3.32 EVMS is a method of using actual cost and schedule information to measure and report project performance, as well as forecast future performance, and can be used to ensure that project payments do not exceed the value of work performed.
3.33 In November 2009, the JCPAA asked the DMO and the ANAO to investigate the possible inclusion of data from EVMS in the PDSSs and in April 2011, requested this information be included in the 2011-12 MPR.108 As a result, during the course of the 2010-11 MPR review, the ANAO monitored the extent to which EVMS was being used in projects and the effectiveness of EVMS data in improving the accountability and transparency of the management of Major Projects.
3.34 The Defence Procurement Policy Manual (DPPM) states that projects must apply earned value management to all contracts valued at $20 million or more, except where the procurement has been categorised as low risk and the responsible Division Head has approved the decision not to use EVMS.109 In this context, the ANAO noted that 15110 of the 28111 projects reviewed have at one stage used, or intend to use EVMS to either make contract payments or as part of their project or contractor's performance management.
3.35 It was also noted that where projects' contracts and schedules had been re-baselined, EVMS was no longer linked to contractor payments, and instead those projects use a milestone-only approach (that is, all payments are made on the achievement of the agreed milestones).112 Information on the application of EVMS by the DMO at an enterprise and project level has been provided by the DMO at Part 2, paragraphs 2.55 to 2.59 of this report.
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108 Source 1: Joint Committee of Public Accounts and Audit, Report 416, Review of the Major Projects Report 2007-2008, November 2009, pp. 12-13.
Source 2: Joint Committee of Public Accounts and Audit, Report 422, Review of the 2009-10 Defence Materiel Organisation Major Projects Report, April 2011, p. 36.
109 Defence Materiel Organisation, Defence Procurement Policy Manual (July 2011), Section 3, Chapter 3.4 Earned Value Management.
110 AWD Ships, MRH90 Helicopters, Wedgetail, ARH Tiger Helicopters, Air to Air Refuel, FFG Upgrade, HF Modernisation, LHD Ships, Overlander Vehicles, Next Gen Satellite, ANZAC ASMD Phase 2A, ANZAC ASMD Phase 2B, Collins RCS, Collins R&S and Battle Comm. Sys.
111 It should be noted that projects with Foreign Military Sales (FMS) cases and Memorandum Of Understanding (MOU) arrangements would not use EVMS, which would include Super Hornet, C-17 Heavy Airlift, SM-2 Missile, Additional Chinook, Hw Torpedo, Stand Off Weapon and 155mm Howitzer.
112 ARH Tiger Helicopters, FFG Upgrade, HF Modernisation and Collins RCS.