Original Date: 11/12/2001
Revision Date: 01/18/2007
Information : Earned Value Performance Measurement and Reporting System
Frontier Electronic Systems developed the Earned Value Performance Measurement and Reporting System as a standardized risk reduction tool. The system allows upper-level and program managers to analyze specific problem areas, and provides quick reliable access to cost performance analysis reports, variance analysis, and performance charts.
Previously, Frontier Electronic Systems (FES) managed and tracked contract performance by using a complex set of monthly accounting reports. Since no standardized methodology for measuring and reporting schedule and cost performance existed, Program Managers developed their own methods of performance evaluation and reporting. The result was an inefficient and cumbersome system that did not provide leading indicators or analysis tools. Data did not reconcile with the accounting records or Estimates To Complete (ETC), and real-time “what-if” analysis was not possible. As FES contracts became more complex, problems such as overruns and late deliveries became more common. To resolve these issues, the company implemented the Earned Value Performance Measurement and Reporting System in 1997.
The Earned Value Performance Measurement and Reporting System is a core element in the tools used by upper- level and program management to evaluate current contract performance and program risk. The system is linked to the Program Management Database and provides earned value performance data at the top and task levels for each contract. Cost and schedule performance indices are provided separately for labor and material/subcontract to allow evaluation of each element independently. Independent Estimates At Completion (EAC) verification is also provided. The Earned Value Performance Measurement and Reporting System also manipulates actual data against proven mathematical models, thus providing expected EAC verification to benchmark against. All firm-fixed price contracts having a value greater than $150,000 and a performance period of greater than three months are evaluated on a monthly basis. Program Managers report monthly on contract status and earned value performance, with a focus on root cause and corrective action when performance variations are identified.
The Earned Value Performance Measurement and Reporting System is a contributing factor to FES’ 20% improvement in the number of programs at or above profit forecast. The system has virtually eliminated unexpected cost overruns.
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