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Capital Planning and Investment Control Guide

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Capital Planning and Investment Control Guide

April 2004

OFFICE OF THE CHIEF INFORMATION OFFICER

    Executive Summary ........................................................................................................................ 1 Chapter 1Introduction ................................................................................................................. 4

    1.1 Purpose ........................................................................................................................................... 4

    1.2 Legislative Background and Associated Guidance ......................................................................... 4

    1.3 Points of Contact ............................................................................................................................. 6

    1.4 Scope ............................................................................................................................................... 6

    1.5 Thresholds for Major IT Investments ............................................................................................... 6

    1.6 Roles and Responsibilities .............................................................................................................. 7

    1.7 Process Overview ............................................................................................................................ 8

    1.8 Process Coordination ...................................................................................................................... 8

    1.9 Document Structure ......................................................................................................................... 8 Chapter 2Pre-Select Phase ....................................................................................................... 10

    2.1 Purpose ......................................................................................................................................... 10

    2.2 Entry Criteria .................................................................................................................................. 10

    2.3 Process .......................................................................................................................................... 10

    2.4 Exit Criteria .................................................................................................................................... 14 Chapter 3Select Phase .............................................................................................................. 15

    3.1 Purpose ......................................................................................................................................... 15

    3.2 Entry Criteria .................................................................................................................................. 15

    3.3 Process .......................................................................................................................................... 15

    3.4 Portfolio Management ................................................................................................................... 18

    3.5 Exit Criteria .................................................................................................................................... 19 Chapter 4Control Phase ........................................................................................................... 20

    4.1 Purpose ......................................................................................................................................... 20

    4.2 Entry Criteria .................................................................................................................................. 20

    4.3 Process .......................................................................................................................................... 20

    4.4 Exit Criteria .................................................................................................................................... 26 Chapter 5Evaluate Phase.......................................................................................................... 27

    5.1 Purpose ......................................................................................................................................... 27

    5.2 Entry Criteria .................................................................................................................................. 27

    5.3 Process .......................................................................................................................................... 27

    5.4 Exit Criteria .................................................................................................................................... 32 Chapter 6Steady-State Phase ................................................................................................... 34

    6.1 Purpose ......................................................................................................................................... 34

    6.2 Entry Criteria .................................................................................................................................. 34

    6.3 Process .......................................................................................................................................... 34

    6.4 Exit Criteria .................................................................................................................................... 36 Chapter 7Assessing Investment Proposals ............................................................................ 37 Appendix ABoard Procedures ............................................................................................. A - 1 Appendix BUSDA CPIC Process Checklist ......................................................................... B - 1 Appendix COMB Exhibit 300 Assessment .......................................................................... C - 1

    Supports the President‘s Management Agenda Items (AI) .............................................................. C - 2

    Acquisition Strategy (AS) .................................................................................................................. C - 3

    Program (Project) Management (PM) .............................................................................................. C - 4

    Enterprise Architecture (EA) ............................................................................................................. C - 5

    Alternatives Analysis (AA) ................................................................................................................ C - 6

    Risk Management (RM) .................................................................................................................... C - 7

    Performance Goals (PG) .................................................................................................................. C - 8

    Security and Privacy (SE) ................................................................................................................. C - 9

    Performance Based Management System (PB) ............................................................................ C - 10

    Life-Cycle Costs Formulation (LC) ................................................................................................. C - 11 Appendix DSteady-State Investment Review Template ..................................................... D - 1 Appendix ECost-Benefit Analysis ........................................................................................ E - 1 Appendix FRisk Assessment ............................................................................................... F - 1 Appendix GPerformance Measurement .............................................................................. G - 1 Appendix HProject Management ......................................................................................... H - 1 Appendix IEarned Value Analysis ......................................................................................... I - 1 Appendix JPost-Implementation Reviews .......................................................................... J - 1 Appendix K Mission Need Statement Template .................................................................. K - 1 Appendix LeGovernment ...................................................................................................... L - 1

    Background ........................................................................................................................................ L - 1

    Purpose ............................................................................................................................................. L - 1

    eGovernment Investment Framework ............................................................................................... L - 2

    Evaluation of eGovernment ............................................................................................................... L - 4 Appendix MEnterprise Architecture ................................................................................... M - 1

    The USDA Enterprise Architecture Framework ................................................................................ M - 1

    The Federal Enterprise Architecture (FEA) Reference Models ........................................................ M - 3

    Why have an Enterprise Architecture? ............................................................................................. M - 5

    Exhibit 300 EA Guidance for Information Technology Investments ................................................. M - 6 Appendix NCyber Security Infrastructure Guide ................................................................ N - 1

    Introduction ....................................................................................................................................... N - 1

