (CBA). The purpose of the LCCE and the CBA is to ensure that programs and projects are acquired on the basis of LCC Return on Investment (ROI) or most benefit. The advent of ANSI/EIA-748 and the increased leveling of 0MB 300 requirements on programs have led EVM to the intersection ofLCCE and CBA.
Earned value management is the measure of project perforn1ance against the project’s scope, schedule and budget. EVM systems track variances from budgeted costs and schedules. These variances can be used to estimate future performance by developing efficiency factors. The paper will demonstrate the use of EVM metrics in LCCE development and updates. The paper will demonstrate that narratives from the EVM variance analysis report can lend itself to the CBA. EVM data can identify negative variances that cause adverse cost and schedule impacts that directly affect the LCCE. Additionally, cost and schedule data from the contractor’s EVM system can be used to fine tune cost estimates. In short the use of EVM metrics can strengthen the cost estimating process. Sensitivity Analysis of the LCCE can benefit from the Estimate-At Completion (EAC) calculations. The Program’s Risk Matrix developed using EVM metrics and Variance Analysis Report can be used in the development of the LCCE Risk Analysis
Operation and Maintenance (O&M), the largest portion of the LCC, are largely viewed as service level contracts. EVM reporting requirements have been levied on many O&M contracts given their dollar value. O&M costs can be estimated and established commensurate with program, technical, cost, and schedule risks. The use of EVM metrics and data lend a degree ofrealism to the estimating LCCE and CBA processes.
Author(s):
Anthony James Chandler
Mr. Chandler has over 23 years of experience and performance of cost analysis & estimating, life-cycle cost estimating (LCCE), Total Ownership Cost (TOA), Cost Benefit Analysis, Analysis of Alternatives (AoA), and System Acquisition. Mr. Chandler has Contract Performance Measurement, Analytical Methods in Management, Financial Program Controls and Earned Value Management experience in the DoD acquisition arena as well as in private Industry. He has proven experience working with Information Technology, Manufacturing, Mechanical Engineering, and Aircraft Systems. As a manufacturing engineer for the Boeing Company, Mr. Chandler applied analytical skills and manufacturing knowledge to convert data packages from engineering into manufacturing plans for the factory. He provided team leadership in developing LCCEs/IGCEs for DoD, Department of Education, and other Government Agencies. He was formerly a Cost Engineer/Systems Analyst for the Department of Homeland Security, TSA, where he provided Independent Verification and Validation
(IV&V) support for the Transportation Worker Identification Credential (TWIC) Program. Mr. Chandler is a trained and proficient user of the Material Estimating System (MES), and Price H, HL, and S (Hardware, Life Cycle Cost, and Software Parametric Analysis), Microsoft Project, and ORACLE.
Education:
BS, Industrial Manufacturing Engineering, Rensselaer Polytechnic Institute, Troy, New York
Certifications:
APICS certification classes (Master Planning, Production, Scheduling and Forecasting)
MEMBERSHIPS
AACE
Kenneth Thomson
Mr. Thomson has over 18 years of professional experience in cost estimating, analysis, financial advisement, and cost modeling for Navy, Air Force, Army and Marine Corps weapon systems, various avionics programs, and military financial plans and systems. He provides direct support to DOD and other federal agencies. He has played a key role in contract negotiations for the V-22 Block A, Block B, and flight test contracts receiving a letter of appreciation from the program office for his work. Mr. Thomson provides financial expertise on cost-related matters by identifying strengths and weaknesses in cost models, ensuring appropriate cost representation for the customer, and analyzing the cost advantages of various alterative solutions to government programs. He has performed Life Cycle Cost Estimates (LCCEs), Cost Benefit Analyses (CBAs), Analysis of Alternatives (AoAs), and Business Cost Analyses (BCAs) for a multitude of programs that include V-22, H-60, MRAPS, C-17, C141, and Airborne Laser.
EDUCATION:
B.S. Economics, Iowa State University
M.S. Cost Analysis, Air Force Institute of Technology (AFIT)
CERTIFICATIONS
APDP Level III, Cost Analysis
MEMBERSHIPS
SCEA
AACE