We have been waiting a while for this update to the EIA-748 Rev D, aptly titled EIA-748 Rev E. This has been a multi-year project undertaken by the NDIA, who labor tirelessly to develop both useful and understandable guidelines that we can use in our development and modification of a compliant earned value management system.
The NDIA, representing industry experts, in conjunction with the SAE (Society of Automobile Engineers), who provide a process for developing and updating standards, had determined that some deletions and consolidations of these guidelines were in order.
As one who operates under the authority of the EIA-748, I appreciate the effort that the NDIA invests in providing clarity to EVMS compliance. Over the years, I haven’t found our beloved government agencies particularly proficient in this area.
There are others who have released their analysis of this change, and there have been high levels of consternation on how this will affect how we set up projects and what the impact may be to existing EVMS system descriptions. There are also more comprehensive presentations out there of all the changes in EIA-748 Rev E and the reasoning behind them than what I have here. But this should suffice for most EVM practitioners who want an overview of the changes and their impact, if any.
First off, the changes in EIA-748 Rev E are not significant. Many relate to processes that organizations already have in place or at least could with their existing EVMS and MRP software. Examples include the ability to report by WBS and OBS, identifying who manages Overhead costs and how this is accomplished, and a process for determining Lot and Unit costs. All of these are functions within existing software and the assumption is that having a guideline for something that is already in place is unnecessary and meaningless.
4 of the 5 categories of guidelines remain unchanged. The one exception is “Accounting Considerations” found in the earlier guidelines. This is now titled “Progress Assessment and Data Collection”. The change is the result of having significantly different guidelines within the category than previously.
Below are the before and after of the 5 categories:
Now the change details:
Organization
Guideline 4 – “Identify Overhead Management” has been deleted, with the intent of this guideline is now included in Rev E Guideline 11, “Develop/Apply Indirect Rates to Determine Indirect Budgets”. I’m not sure how the soon-to-be-published NDIA Intent Guide will address responsibility for Overhead Management, but providing proof of compliance should be a simple thing, assuming you all manage OH, of course.
No other changes to this category in Rev E.
Planning, Scheduling and Budgeting
Guideline 7 – Title changed from “Identify Products and Milestones for Progress Assessment” to “Identify Indicators to Measure Progress”.
The section on Over Target Baseline in Guideline 8 moved to Guideline 27.
Guidelines 10 – “Determine Discrete Work and Objective Measures“ and 12, “Level of Effort Planning and Control”, are combined into a new Guideline 10, retitled “Establish Work Package Performance Measurement Criteria”.
Guidelines 11 – “Sum Detail Budgets to Control Account“ and Guideline 15, “Reconcile to Target Cost Goals”, have been combined as well; now Guideline 13, “Reconcile to Target Cost Goals”.
The titles for these Guidelines have been updated to reflect the new alignment of elements within each. I suggest reviewing these once you have the revised NDIA Intent Guide Rev E in hand.
Progress Assessment and Data Collection
Guideline 14 – “Measure Progress and Determine Earned Value”. This is a new guideline, the next logical consideration after Guideline 7. Material status is also addressed here.
Guidelines 16 – “Record Direct Costs” and Guideline 19, “Record/Allocate Indirect Costs”, were combined into Guideline 15, “Collect Actual Costs for Work Performed by Cost Elements”.
Guideline 17 – “Summarize Direct Costs by WBS Elements” and Guideline 19, “Summarize Direct Costs by OBS Elements”, have been deleted due to EV Software providing this capability. This was deemed something akin to telling people to breathe, which most people are already doing, we hope!
Guideline 21 – “Track and Report Material Costs and Quantities” is now covered in the new Guideline 16, “Account for Purchased Material” (a rather vague title for this, but the soon to come NDIA Intent Guide will make it all clear). One can assume this will be an all-encompassing guideline for material statusing.
Analysis and Management Reports
Guideline 17 – A slight title change to “Generate Schedule and Cost Variances”. This was previously Guideline 22
Guideline 18 – Another slight wording change now: “Identify and Evaluate Significant Variances”. This was previously Guideline 23.
Guideline 19 – Yet another slight change now: “Evaluate Indirect Cost Variances”. I want to be the synonym guy. This was previously Guideline 24
Guideline 20 – A new guideline, “Update Control Account Estimates at Completion”. Not sure what was lacking in the earlier Rev D, but in case you hadn’t been doing this, they are on to you.
Guideline 21 – “Summarize, Review, Evaluate Performance Data and Variances”. Same thing, new title. This was previously Guideline 25.
Guideline 22 – “Implement Management Actions in Response to EVM Data”. This is a title change for the same guideline previously found in Guideline 26.
Guideline 23 – “Develop Revised Program Estimate at Completion”, another revision to the same thing, probably emphasizing the constancy of EAC updating vs the Maintenance emphasis in the earlier Guideline 27. Maybe industry is finally recognizing EACs are no more constant than the weather.
Revisions and Data Maintenance
So, technically, Guidelines 28 through 32 were deleted. This being due to reducing the total number of Guidelines from 32 to 27. That said, here are the changes:
Guideline 24 – Now titled “Incorporate Customer Directed Changes”, replacing Guideline 28 “Incorporate Changes in a Timely Manner”. The “timely manner” phrase was also replaced, being that this was rather condescending. I made a point to be offended by this, so I’m very happy the industry took note.
Guideline 25 – “Document and Reconcile Internal Replanning Changes” is a little more wordy, but no change otherwise. This replaces Guideline 29 “Maintain Baseline and Reconcile Budgets“ and Guideline 32 “Document Performance Measurement Baseline Changes”.
Guideline 26 – “Control Retroactive Changes” remains unchanged. This replaces Guideline 30.
Guideline 27 – “Over Target Budget or Over Target Schedule” replaces Guideline 31 “Prevent Unauthorized Revisions”. This guideline is more specifically addressing OTB and OTS.
Summary
These changes in EIA-748 Rev E really have a minimal effect of how an EVMS will operate. Clarifications, redundancies and guidelines that addressed processes and capabilities, obviously already functions of EVM and accounting software, have been targeted. What the government will likely require is updating EVM System Descriptions.
I do wish that some of the existing elements of EVM that constrain accurate reporting of progress would also be addressed. For instance, getting rid of 50/50 and 0/100 Earned Value Techniques. These techniques generate a % complete detached from the work that has been accomplished during the same period. They also often lead to incurring actuals with no ability to earn commensurate progress.
Let’s face it, planning a task to take 2 months doesn’t mean it will take 2 months. I would prefer to give the CAMs some credit in their ability to determine progress, using QBD.
Also allow % Complete on individual Milestones when using the Milestone EVT. This has got to be the stupidest rule in all of EV. I am surprised our industry still thinks these are good practices. I will address these items fully in a later blog.
I would like to personally thank the volunteers at NDIA, and those who assisted them in this effort to create EIA-748 Rev E. Having industry lead EVM compliance is an obvious and necessary path to effective project management. So far, NDIA has done a fine job. I fondly remember the first time I got my hands on the Earned Value Management Systems ANSI/EIA-748 Intent Guide. What a treasure that was!