Ending the EAC Tail Chase
An Unbiased EAC Predictor using Progress Metrics
Earned Value Management & Hardware Track
The world of EVM has traditionally produced results that are unreliable – specifically, traditional EAC predictions are biased low; they are “in a tail chase.” Many papers (by Christensen and others) show that all standard CPI and SPI-based EAC predictions are in essence lower bounds. While producing estimates for a customer whose EACs have traditionally tail-chased from start to finish, the authors stumbled upon a method of that takes into account the performance of completed programs of a similar nature. In addition to correcting the lag in EACs, this method constructs a curve from which the expected work complete at any point of progress can be extrapolated. Although this method is new, it has already shown itself to be quite useful. Specifically, the ability to create a production curve for units before they are built has several major implications: (1) Productivity can be tracked in real time; (2) The effect of productivity shifts can be quantified; and (3) Overruns due to specific events (work stoppages, natural disasters, fires, etc.) can be isolated and costed for insurance purposes or as the basis for a Request for Equitable Adjustment (REA).
This paper will outline the methodology and show that first it is statistical, and thus testable, second, but perhaps most importantly, is unbiased, and third has a rapidly diminishing standard error of the estimate (SEE). While traditional methods do not have an SEE and so comparisons are difficult, we believe that the community will agree that the SEE of the method is better than the error experienced in traditional methods. The only shortcoming of the method is that it depends upon a reliable, repeatable progressing method and thus has somewhat limited use.
Eric Druker graduated from the College of William and Mary with a B.S. in Applied Mathematics in 2005 concentrating in both Operations Research and Probability & Statistics and a minor in Economics. Over the past two years he has been employed by Northrop Grumman as an Operations Research Analyst. He performs cost and risk analysis on several programs within both the Intelligence and DoD communities. Mr. Druker has also worked on high profile projects such as the Virginia Information Technology Agency and the United States Army Corps of Engineers (USACE) proposals. He was a recipient of the 2005 NGIT President’s award for his work on several high profile Independent Cost Evaluations during which he helped to develop the risk process currently used by NGIT’s ICE teams. He has also performed decision tree analysis for NG Corporate law and built models for Hurricane Katrina Impact Studies and Schedule/Cost Growth determination.
Richard L. Coleman is a 1968 Naval Academy graduate, received an M. S. with Distinction from the U. S. Naval Postgraduate School and retired from active duty as a Captain, USN, in 1993. His service included tours as Commanding Officer of USS Dewey (DDG 45), and as Director, Naval Center for Cost Analysis. He has worked extensively in cost, CAIV, and risk for the Missile Defence Agency (MDA), Navy ARO, the intelligence community, NAVAIR, and the DD(X) Design Agent team. He has supported numerous ship programs including DD(X), the DDG 51 class, Deepwater, LHD 8 and LHA 6, the LPD 17 class, Virginia class submarines, CNN 77, and CVN 21. He was recently appointed as the Director of the Cost and Price Analysis Center of Excellence and conducts Independent Cost Evaluations on Northrop Grumman programs. He has more than 50 professional papers to his credit, including five ISPA/SCEA and SCEA Best Paper Awards and two ADoDCAS Outstanding Contributed Papers. He was a senior reviewer for all the SCEA CostPROF modules and lead author of the Risk Module. He served as Regional and National Vice President of SCEA.
Jeff Jaekle – Graduated from William and Mary in May of 2006 with a B.A. in Economics and a minor in government. In June of 2006, Jeff joined Northrop Grumman as an operations researcher performing cost analysis for the National Geospatial-Intelligence Agency (NGA). Mr. Jaekle has performed research for the Air force
(AFCAA) and worked on cost analysis for the Virginia Information Technology Agency (VITA). He also works on a team conducting Independent Cost Proposal Evaluations throughout Northrop Grumman.
Elisabeth Boyadjis- Graduated from The College of William and Mary in May 2006 with a double major in Economics and Women’s Studies. She joined the Northrop Grumman team in June 2006 as an operations researcher and began performing program analysis for cost and risk studies in support of the National Geospatial Intelligence Agency (NGA) and the Virginia Information Technology Agency (VITA). Ms. Boyadjis is currently working on-site supporting the Air Force Cost Analysis Agency (AFCAA) where she has conducted EVM and cost analysis on several major contracts.