Lockheed Martin Earned Value Management Framework “What is the Customer looking for/ expecting as Lockheed Martin advances ownership and addresses continuous improvement ?” PMI College of Performance Management 17th Annual International Conference May 22-24, 2001 A:DCMA conf 3-01 Walt Berkey, Corporate EVM Council Chair (301) 240-5446, walt .berkey @ lmco .com AGENDA • EVMS Vision & Lockheed Martin Model • Customer Expectation • Lockheed Martin Corporate EVM Framework • Challenges • EVM Relationships EVMS 1994 - Gary Christle “Vision” “The quality of a management system is determined not by the absence of defects, but by the presence of management value.” 2001 - Lockheed Martin Model Earned Value Management institutionalized within the organization will provide useful performance measurement data for management decisions Lockheed Martin E V M S M o d e l - Joint Attributes The New Paradigm provides an environment where: • The Lockheed Martin implements EVMS to manage projects. • Both Lockheed Martin and the Buyer use EVMS in a meaningful way on an ongoing basis to make informed decisions affecting the project. • Lockheed Martin continually seeks opportunities to enhance its EVMS capabilities and data utilization. Lockheed Martin E V M S M o d e l - Joint Attributes • The Buyer will not interfere with Lockheed Martin’s ability to implement, maintain and use its system, consistent with the ANSI/EIA 748-1998, so long as the EVMS data depicts current performance. – The Buyer will not judge the “adequacy” of the EVMS in advance of actual performance . – Lockheed Martin will use appropriate system assurance measures to ensure its system is consistent with ANSI/EIA 748-1998 – On going use will support self correction and supportable EACs Lockheed Martin E V M S M o d e l - Joint Attributes • The Buyer reserves the right to intervene in an appropriate way to seek resolution to the data adequacy when the program data no longer depicts current performance. CUSTOMER EXPECTATION! • Lockheed Martin to take ownership of EVMS • Corporate and Business Unit processes integrate EVM and be used appropriately • A plan for continuous improvement of the EVM processes • A process to resolve customer issues • Communicate customer issues to appropriate management personnel • Management use of EVM data in decisions CUSTOMER EXPECTATION! • Lockheed Martin to take ownership of EVMS ü Corporate Policy Statement CPS-026, Program Performance Management (Revision NO: 1 issued January 16, 2001) ü Policy: “Lockheed Martin will apply EVM principles to its programs to provide management with an effective an objective measure of technical, cost, and schedule performance.” ü Advance Agreement between DCMA and Lockheed Martin Corporation revised 21 February 2001 to include NASA CUSTOMER EXPECTATION! • Corporate and Business Unit processes integrate EVM and be used appropriately • CPS-026: “Responsibilities: Business area and business unit senior executives, assisted by their senior Finance executives, will: Ø integrate Program Performance Management techniques across all disciplines within the organization Ø conduct appropriate training of core personnel across all disciplines within the organization Ø ensure that business unit personnel comply with this policy, and ...” CUSTOMER EXPECTATION! • A plan for continuous improvement of the EVM processes • CPS-026: Responsibilities: ü “The CFO has overall responsibility for ensuring that the objectives of this policy are met and approving deviations from the requirement…” ü“The corporate Vice President of Contracts will establish a corporate self-assessment program to monitor the effectiveness of CPS-026 implementation” Ÿ Business area and business unit senior executives, assisted by their senior Finance executives, will: Ø ...establish effective measures to monitor program performance and... CUSTOMER EXPECTATION! • A plan for continuous improvement of the EVM processes (continued) ü Corporate EVM Council chartered: Corporate Representative, Chair, Vice Chair, Administrator, Business Area Representative and Business Unit EVM POCs • INITIATIVES: ü Self Assessment Ø EVM system document FRAMEWORK Ø Subcontract Management, Training, & Tools CUSTOMER EXPECTATION! • A plan for continuous improvement of the EVM processes (continued) ü Corporate Advance Agreement (DCMA/NASA/LMC) for the Implementation and Maintenance of Earned Value Management business process updated 21 February 2001: ü Includes NASA recognition of CPS-026 as satisfying the intent of NPD 9501.3, Earned Value Performance Management Ø “LM and DCMA will jointly pursue consistent Program Performance Management utilizing LM Self Assessment, Joint LM/DCMA system surveillance (risk handling) and corporate audit activity.” CUSTOMER EXPECTATION! • A process to resolve customer issues ü CPS-026: Responsibilities: “The corporate Vice President of Contracts will communicate with government oversight activities to ensure that LM initiatives in Program Performance Management are understood and customer issues are addressed” ü Advance Agreement: “Requests for DCMA EVM System reviews will first be coordinated directly with the LMC business unit EVM POC and cognizant business unit ACO, or his/her designated DCMA EVM POC” ü EVM Council: Lockheed Martin Corporation EVM Points of Contact (latest revision) provides the names, telephone numbers, and e-mail address for Corporate, EVM Council, Business Area, and Business Units CUSTOMER EXPECTATION! • Communicate customer issues to appropriate management personnel ü Corporate: ü Customer Policy level meetings ü Corporate Management Council (EVM on agenda) ü Corporate Program Management Council membership (includes EVM Council representative) ü EVM Council: ü Leadership bi-weekly telephone meetings ü Member meetings twice per year minimum CUSTOMER EXPECTATION! • Communicate customer issues to appropriate management personnel (continued) Ÿ Business Units: üEVM Council: Lockheed Martin Corporation EVM Points of Contact (latest revision) provides the names, telephone numbers, and e-mail address for Corporate, EVM Council, Business Area, and Business Units ü LM 2000 Self Assessment was coordinated with DCMA Ÿ Joint LM/DCMA system surveillance (RAMP) is an in process area for both LM and DCMA to incorporate program surveillance and to utilize a risk approach in place of an annual 32 guideline system review CUSTOMER EXPECTATION! • Management use of EVM data in decisions • CPS-026: Responsibilities: “The corporate Vice President of Contracts will provide corporate executive management with appropriate reports” and “Business area and business unit senior executives, assisted by their senior Finance executives, will: Ø ...and provide timely information to program management and company management ü quarterly, report to the corporate Vice President Contracts the current CPI and SPI for all Major Defense Acquisition Programs and all development contracts over $50 million.” üCEO/COO/CFO quarterly review all contracts > $50M with a particular focus on red and yellow contracts Ø Business Areas monthly reviews include SPI, CPI, TCPI, EAC, and return to GREEN plan for all red/yellow contracts CHALLENGES • NASA recognition of CPS-026 and ANSI/EIA 748-1998 in the MOU being executed with DCMA • Integrating PROGRAM DATA not just using EVM indices in assessments of contract EACs • Integrating Joint Surveillance and RAMP to arrive at a risk rating and application of DCMA resources • Program surveillance should not address the system until program discipline has been eliminated as root cause • System compliance can be ensured by mapping EVMS outputs with the 32 guidelines • Annual 32 guideline compliance reviews should be replaced with an EVMS change management process EVM Relationships LOCKHEED CORPORATE POLICY MARTIN BUSINESS UNIT PROCESSES ANSI/EIA 748-98 CONTRACT AA EVMS PROCESSES 5000.2-R/DFARS NASA FAR ONE BOOK EVMIG MOA ANSI/EIA 748-98 ANSI/EIA 748-98 ACQUISITION AGENCY DCMA