Brief Project Plan

Cost Data Integrity Project

1.0.1 Purpose

To address various issues surrounding how actual costs are currently reported in Monthly
Performance Reports. Senior leadership and others have expressed concerns about the validity of
cost performance information used within the agency's Earned Value Management System.

1.0.2 Scope
This project applies to all Information Technology Projects that currently participate in the Monthly
Performance Review Process. Specifically, any IT investment that is "developmental" in nature must
comply with the Earned Value Management System standards. Those standards related to actual
costs are not currently met and must be addressed.

1.0.3 Project Location

This project will be led by the Project Management Office in Washington D.C. and include certain IT
projects outside of Washington D.C. Most of the work will be conducted by system personnel who
have "subject matter expertise" with the Project Management System - an agency wide application
used to help implement an Earned Value Management System.

2.0 Problem Statement and Objectives

General background statement to define the nature of the work:

Current accounting practices for Earned Value Management are extremely weak. There are a wide
range of problems, such as a lack of program controls over processing timesheets and no formal
accounting staff to process and post actual cost data in the Project Management System. The
Process Improvement Team needs to identify the major root causes behind this broken process and
implement solutions to mature this process rapidly so that the agency can properly monitor cost
performance.

Objectives for the project are:

Define
1. Identify the major source problem areas that are impairing the integrity of actual cost data. Map
each of these areas out.

2. Organize a team to cover the major deficient areas that must be addressed.

Measure
3. Map out the Critical to Quality (CTQ) Characteristics behind this problem.

4. Establish performance standards for each CTQ.

5. Conduct Measurement System Analysis.

6. Define baseline performance levels.

7. Define process capabilities. 1

Analyze
8. Identify the causes behind errors and defects through testing.
each of these areas out.

2. Organize a team to cover the major deficient areas that must be addressed.

Measure
3. Map out the Critical to Quality (CTQ) Characteristics behind this problem.
Brief
4. Establish performance standards for each Project
CTQ.Plan
Cost Data Integrity Project
5. Conduct Measurement System Analysis.

6. Define baseline performance levels.

7. Define process capabilities.

Analyze
8. Identify the causes behind errors and defects through testing.

9. Apply specific techniques such as FMEA

Improve
10. Develop and evaluate solutions.

11. Design a To Be Process and Test Pilot.

12. Submit Full Scale Improvement Plan.

Control
13. Design a Control Plan

14. Summarize and Communicate Best Practices.

15. Develop Operating Procedures and Training Modules.

16. Create a Project Summary Document

2.1 Methodology for Problem Statement Determination & Refinement

Specific Questions to help define the nature of the work:

1. What is the overall problem? IT investments are not properly accounting for actual costs incurred
within the Project Mangement System.

2. What is the real problem? No well defined process and business rules are in place to make
project accounting a reality.

3. Whose problem is it? Each Project Manager is responsible for making sure they capture and
report actual costs correctly. The Project Management Office provides oversight and is seen
indirectly responsible for this problem.

4. Where does the problem come from? Incomplete and inaccurate data in the Project Management
System. This is the source data for various Earned Value Management Reports and the EVM
measurements reported in the Monthly Performance Reviews.

5. Why do we want to solve the problem? Currently, no-one can properly evaluate cost performance
using Earned Value Management since the numbers have 2 no real validity. It is not unlike "Enron" -
the numbers are very suspect.

6. Who is affected? Everyone who relies on cost performance data from the Project Management
2. What is the real problem? No well defined process and business rules are in place to make
project accounting a reality.

3. Whose problem is it? Each Project Manager is responsible for making sure they capture and
report actual costs correctly. The Project Management Office provides oversight and is seen
indirectly responsible for this problem.
Brief Project Plan
4. Where does the problem come from? Incomplete and inaccurate data in the Project Management
Cost Data Integrity Project
System. This is the source data for various Earned Value Management Reports and the EVM
measurements reported in the Monthly Performance Reviews.

5. Why do we want to solve the problem? Currently, no-one can properly evaluate cost performance
using Earned Value Management since the numbers have no real validity. It is not unlike "Enron" -
the numbers are very suspect.

6. Who is affected? Everyone who relies on cost performance data from the Project Management
System. This would include Project Managers and their teams. This would also include any
customer that receives and reviews performance information, such as the Chief Information Officer,
Directors, and other senior leaders within the agency.

7. How will you proceed? Need to form a rapid process improvement team to look at the causes
behind this problem and implement some solutions to turn it around. This could involve
enhancements to the Project Management System, new procedures, organizational changes, and a
wide range of options to fix the overall problem.

8. What work products or results do you expect? Probably enforcement of certain manual
procedures and enhancements to "error proof" the Project Management System.

9. Who needs to be involved? Project Managers and team members who are responsible for
entering cost data into the Project Management System.

10. When do you need to get this done? Within four months, a set of solutions need to be ready to
go across the entire portfolio of IT projects that are using Earned Value Management.

