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Financial Management
and
Program Management
Integration and Intersections
Brian Schultz
Professor of Program Management
American Society of Military Comptrollers
Professional Development Institute
May 31 – Jun 2, 2017
Agenda
• Program Management
• FM Interrelationships
• Profound Problem Solving
• Critical Thinking
• Integration
• Summary
2
3
Project Management:
The application of knowledge, skills, tools, and techniques to project
activities in order to meet or exceed stakeholder needs and expectations;
typically technical in nature with a defined beginning and end.
Program Management:
The management of a related series of projects [a program] executed over a
broad period of time, and which are designed to accomplish broad goals, to
which the individual projects contribute; typically business and technical in
nature and my be a an ongoing effort
DoD Acquisition Context:
The development, production, deployment of a new system which meet the
technical requirements within the limits of cost and schedule requirements
approved by the Decision Authority which meets the needs of the ultimate
“User.”
Program Management Defined
4
TechnicalSchedule
Cost
Program Parameters
5
TechnicalSchedule
Cost
Risk
Managing Risk
6
The contract between
Milestone Decision Authority
and
Program Manager
regarding
cost, schedule, and technical performance
Acquisition Program Baseline (APB)
7
From Requirement to Operational Capability
8
Execution
POM-BES
MeasurementObs & Exp
MSDecisions
Cost TechnicalAPB/PMBKtr
Performance
BOE
What-Ifs
Estimate
WORK-VALUE(BCWP)
ACTUALS(ACWP)
PLAN(BCWS)
EAC
Multiple Interrelationships
9
WORK-VALUE(BCWP)
BOE
Execution
POM-BES
MeasurementObs & Exp
Cost TechnicalKtr
Performance
ACTUALS(ACWP)
PLAN(BCWS)
Estimate
EAC
APB/PMBMSDecisions
What-If
Interrelationships
10
WORK-VALUE(BCWP) BOE
Execution
POM-BES
MeasurementObs & Exp
Cost Schedule TechnicalKtr
Performance
ACTUALS(ACWP)
PLAN(BCWS)
Estimate
EAC
APB/PMBMSDecisions
What-If
Interrelationships
11
WORK-VALUE(BCWP) BOE
Execution
POM-BES
MeasurementObs & Exp
Cost Schedule TechnicalKtr
Performance
ACTUALS(ACWP)
PLAN(BCWS)
Estimate
EAC
APB/PMBMSDecisions
What-If
Interrelationships
12
WORK-VALUE(BCWP) BOE
Execution
POM-BES
MeasurementObs & Exp
Cost Schedule TechnicalKtr
Performance
ACTUALS(ACWP)
PLAN(BCWS)
Estimate
EAC
APB/PMBMSDecisions
What-If
Interrelationships
13
Interrelationships
14
Decision
How much does it cost?
Can we do it
within cost and schedule?
Can we afford it?
Cost Estimating
Earned Value Management
Financial Management
Decision Factors
15
Financial Management:
Two major activities; budget development and budget execution; requesting
level of funding to achieve mission requirements and the distribution and
consumption of the allocated funds while measuring the effectiveness of the
financial execution process.
Earned Value Management:
System to measure contractor planned cost, schedule, and technical
performance to actual performance; identifies cost and schedule efficiency
along with data to estimate future cost and schedule performance.
Cost Estimating and Analysis:
Process of analyzing program attributes/requirements to develop the
estimated cost of the program while identifying cost drivers and key
parameters thus allowing for “What if” analyses.
Purposes
16
Type 1:
• Problem can be clearly defined
• Clear (right or wrong) solutions Straight
Forward
Type 2:
• Problem can be clearly defined
• Multiple “right” solutions Complex
Solution Process:1. Define Problem
2. Determine
Alternatives
3. Analyze
Alternatives
4. Determine Solution
5. Implement Solution
Type 3:
• Problem hard to define
• No right or wrong solution
• Design a way forward
Solution Process:
?
