Using Earned Value Data to Detect Potential Problems in Acquisition Contracts
Journal of Cost Analysis and Parametrics
Government contractors report earned value information to government agencies in monthly contract performance reports. Though major differences may exist in the data between subsequent contract performance reports, we know of no government effort to detect these occurrences. The identification of major changes may locate and isolate problems and, thus, prevent million and billion dollar cost and schedule overruns. In this study, we illustrate a proof of concept approach to identify changes in the cost performance index and the schedule performance index that may indicate problems with contract performance. We find the intuitive detection algorithm identifies changes in the cost performance index and the schedule performance index that correspond to large changes in the Estimate at Complete from 1 to 12 months out. The ability to detect unusual changes provides decision-makers with warnings of potential problems for acquisition contracts.
First Lieutenant C. Grant Keaton is a space systems cost analyst at the Air Force Cost Analysis Agency. He earned a B.S. in Economics and a minor in Russian from the United States Air Force Academy and an M.S. in Cost Analysis from the Air Force Institute of Technology. His current research focuses on time series analysis and quantitative content analysis.
Dr. Edward D. White is an Associate Professor in the Department of Mathematics and Statistics. He has served as a member of the AFIT faculty since the summer of 1998. Dr. White received his B.S. in Mathematics from the University of Tampa, his M.A.S. in Applied Statistics from The Ohio State University, and his Ph.D. in Statistics from Texas A&M University. His work has been published in various journals such as the Air Force Journal of Logistics, Journal of Cost Analysis and Management, Defense Acquisition Review Journal, Cost Engineering, Journal of Public Procurement, and the Journal of Cost Analysis and Parametrics, where he serves as co-editor. His primary research interests include statistical modeling and simulation.
Lieutenant Colonel Eric J. Unger is the Director of the Cost Analysis Graduate Program at the Air Force Institute of Technology. He received a B.A. in Mathematics and Economics from Northwestern University, an M.S. in Acquisition Management from the Air Force Institute of Technology, and a Ph.D. in Policy Analysis from the Pardee RAND Graduate School. He served previously as the Chief of Cost, MILSATCOM, at Los Angeles Air Force Base. His research focuses on the policy impact of quantitative cost analysis.