A Framework for Calculating Indirect Costs and Earned Value for IT Infrastructure Modernization Programs
Suter, Richard F.
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Earned Value (EV) supports proactive project management by comparing work accomplished over time against the cost and schedule of work authorized. This comparison is essential to a range of tasks such as performance-based acquisition and budgeting. However, the utility of EV as a planning and management tool depends on the accuracy of Planned Value (PV) estimates. For Information Technology (IT) infra-structure modernization projects, those estimates are dominated by difficult-to-calculate indirect costs''for the effort consumed in communication, control, and coordination activities. While the DoD 5000 recognizes and recommends including indirect costs in Earned-Value computation, it does not provide guidance on how to do so. However, a conceptual framework built around the notion of communications efficiency can be constructed and evaluated using the information resident in artifacts such as Enterprise Architecture products, organizational capability and maturity assessments, and repositories of project data; each of these provide a basis for developing (parametric) bounds on indirect costs and, in some instances, direct estimates. These methods can be built into an Earned-Value Management (EVM) system.
Proceedings Paper (for Acquisition Research Program)
NPS Report NumberNPS-FM-05-045
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