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Highlights

In 2008, the Department of Treasury (Treasury) plans to spend approximately $3 billion on information technology (IT) investments--the third largest planned IT expenditure among civilian agencies. To more effectively manage such investments, in 2005 the Office of Management and Budget required agencies to use earned value management (EVM). EVM is a project management approach that, if implemented appropriately, provides objective reports of project status, produces early warning signs of impending schedule delays and cost overruns, and provides unbiased estimates of a program's total costs. GAO was asked to assess whether the department and its key component agencies (1) have the policies in place to effectively implement EVM and (2) are adequately using EVM techniques to manage critical system investments. GAO compared agency policies to best practices identified in the Cost Assessment Guide and reviewed the implementation of key EVM practices for several investments.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of the Treasury To improve Treasury's ability to effectively implement EVM on its IT acquisition programs, the Secretary of Treasury should direct the Assistant Secretary for Management, in collaboration with the Chief Information Officer, to define a comprehensive EVM policy that specifies a methodology that standardizes EVM data collection and reporting compliant with the American National Standards Institute (ANSI) standard.
Closed - Implemented
The Department of Treasury issued a new Earned Value Management (EVM) policy on September 30, 2008. This new policy addresses the reporting of standardized data, includes metrics that each EVM report must include, and specifies the information that must be tracked. Further, the policy requires that the estimation method used in developing the work breakdown structure be consistent with the resulting performance measurement baseline. The policy calls for bureaus to generate ANSI compliant EVM data at least monthly and report quarterly to the Department of Treasury.
Department of the Treasury To improve Treasury's ability to effectively implement EVM on its IT acquisition programs, the Secretary of Treasury should direct the Assistant Secretary for Management, in collaboration with the Chief Information Officer, to define a comprehensive EVM policy that specifies a systematic approach to the development and documentation of work breakdown structures including the incorporation of standardized common elements.
Closed - Implemented
The Department of Treasury issued a new Earned Value Management (EVM) policy on September 30, 2008. This new policy states that each bureau shall develop, implement, and use a standard process, which includes at a minimum a product-oriented work breakdown structure (WBS) and WBS dictionary for all major IT investments, based on the GAO's Cost Estimation Guide. The GAO Cost Estimation Guide addresses incorporating common elements into the WBS.
Department of the Treasury To improve Treasury's ability to effectively implement EVM on its IT acquisition programs, the Secretary of Treasury should direct the Assistant Secretary for Management, in collaboration with the Chief Information Officer, to define a comprehensive EVM policy that specifies guidance on conducting surveillance reviews on the government's EVM system.
Closed - Implemented
The Department of Treasury issued a new Earned Value Management (EVM) policy on September 30, 2008. This new policy provides guidance regarding surveillance reviews on the government's EVM systems. The policy refers to these systems as "non-contractor" systems.
Department of the Treasury To improve Treasury's ability to effectively implement EVM on its IT acquisition programs, the Secretary of Treasury should direct the Assistant Secretary for Management, in collaboration with the Chief Information Officer, to define a comprehensive EVM policy that specifies training requirements for relevant personnel.
Closed - Implemented
The Department of Treasury issued a new Earned Value Management (EVM) policy on September 30, 2008. This new policy requires relevant personnel to be trained in EVM practices.
Department of the Treasury To improve Treasury's ability to effectively implement EVM on its IT acquisition programs, the Secretary of Treasury should direct the Assistant Secretary for Management, in collaboration with the Chief Information Officer, to implement a process for ensuring effective implementation of EVM throughout the department by establishing a comprehensive EVM system by, among other things, defining the scope of effort using a work breakdown structure that allows for traceability across EVM project management documents.
Closed - Implemented
While the Department of the Treasury no longer requires the use of earned value management (EVM) on the government-led portions of its investments, investments must still use work breakdown structures to define the scope of the effort. To ensure investments are effectively implemented, the department requires bureaus to submit investments' cost and schedule performance data by work breakdown structure element (i.e.,activity, project, investment) on a monthly basis. Staff from the Office of the Chief Information Officer are responsible for tracking the reported data and following up with the appropriate project management staff if there are any issues.
Department of the Treasury To improve Treasury's ability to effectively implement EVM on its IT acquisition programs, the Secretary of Treasury should direct the Assistant Secretary for Management, in collaboration with the Chief Information Officer, to implement a process for ensuring effective implementation of EVM throughout the department by establishing a comprehensive EVM system by, among other things, ensuring the development of validated performance measurement baselines that includes planned costs and schedules.
Closed - Implemented
While the Department of the Treasury no longer requires the use of earned value management (EVM) on the government-led portions of its investments, it is instilling more discipline into the development of performance measurement baselines by performing statistical analyses of cost and schedule variances to identify where problems or biases may exist in bureaus' baseline plans. According to officials, cost or schedule variance changes from 0 percent to over 30 percent, changes in performance ratings from green to red rating, or "anything about the project performance that otherwise looks suspicious" would trigger a review of baseline plans. The department, however, stated that no such reviews have been warranted to date. Although the statistical analyses and reviews they may trigger are not formally documented in policy, the Department has shared these practices with the bureaus as part of training on capital planning and investment control issues. We were provided a copy of the materials used in the training sessions.
Department of the Treasury To improve Treasury's ability to effectively implement EVM on its IT acquisition programs, the Secretary of Treasury should direct the Assistant Secretary for Management, in collaboration with the Chief Information Officer, to implement a process for ensuring effective implementation of EVM throughout the department by ensuring that the data resulting from the EVM system are reliable, including executing the work plan and recording both government and contractor costs.
Closed - Implemented
While the Department of the Treasury no longer requires the use of earned value management (EVM) on the government-led portions of its investments, bureaus are required to report investments' cost and schedule performance data on a monthly basis. The cost data includes both government and contractor data. Staff from the Office of the Chief Information Officer are responsible for tracking the reported data and following up with the appropriate project management staff if there are any issues.
Department of the Treasury To improve Treasury's ability to effectively implement EVM on its IT acquisition programs, the Secretary of Treasury should direct the Assistant Secretary for Management, in collaboration with the Chief Information Officer, to implement a process for ensuring effective implementation of EVM throughout the department by ensuring that the program management team is using earned value data for decision-making by systematically using EVM performance metrics in making the ongoing monthly decisions required to effectively manage the investment.
Closed - Implemented
While the Department of the Treasury no longer requires the use of earned value management (EVM) on the government-led portions of its investments, monthly reports on investments' cost and schedule variances are provided by the bureaus to Treasury. Project performance is rated red, yellow, or green depending on the cost and schedule variance. A yellow rating triggers a bureau-level project review and a red rating triggers a department-level review. These reviews result in additional corrective actions from project staff.
Department of the Treasury To improve Treasury's ability to effectively implement EVM on its IT acquisition programs, the Secretary of Treasury should direct the Assistant Secretary for Management, in collaboration with the Chief Information Officer, to implement a process for ensuring effective implementation of EVM throughout the department by ensuring that the program management team is using earned value data for decision-making by properly documenting updates to the performance measurement baseline as changes to the cost and schedule occur.
Closed - Implemented
While the Department of the Treasury no longer requires the use of earned value management (EVM) on the government-led portions of its investments, it has a monthly reporting process for ensuring effective management of investments among its bureaus. The department also has a baseline change request process through which updates to performance measurement baselines are reviewed and documented.

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