Capital Planning and Earned Value Implementation for the Department of State’s Global Network

1. Capital Planning and Earned Value Implementation for the Department of State’s Global Network PMI Knowledge Exchange Forum October 26, 2004 Presented by Bob Horrigan, PMP

2. Session Talking Points • President’s Management Agenda • Global Network Capital Asset Plan and Business Case • The Roadmap • Performance Goals and Measures • Acquisition Strategy • Project Investment and Funding Plan • Performance Based Measurement • Architecture and Security

3. Brief History: Where We’ve Come From • 1997 Clinger-Cohen Act: Added diligence in IT investment management • 1998 OMB Directive 300: All agencies must implement IT investment planning for capital programs • 2001 State Department: Implements Federal Information Technology Investment Portfolio System (I-TIPS) • 2002 OMB Institutes Scoring for OMB 300 Requirements, DoS Receives Red Score, CIO Leads Charge to Improve • 2003 All Projects Must Conform to OMB Requirements – Security, Management Controls (earned value), Risk Management, Alternatives Analysis, Conformance to Enterprise Architecture

4. Three “legs” of Clinger-Cohen • Select – Screen/Rank/Select • Is this the best choice to achieve the desired result? • Control – Monitor Progress/Take Corrective Action • Is the project meeting schedule and milestone targets? • Should the project methodology be changed to adjust for emerging factors? • Evaluate – Conduct Reviews/Make Adjustments/ Apply Lessons Learned • Is the project meeting its intended goal? • What was learned that could inform future actions?

5. Clinger-Cohen Act: IT investments are to be defined, selected, and managed on the basis of a well-founded Business Case • Define Strategic BusinessNeeds/Value Capture -- Derived from Strategic Plan Performance metrics and/or Cost Savings -- Enterprise Architecture • Define Customer Needs • Define Critical Success Factors • Gap analysis (process, organization, IT Capability) Define Technical Alternatives -- Status Quo -- Process/Organization projects -- Security projects -- Technical/System/IT -- Outsourcing Strategic Plan Modernization Blueprint (EA) Define Acquisition & Program Management Plans Business Line & IS Inputs Benefit/Cost Assessment -- $ Benefits and Costs -- Business Benefits -- CFO/Budget Spreadsheet -- Risks Business Case (OMB A-11 300) Refine Selected Alternative Agency Guidance OMB A-11 and A-130 CCA and FASA Risk ID, Assessment, & Define Management Plan SEC. 5122. CAPITAL PLANNING AND INVESTMENT CONTROL. implement in the agency a process for maximizing the value and assessing and managing the risks of the information technology acquisitions IT Investment Guidance

6. President’s Management Agenda (PMA) • The Problem (from PMA) — The federal government is the world ’s largest single consumer of information technology (IT). IT has contributed 40 percent of the increase in private-sector productivity growth, but the $45 billion the U.S. government spent on IT in 2002 has not produced measurable gains in public-sector worker productivity. • OMB’s Task — To improve use and management of IT resources in all agencies to achieve the greatest gain for U.S. taxpayer dollars through appropriate IT Capital Planning. • State’s Task — Move from “yellow” to “green” on the PMA scorecard with regard to IT Capital Planning. The Exhibit 300 is the tool that OMB uses to measure our progress.

7. Global Network Overview • Major, consolidated IT investment called Global Network ($1B over 10 years) includes 8 subprojects: • Bandwidth Management • Enterprise Network Management • Enterprise Software Licensing and Maintenance • Alternate Communications Site • InfoCenter Service Support Desk • In-Line Network Encryption (Type 1) • OpenNet Everywhere • Exchange engineering

8. The Roadmap • Performance Goals and Measures • Project Management Team and Qualifications • Alternatives Analysis • Cost Benefit Analysis • Risk Inventory and Assessment • Acquisition Strategy The OMB 300 lays out the plan for IT management. It includes:

9. The Roadmap (cont’d) • Funding Plan • Earned Value Statistics and Variance Explanations • Corrective Action Plans • Agency Head Concurrence if variance is greater than 10% • Enterprise Architecture Alignment • Performance Reference Model • Service Reference Model • Technical Reference Model • Security and Privacy

10. Performance Goals and Measures • Four measures following the Performance Reference Model • Bandwidth Cost Improvement • Enterprise Standardization Improvement • Security Improvement thru patch management and monitoring tools • Network Availability • These measures are also mapped to the support contractor’s performance-based contract • ENM Project Performance Metrics

11. Acquisition Strategy • Performance Based Contracts • Enterprise Network Management Support – Cost Plus Award Fee • Bandwidth – FFP • Enterprise Licensing – FFP • Acquisition Plans developed for all three • Formal MOU signed between DoS CIO and AID CIO • Collaboration with US AID and GSA SmartBuy highlighted

12. Project Investment and Funding Plan • Performance-Based Management System in place following ANSI/EIA Standard 748-A. • Cost baseline identified from 10/1/05 – 9/30/14 • Earned Value Measurement System in place • Reporting required monthly to eGov Program Board

13. ENM’s Performance Based Measurement • Required by OMB and Contract • Generates metrics for cost and schedule performance • Based on an internal, automated timekeeping system, Microframe Project Manager (MPM), NGIT System Description, ANSI/EIA 748, Work Breakdown Structure, Billet Assignment System, Board Action Requests • Must have scope management discipline to succeed

14. Cost Control thru Earned Value - What is It? • Baseline Management • A well defined plan before work begins • A clearly identified performing manager for each project • A clearly authorized scope, budget and scheduled time frame to the performing manager • Early Visibility to Variance • Quick decisive plan to correct and/or pose alternatives • Management notification and concurrence • Possible Trade-Offs • Schedule vs. Costs • Greater customer involvement • Cancel Project/Cut Losses

15. ProjectSOW Expenses Expenses WBS Expenses Time Phased Budget Cost Accts BOE Time Cards Time Cards Time Cards Plan OBS Schedule Hours Resources General Ledger Change Control Process Act Do $$ Variance Action Plans Task Completion Reports Check Reports PDCA Cycle with EVA

16. Summary • Project success dependent on adhering to stringent controls required by OMB • Performance Goals • Cost and schedule controls • Performance based contracting requirements • Adherence to security requirements and reporting • Long term planning and marketing required for future funding of new initiatives