Benefits of this Project:

• Address fundamental control weaknesses within the overall Project Management System.
• Much higher level of confidence in the reported cost information
• Proper evaluation and reviews of IT investments within the agency
• Meet compliance issues with an Earned Value Management System
• Higher levels of accountability with how money is invested and spent for information technology

Impacts of Doing Nothing:

• Ineffective management of IT investments
• Lack of control over budgets
• Monthly Performance Review process continues to be a non-value added exercise to the agency
• Outside agencies that rely on the information may challenge the reported information as
misleading

Major Deliverables or Outputs of this Project:

• Project Charter
• Thought Process Map
• Critical to Quality Defined
• SIPOC Diagram
• Pareto Chart
• Attribute Measurement System Analysis
• Baseline Sigma Level (DPMO)
• Statistical Process Control Chart
• Root Cause Analysis
• FMEA
• Establish Performance Standards
• Proposed Solutions
• Solutions Implementation Plan
• Project Summary Report (Close Out)

Major Activities:
1. Form a team that has Subject Matter Expertise with the3 Project Management System and project
cost accounting.

2. Interview project personnel and examine current reports within the Project Management System
• SIPOC Diagram
• Pareto Chart
• Attribute Measurement System Analysis
• Baseline Sigma Level (DPMO)
• Statistical Process Control Chart
• Root Cause Analysis
• FMEA
• Establish Performance Standards Brief Project Plan
• Proposed Solutions
• Solutions Implementation PlanCost Data Integrity Project
• Project Summary Report (Close Out)

Major Activities:
1. Form a team that has Subject Matter Expertise with the Project Management System and project
cost accounting.

2. Interview project personnel and examine current reports within the Project Management System
to assess the extent of the problem.

3. Identify the source characteristics that are critical to ensuring quality with actual costs.

4. Map out the current process and look for bottlenecks, ineffeciences, or other problems.

5. Analyse the current cost data on a sample basis. Establish a baseline level of performance for the
"as is" state.

6. Conduct root cause analysis to determine the sources behind errors and defects in the data.

7. Set performance standards and goals for measuring acceptable vs. unacceptable process
results.

8. Design solutions to reduce the unacceptable results and monitor using control charts and plans.

9. Close out the project and document in a Project Summary Report.

Overview of Schedule:
Expected Start Date: July 23, 2007
6.2 Methodology for Problem Statement Determination
Finalize Project Plan / Charter / Kick Off: August 10, 2007
& Refinement
Complete Define Phase: August 31, 2007
Complete Measurement Phase: September 28, 2007
Complete Analysis Phase: October 19, 2007
Complete Improvement Phase: November 16, 2007
Complete Control Phase: December 7, 2007

Assumptions/Dependencies:
The Chief Information Officer (CIO) initially requested that the project team look at only three
projects. However, this may not be sufficient to fully understand the scope of this problem.
Additionally, the CIO wanted preliminary results within 60 to 90 days. This project may require more
time to fully address all of the control weaknesses with the current process. The Project
Management Office currently works with the CIO and others to meet leadership needs, such as
oversight over the Monthly Performance Reviews and full-scale implementation of an Earned Value
Management System. Finally, there is a basic assumption that the results of this project will be
supported by leadership and adopted by Project Managers. In the past, new policies and changes
have not been widely successful since Project Managers have resisted changes to the status quo.

Major Quality Assurance Reviews and Roles:

The agency currently uses a milestone review process at each phase of the project. The CIO
Council conducts these milestone reviews to evaluate if the project is really ready to move to the
next phase. Certain exit criteria must be met. This project will follow this same approach and submit
to the CIO Council specific work products and deliverables at the end of each phase. For example,
the Define Phase should have a CTQ Diagram and SIPOC Diagram. Additionally, this project will
have a fully loaded resource schedule maintained in Microsoft Project. Weekly progress meetings
are held in accordance with the project schedule.

Risks and Contingency Plans to Cover Them:

Some of the critical risks facing this project include:
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1. Complexity and Staffing - This project will look at all root causes behind why actual costs are not
accurate. This could range from simple problems to complex related system issues. The project staff
will need to be highly skilled with problem solving from an accounting perspective. Most team
Major Quality Assurance Reviews and Roles:
The agency currently uses a milestone review process at each phase of the project. The CIO
Council conducts these milestone reviews to evaluate if the project is really ready to move to the
next phase. Certain exit criteria must be met. This project will follow this same approach and submit
to the CIO Council specific work products and deliverables at the end of each phase. For example,
the Define Phase should have a CTQ Diagram and SIPOC Diagram. Additionally, this project will
have a fully loaded resource scheduleBrief Project
maintained PlanProject. Weekly progress meetings
in Microsoft
are held in accordance with the project schedule.
Cost Data Integrity Project
Risks and Contingency Plans to Cover Them:
Some of the critical risks facing this project include:

1. Complexity and Staffing - This project will look at all root causes behind why actual costs are not
accurate. This could range from simple problems to complex related system issues. The project staff
will need to be highly skilled with problem solving from an accounting perspective. Most team
members have an overall project management background with little or no accounting experience.
This may hinder the effectiveness of the project team. In order to mitigate this risk, the Team Lead
will be a licensed Certified Public Accountant with extensive experience in both accounting and
process improvement.