Problem Solving and Solutions
Profound
17
• Hard to define problem• Unique, one-of-a-kind problem; no historical perspective
• Problem hard to bound; entwined with other problems
• Problem cause changed based on perspective
• Multiple interrelated factors
• Dynamic problem; problem is a symptom of another problem
• No definite solution• Difficult, if not impossible, to measure success
• Solutions are judgment calls and multiple measures of success
• Multiple stakeholders with differing objectives
• Possible solutions with pros and cons; no right or wrong solution
• Implementing a solution leads to unforeseen consequences;
another problem
Profound problems associated with constant change
Characteristics of a Profound Problem
Defense
Systems
Acquisition
18
Profound Problem Complexity
Stakeholder Perspectives
19
User
MDA
Combatant Commands
Comptroller
PM
Congress
Industry
Allies
Services and JCS
Understand Their View
Solving Profound Problems
with Critical Thinking
20
• What is Critical Thinking?
– Skill?
– Tool?
– Discipline?
Dictionary.com : “disciplined thinking that is clear,
rational, open-minded, and informed by evidence.”
21
• What methods are used in your program?
Are they effective?
• Thinking Frameworks - How we approach
thinking
– Argumentative Thinking
– Parallel Thinking
• Many Thinking Tools
– SWOT Analysis
(Strengths, Weaknesses,
Opportunities, & Threats)
– Theory of Constraints
– Six Thinking Hats
“Thinking is
the hardest
work there is,
which is
probably the
reason why so
few engage in
it.”
- Henry Ford
Thinking Frameworks
22
• Parallel Thinking
– “Networking” ideas
– Look at an issue from different perspectives
– Gets the whole team involved
– Sensitizes thinking
• A Creative and Critical Thinking Process
– Holistic view of your Plan for Change
• Decision
• Problem Solving
• Build a Thought Map
Parallel Thinking*
* term coined and implemented by Edward de Bono.
23
Argumentative
Thinking• Western Philosophy
• Big 3 (Socrates, Plato,
Aristotle)
• Thesis-Antithesis-
Synthesis
• Empirical Observation
• Individual Focus
• Competitive
Parallel Thinking• Eastern Philosophy
• Confucius
• Answer Grows From
Group
• Holistic (mind map)
• Collective Contribution
• Collaborative
Roots
Process
Nature
Argumentative vs Parallel Thinking
What Does a Mind Map Look Like?
24
Benefits
Gut Feel
Typical Program Manager Expectations
• Develop and maintain collaborative environment for
team members – apply critical thinking
• Inputs from across functional areas considered in
deliberations
• Team is empowered and accountable
• Team is committed to achieve goals
• Communications up, down, and across
• Take care of our people
25
BFM Integration Across Program Office
26
Earned Value
Management
Financial
ManagementCost Analysis
& Estimating
Program
Manager
Engineering Contracting Test & Eval Logistics Bus & Fin Mgt
ProgramManagement
FinancialManagement
EarnedValue
Management
CostAnalysis
ProgramManagement
ProgramManagement
Financial ManagementEarned Value ManagementCost Estimating
27
Integrating PM Tools
System Trade Space Decisions
28
(T)
(O)
LCC constraint
Trade Space
29
Earn
ed
Valu
e M
an
ag
em
en
t
Fin
an
cia
l M
an
ag
em
en
t
Co
st
Esti
mati
ng
/An
aly
sis
Acco
un
tin
g
Bu
dg
eti
ng
Co
st
Es
tim
ati
ng
Acco
un
tin
g
Earn
ed
Valu
e
BCEFM Integration
Summary
30
• Significant interrelationships between cost
estimating, cost analysis, earned value
management, and financial management drive
complexity
• Use of critical thinking assists in resolving profound
problems
• Integration of EVMS, FM, and Cost across program
office functions necessary to achieve optimal
solutions
• Stay engaged in supporting key PM decisions
