Using Earned Value Information to Predict Program Cancellation
NAVAL POSTGRADUATE SCHOOL MONTEREY CA DEFENSE RESOURCES MANAGEMENT INST
Pagination or Media Count:
Since 2001, 12 major defense acquisition programs MDAPs have been cancelled. Although each of these programs had problems with cost or schedule overruns or both, there were other MDAPs that had similar problems and were not cancelled. Is it possible that program managers had information that might help determine which program was likely to survive and which was more likely to be cancelled We employ a unique and rigorous statistical methodology to help program managers and their overseers understand and quantify the risk to their programs based on key earned value metrics. We compare programs that were cancelled to programs that had significant cost overruns but were not cancelled. We use survival analysis to investigate whether differences in key EV metrics reported for cancelled programs and troubled but not cancelled programs can be used to model the probability of cancellation for MDAPs. Our most significant finding across models is that when there is high cost growth in the EAC reported by the contractor, programs run far larger risks of cancellation. We find less robust evidence that increases in PM estimates and high cost variance also can drive risk of program cancellation.
- Administration and Management