Damage Control

Early warning system for troubled IT projects isn't tamper-proof.

When hauled before lawmakers eager to vent frustration over federal mismanagement of information technology projects, having a curative for their complaints at the ready makes all the difference.

So it went when Karen Evans, the Office of Management and Budget administrator of e-government and information technology, testified last spring before the House Government Reform Committee with a three-word response to congressional attacks: earned value management (EVM).

EVM tracks a project's progress measured against its estimated cost and schedule, and will allow the government to effectively spot trouble before it gets out of control, Evans said. She repeated this after a red-faced Rep. Dutch Ruppersberger, D-Md., asked Evans to expound on her past mistakes, "or do you think you were perfect?" he added. (Evans said she did not.)

Four months later, in August, OMB gave agencies until Dec. 31 to craft a mandatory plan for using EVM to assess major information technology projects.

OMB says a project has been successfully completed if EVM indicators show its variance from the projected cost and schedule is no more than 10 percent. Long used in the private sector and notably practiced in the federal government by NASA and the Defense Department, EVM corrects for agencies' tendency to manage through planning documents, its proponents say.

But some agencies likely are manipulating the data in their EVM reports to OMB. Even the most competently planned, expertly implemented project is likely to incur some variance. Business needs that sparked a project can change. An agency's priorities can change, too, requiring a shift in resources and personnel. Maybe the project manager gets mono, or a midlife crisis. Stuff happens.

Still, some reports purport to show no variance at all, Evans says. "That's a little hard for us to believe," she says. "If we get a perfect EVM report, that's a big red flag." Agencies should not be afraid to reveal that a project is slipping beyond original projections, OMB officials say.

"Bad new is OK," says Tim K. Young, Evans' associate administrator. "I give it almost daily, I receive it almost daily." What OMB really dislikes is surprises, he adds.

But too much reliance on EVM can act as deterrent to delivering bad news, say some project management observers. And tying a company's or a manager's compensation to performance measures can create an incentive to fudge EVM indicators, says Tristan Yates, a Washington-area project management consultant. And subtler ways exist than blatantly perfect reports. Managers can mark partially finished tasks-especially the harder ones-as more complete than they really are. They can postpone tackling complex tasks until late in the schedule. Or they can just puff up the cost and completion schedule.

OMB says reporting standards prevent falsehoods, but the pressure to lie only increases during bad times. Federal agencies rely heavily on private sector information technology firms. At the Environmental Protection Agency, for example, technology contractors outnumber in-house workers by a ratio of 10-to-1. If a company starts laying off people "you're going to get a little paranoid," Yates says. "If something bad happens, you're going to do something to hide it." EVM can be useful, but only if project managers feel they can deliver bad news without being penalized, he adds.

They can, says Charles Havekost, chief information officer of the Health and Human Services Department. "This isn't whack-a-mole," he says. When a project veers off course, managers will receive help, not opprobrium, Havekost promises. If it turns out a manager has been lying, "The negative implications of that to someone's credibility and career are such that it's not what they should do," he adds.

OMB warns that managers are ultimately accountable for a finished product, something that can't be fudged at all. Managers might get away with cheating in the short term, but they're still on the hook for a working result, Evans says.

That is why the best project management technique is to schedule frequent deliverables, Yates says. The 1996 Clinger-Cohen Act was supposed to herald a new era of shorter, successive acquisitions of interoperable system increments, but government still tends toward massive acquisitions that run a higher risk of cost and schedule screw-ups. "Show me an actual deliverable. Let me see the application, let me see what you've done," Yates says. "EVM doesn't really cover any of that."

Even if it keeps costs and schedules in check, EVM still can cause agencies to lose sight of the bigger perspective, says Russ Caple, director of management consulting at Fujitsu Consulting of Falls Church, Va. Government technology projects can last for years, meaning the original business need that spawned the effort often changes. But pausing to adjust could add delays and trigger negative indicators. "I'm not saying [EVM] isn't a tremendously useful tool," Caple says. "But it's got to be in the context of saying that the real goal is not to build something, the real goal is to attain business change."

Evans says that is a legitimate critique. But she points to the annual capital planning and investment control process agencies undergo every year, when they must justify to OMB proposed information technology systems. Even managers of ongoing projects must submit business cases. Quarterly reviews of high-risk projects also ensure that agencies have clear goals for their projects, OMB officials say.

But if EVM reports are done monthly or quarterly, then agencies should check that often to make sure business needs are still valid, Caple says. Annual business cases are just a snapshot. "You need to continually revisit the business assumptions," he adds.

Most project managers don't know how to use EVM effectively, however. In a recent survey of senior agency managers commissioned by Bala Cynwyd, Pa.-based Primavera Systems Inc., which happens to sell EVM software, roughly half the respondents said their agencies were unfamiliar with or lacked personnel trained in EVM. OMB required agencies to submit by Aug. 30, 2005, plans to build up workforce skills in four areas, including project management. "There are things that we are doing with the agencies to help deal with the implementation of EVM," Evans says.