    Point of Contact ................................................................................................................................ N - 1

    Security infrastructure and Security Objectives ................................................................................ N - 1

    Security Analysis .............................................................................................................................. N - 2

    Security Strategic Investment Criteria .............................................................................................. N - 2

    CPIC Phase Security Requirements ................................................................................................ N - 7 Appendix OTelecommunications Reference Manual ......................................................... O - 1

    Introduction ....................................................................................................................................... O - 1

    Frequently Asked Questions ............................................................................................................ O - 1

    Evaluation Criteria ............................................................................................................................ O - 2

    Pre-Select Phase Activities .............................................................................................................. O - 2

    Select Phase Activities ..................................................................................................................... O - 3

    Evaluate Phase Activities ................................................................................................................. O - 7

    Steady State Phase Activities ........................................................................................................... O - 7

    Telecommunications Cost Estimating Check Lists ........................................................................... O - 9

    Ratings Criteria For Telecommunications Technologies and Services (USDA-only) .................... O - 13 Appendix POMB Reporting Requirements .......................................................................... P - 1 Appendix QQuarterly/Milestone Control Review Checklist ............................................... Q - 1 Appendix RGlossary of Terms and Acronyms ................................................................... R - 1

    Glossary of Terms ............................................................................................................................ R - 1

    Acronyms .......................................................................................................................................... R - 6 Appendix SReferences ......................................................................................................... S - 1

April 2004 ii USDA CPIC Guide to Information Technology

    In 2006, the United States Department of Agriculture (USDA) plans to invest about $2 billion in informa-tion technology (IT) assets and services. The success of these IT investments directly influences the abili-ty of organizations within USDA to execute business plans and fulfill missions. For example:

    ; All current eGovernment plans and initiatives are all heavily dependent upon their underlying IT in-

    vestments.

    ; The Food and Nutrition Service is heavily dependent upon Electronic Benefit Transfer (EBT) to carry

    out its $15 billion Food Stamp Program. About 75 percent of food stamp benefits are currently being

    issued via EBT.

    ; The Rural Development mission area is highly dependent upon its information systems to manage its

    $60 billion loan portfolio.

The Key Components

    Recognizing both the importance of IT investments to the organization and its role in supporting the suc-cess of these investments, the Office of the Chief Information Officer (OCIO) is engaged in an ongoing effort to establish, maintain, and support an IT investment analysis and decision-making environment. This environment consists of three key components: executive decision-makers, supporting tools, and repeatable processes. Each is described below:

    ; Executive decision-makersConsists primarily of an executive review board (E-Board) that over-

    sees the process and is a stakeholder in the success of USDA.

    ; ToolsUSDA uses a variety of tools to manage its IT investments. However, the primary tool to be

    used during this IY cycle will be Métier‘s WorkLenz. WorkLenz is a Web-based project and portfolio

    management tool that can be used to support both USDA investment decision-making and OMB in-1vestment submissions. The OCIO maintains and supports WorkLenz.

    ; ProcessesCapital Planning and Investment Control (CPIC) is USDA‘s primary process for (1) mak-

    ing decisions about which initiatives and systems USDA should invest in and (2) creating and analyz-

    ing the associated rationale for these investments. As summarized below, this guide describes the

    CPIC process in detail.

This Guide

    The USDA Information Technology Capital Planning and Investment Control Guide identifies the

    processes and activities necessary to ensure that USDA‘s investments in IT are well thought out, cost-

    effective, and support the missions and business goals of the organization. It is based on guidance from both the Office of Management and Budget (OMB) and the Government Accounting Office (GAO). It also incorporates ―lessons learned‖ from USDA‘s iterations through the process over the last three years.

    At the highest level, the CPIC process is a circular flow of USDA‘s IT investments through five sequential phases. As shown in Figure ES-1, these phases are:

; Pre-Select PhaseExecutive decision-makers assess each proposed investment‘s support of

    USDA‘s strategic and mission needs. Project Managers compile the information necessary for sup-

    porting a detailed proposal assessment.

     1 More information about WorkLenz can be found at http://www.ocio.usda.gov/irm/cap_plan/worklenz_project.html.

April 2004 1 USDA CPIC Guide to Information Technology

    ; Select PhaseInvestment analyses are conducted and the E-Board chooses the IT projects that

    best support the mission of the organization, support USDA‘s approach to enterprise architecture,

    and are prepared for success.

    ; Control PhaseUSDA ensures, through timely oversight, quality control, and executive review, that

    IT initiatives are executed or developed in a disciplined, well-managed, and consistent manner. ; Evaluate PhaseActual results of the implemented projects are compared to expectations to assess

    investment performance. This is done to assess the project‘s impact on mission performance, identify

    any project changes or modifications that may be needed, and revise the investment management

    process based on lessons learned.