2. Access to Project Management System - This project will need to analyze accounting transaction
data that resides in the Project Management System. The project requires detail knowledge of how
PMS processes data. The Team Lead has no experience with PMS. In order to mitigate this risk, at
least two team members must be highly experienced with PMS and at least one team member must
be a Senior System Administrator with PMS.

3. Overall Team Resources - This project has four members assigned for approximately four
months. The project could take longer or may require more staff support. In order to mitigate against
this risk, the Project Team will leverage the staff of targeted projects that are the subject of this
project. This could take the form of issuing Request for Information to Project Analyst or other
personnel who are directly responsible for the integrity of cost data for that respective project.

4. Scope Changes - The root causes of problems could force the project to expand the scope of its
work, such as looking at new requirements for the Project Management System. In order to properly
manage project scope, the Project Charter will include clear goals and objectives for the project.
Where practical, a set of life cycle work products will be defined to help ensure that the project stays
within scope.

5. Bad Data - This project is data intensive, relying on a good stream of reliable data. The source
data from PMS may not be reliable. In order to protect against bad data, the Project Team will trace
and test samples of data back to source documents to make sure the data has merit.

6. Difficult to Implement Solutions - The project will design and develop solutions to address root
causes behind the integrity of cost data. Some of these solutions may be difficult to implement, such
as strong resistance from Project Managers within the agency. In order to provide some emphasis
behind the proposed solutions, a formal report will be issued by the PMO to the CIO and the Project
Team will schedule a formal briefing to senior leadership. This will help put some force behind the
proposed solutions.

In order to protect against changes to this project, a 10% contingency reserve will be maintained as
part of the budget. This reserve will help manage any unknown risks that my come up.

Estimated Costs:
Labor: Four team members assigned to work more than 80% of their time on this project. Project
should take approximately 18 weeks to complete. Rough estimated labor costs:

Team Leader . . . . . . . . . . . . $ 185 / hr x 800 hours = $ 148,000

Subject Matter Expert IV . . . $ 170 / hr x 580 hours = $ 98,600
Subject Matter Expert III . . . . $ 162 / hr x 580 hours = $ 93,960
Subject Matter Expert III . . . . $ 162 / hr x 580 hours = $ 93,960
System Administrator . . . . . $ 150 / hr x 580 hours = $ 87,000
TOTAL ESTIMATED BASE COST . . . . . . . . . . . . . . $ 521,520

Interdependencies with Other Projects or Functions:

5 It may also impact the budget change
This project will impact the monthly EVM validation process.
control process. These processes use cost data from the Project Management System and any
changes to how cost are managed per the results of this project may impact these processes. For
example, System Administrators look at Timesheet Approval Reports to validate monthly costs
Estimated Costs:
Labor: Four team members assigned to work more than 80% of their time on this project. Project
should take approximately 18 weeks to complete. Rough estimated labor costs:

Team Leader . . . . . . . . . . . . $ 185 / hr x 800 hours = $ 148,000

Subject Matter Expert IV . . . $ 170 / hr x 580 hours = $ 98,600
Subject Matter Expert III . . . . $ 162 /Brief
hr x 580Project
hours = $ Plan
93,960
Subject Matter Expert III . . . . $ 162 / hr x 580 hours = $ 93,960
System Administrator . . . . . $Cost 150 / hrData Integrity
x 580 hours Project
= $ 87,000
TOTAL ESTIMATED BASE COST . . . . . . . . . . . . . . $ 521,520

Interdependencies with Other Projects or Functions:

This project will impact the monthly EVM validation process. It may also impact the budget change
control process. These processes use cost data from the Project Management System and any
changes to how cost are managed per the results of this project may impact these processes. For
example, System Administrators look at Timesheet Approval Reports to validate monthly costs
within the Project Management System. This project will most likely evaluate this control procedure
and may result in changes to improve the current process.

Project Staffing and Time Commitments:

Four team members from the Project Managegment Office (PMO) will be assigned to work on this
project. Two of the team members work permanently for the PMO and two others will be outside
contractors with expertise in process improvement and cost management. The Team Leader will
devote full-time to this project while the three remaining team members will devote approximately
80% of their time to this project.

Project Organization:
The Project Team will reporrt to the Director of the Project Management Office (PMO) on a weekly
basis. The Director of the PMO will report to the CIO and other senior leaders. Project team
members will be responsible for executing the project plan and schedule. This includes all work
products and deliverables during the Define-Measure-Analyze-Improve-Control life cycle of the
project.

Project Management Approach (or Strategy):

• Approach: Follow a Six Sigma approach to improving processes associated with actual costs
within the Project Management System. Team members will be trained and skilled in the application
of Six Sigma with direct oversight by the CIO Council which includes Six Sigma Master Black Belts.
Decisions made at each phase must pass through a milestone review process with the CIO Council,
including exit criteria that are rooted in Six Sigma work products for each phase.

• Status or Progress Reporting Plan: Weekly meetings with the PMO Director and weekly meetings
each Monday with the core team to plan and execute the work.

Change Management Approach:

Changes to the project scope and deliverables will be managed by the Team Lead. Changes must
be approved by the PMO Director who sponsors the project.

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 Brief Project Plan
Cost Data Integrity Project