The U.S. Government Accountability Office (GAO) has recommended earned value management (EVM) techniques be employed in order to coordinate a fragmented IT system acquisition process across the federal government.
In fiscal year 2009, the federal government planned to spend about $71 billion on IT investments. To more effectively manage such investments, in 2005 the Office of Management and Budget directed agencies to implement EVM.
In a report released to the Senate last month, GAO Director of IT Managment Issues David A. Powner stated that EVM can provide objective reports of project status, produce early warning signs of impending schedule delays and cost overruns and provide unbiased estimates of anticipated costs at completion.
Eight agencies account for about 75 percent of the planned IT spending. From February to October, the GAO audited 16 selected programs from these eight government agencies including the Departments of Agriculture, Commerce, Defense, Homeland Security, Justice, Transportation, and Veterans Affairs and the National Aeronautics and Space Administration to assess the agencies’ EVM policies and determine whether they are adequately using earned value techniques.
The Department of Health and Human Services was excluded from the GAO's selection because the "agency did not have investments in system acquisition that met our dollar threshold."
The GAO found that none of the eight agencies reviewed have comprehensive EVM policies and most lack sufficient guidance on the type of work structure needed to effectively use EVM data and on the training requirements for all relevant personnel.
The GAO’s analysis of 16 investments shows that agencies are using EVM to manage their system acquisitions; however, the extent of implementation varies. Specifically, for 13 of the 16 investments, key practices necessary for sound EVM execution had not been implemented.
The GAO reported that its key findings were:
- EVM provides insight on program’s costs and schedules;
- Federal guidance calls for using EVM to improve IT management;
- Agencies’ EVM policies are not comprehensive;
- Agencies’ key acquisition programs are using EVM, but are not consistently implementing key practices;
- Most programs did not fully establish comprehensive EVM systems;
- Many programs did not fully implement practices to ensure data reliability;
- Most programs used earned value data for decision-making purposes; and
- Earned value data show trends of cost overruns and schedule slippages on most programs.
Finding no comprehensive policies and therefore concluding a difficulty for the agencies to gain the full benefits of EVM, the GAO found that many weaknesses can be traced back to inadequate agency EVM policies and raise questions concerning the agencies’ enforcement of the policies already established, including the completion of the integrated baseline reviews and system surveillance.
Therefore the following recommendations were made:
- Modify policies governing EVM to ensure that they address weaknesses;
- Direct key system acquisition programs to implement the EVM practices that address detailed weaknesses; and
- Direct key system acquisition programs to take action to reverse current negative performance trends to mitigate the potential cost and schedule overruns.
The GAO additionally warned that programs’ earned value data show trends toward cost overruns that are likely to collectively total about $3 billion at program completion. GAO stated that without “timely and aggressive management action, this projected overrun will be realized, resulting in the expenditure of over $1 billion more than currently planned.”