In fiscal year 2008,  Treasury plans to spend approximately $3 billion for 234 IT investments— including about $2 billion (about 71 percent) for 60 major investments. Treasury’s EVM Policy Is Not Fully Consistent with Best Practices

While Treasury has established policy to guide its implementation of EVM,  key components of this policy are not fully consistent with best practices. The policy currently in place fully  addresses three of the seven components, partially addresses three, and  does not address one (see table 2). According to the CPIC Director, Treasury’s EVM working group, which  was established in January 2008, is working on the development of a  revised EVM policy, which, according to Deputy Assistant Secretary for  Information Systems and Chief Information Officer, is expected to be  finalized by October 2008. These weaknesses  exist in part because, as previously noted, Treasury’s policy does not fully  address key elements and because the department does not have a  mechanism to enforce its implementation. When executing work plans and recording actual costs, two of the six  investments incorporated government costs with contractor costs. In regards to implementation, the  department is not fully addressing key practices needed to effectively  manage its critical investments. Until the department defines a comprehensive policy and  establishes a process for ensuring effective EVM implementation, it will be  difficult for Treasury to optimize the effectiveness of EVM as a  management tool and consistently implement the fundamental practices  needed to effectively manage its critical programs. Implement a process for ensuring effective implementation of EVM  throughout the department by    establishing a comprehensive EVM system by, among other things,    defining the scope of effort using a work breakdown structure that  allows for traceability across EVM project management documents;    ensuring the development of validated performance measurement  baselines that includes planned costs and schedules;    ensuring that the data resulting from the EVM system are reliable,  including    executing the work plan and recording both government and    ensuring that the program management team is using earned value data  for decision-making by    systematically using EVM performance metrics in making the  ongoing monthly decisions required to effectively manage the  investment; and    properly documenting updates to the performance measurement  baseline as changes to the cost and schedule occur. GAO staff who made major contributions to this report are listed in  appendix V.

Appendix I: Comments from the Department of Treasury

Appendix II: Objectives, Scope, and Methodology

Our objectives were to determine whether the Department of the Treasury  and its key component agencies (1) have the policies in place to effectively  implement earned value management (EVM) and (2) are adequately using  EVM techniques to manage critical system investments.
Why GAO Did This Study

In 2008, the Department of Treasury (Treasury) plans to spend approximately $3 billion on information technology (IT) investments--the third largest planned IT expenditure among civilian agencies. To more effectively manage such investments, in 2005 the Office of Management and Budget required agencies to use earned value management (EVM). EVM is a project management approach that, if implemented appropriately, provides objective reports of project status, produces early warning signs of impending schedule delays and cost overruns, and provides unbiased estimates of a program's total costs. GAO was asked to assess whether the department and its key component agencies (1) have the policies in place to effectively implement EVM and (2) are adequately using EVM techniques to manage critical system investments. GAO compared agency policies to best practices identified in the Cost Assessment Guide and reviewed the implementation of key EVM practices for several investments.

What GAO Found

The Department of Treasury's EVM policy is not fully consistent with best practices. Specifically, of seven best practices that leading organizations address in their policies, Treasury's policy fully addresses three, partially addresses three, and does not address the training component. According to the Director for Capital Planning and Investment Control, the department is currently working on revising its policy and according to Deputy Assistant Secretary for Information Systems and Chief Information Officer expects to finalize it by October 2008. Until Treasury develops a comprehensive policy to guide its efforts, it will be difficult for the department to optimize the effectiveness of EVM as a management tool. The department and its bureaus are not fully implementing key EVM practices needed to effectively manage their critical system investments. Specifically, the six programs at Treasury that GAO reviewed were not consistently implementing practices needed for establishing a comprehensive EVM system, ensuring that data from the system are reliable, and using the data to help manage the program. For example, when executing work plans and recording actual costs, a key practice for ensuring that the data resulting from the EVM system are reliable, only two of the six investments reviewed incorporated government costs with contractor costs. These weaknesses exist in part because Treasury's policy is not comprehensive and because the department does not have a process for ensuring effective EVM implementation. Unless the department consistently implements fundamental EVM practices, it may not be able to effectively manage its critical programs.