    ; Steady-State PhaseMature systems are assessed to ascertain their continued effectiveness in

    supporting mission requirements, evaluate the cost of continued maintenance support, assess poten-

    tial technology opportunities, and consider retirement or replacement options.

    Each of these five phases is structured in a similar manner using a set of common elements. These common elements provide a consistent and predictable flow and coordination of activities within each phase.

    Figure ES-1. The Five CPIC Phases and the Common Elements Within Each Phase

    Beyond the detailed CPIC process and activity description, this Guide also includes:

    ; A charter for the E-Board and the associated operating procedures necessary to conduct investment

    reviews

    ; A template for evaluating the mission need of a new IT investment proposal

    ; Guidance on how to:

     Complete a Cost-Benefit Analysis (CBA)

     Conduct a risk assessment for IT capital planning

     Develop performance measures for IT projects

     Manage IT projects

     Conduct earned value analysis

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     Conduct a Post-Implementation Review (PIR)

    ; The scoring criteria to be used by OCIO and the E-Board during investment reviews ; A glossary of terms and acronyms used throughout this document

    ; A list of references used to create this document.

    For further information on IT investment management or USDA‘s CPIC process, please see the USDA CPIC Web site at http://www.ocio.usda.gov/irm/cap_plan/index.html or contact the OCIO CPIC staff via e-mail at ocio-cpic@usda.gov

April 2004 3 USDA CPIC Guide to Information Technology

1.1 PURPOSE

    This document describes the United States Department of Agriculture (USDA) Information Technology (IT)

    Capital Planning and Investment Control (CPIC) process. As such, it outlines a framework for USDA to

    manage its IT investment portfolio better. This investment management process allows USDA to optimize the benefits of scarce IT resources, address the strategic needs of USDA, and comply with applicable laws and guidance.

    Major investments, while small in number, have significant impacts on the efficient and effective operation of USDA agencies and services. Figure 1-1 shows the size of the major systems budget relative to the

    entire IT budget for fiscal year (FY) 2004.

    Figure 1-1. USDA FY 2004 IT Investments Budget

    (in Millions of Dollars as of April 15, 2004)

    $78265 Major Investments

    279 Small/Other Investments$964

    The CPIC is a structured, integrated approach to managing IT investments. It ensures that all IT invest-ments align with the USDA mission and support business needs while minimizing risks and maximizing returns throughout the investment‘s lifecycle. The CPIC relies on a systematic pre-selection, selection,

    control, and on-going evaluation process to ensure each investment‘s objectives support the business and mission needs of the Department (see Figure 1-2).

    Through sound management of these investments, the executive review board (E-Board) determines the IT direction for USDA, and ensures that agencies manage IT investments with the objective of maximizing return to the Department and achieving business goals.

1.2 LEGISLATIVE BACKGROUND AND ASSOCIATED GUIDANCE

    Recent statutes require Federal agencies to revise their operational and management practices to achieve greater mission efficiency and effectiveness. These laws include:

; The Chief Financial Officer (CFO) Act of 1990

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; The Government Performance and Results Act of 1993 (GPRA)

    ; The Federal Acquisition Streamlining Act of 1994 (FASA)

    ; The Paperwork Reduction Act of 1995 (PRA)

    ; The Clinger-Cohen Act of 1996 (CCA)

    ; The Government Paperwork Elimination Act of 1998 (GPEA)

    ; The Federal Information Security Management Act (FISMA)

    ; The E-government Act of 2002 (P.L. 107-347).

    Figure 1-2. CPIC Information and Process Flow

    This CPIC Guide is based upon the IT aspects of these laws, and focuses specifically on the CCA re-quirements. The CCA‘s objective is that senior managers use a CPIC process to systemically maximize

    the benefits of IT investments. The Act further describes CPIC as follows:

    ; ―The Head of each executive agency shall design and implement in the executive agency a process

    for maximizing the value and assessing and managing the risk of the information technology acquisi-

    tions of the executive agency‖ and

    ; ―The process shall:

    1. Provide for the selection of information technology investments to be made by the executive

    agency, the management of such investments, and the evaluation of the results of such invest-

    ments;

    2. Be integrated with the processes for making budget, financial, and program management deci-

    sions within the executive agency;

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    3. Include minimum criteria to be applied in considering whether to undertake a particular invest-

    ment in information systems, criteria related to the quantitatively expressed projected net risk-

    adjusted return on investment and specific quantitative and qualitative criteria for comparing and

    prioritizing alternative information systems investment projects;

    4. Provide for identifying information systems investments that would result in shared benefits or

    costs for other Federal agencies of State or local governments;

    5. Require identification of quantifiable measurements for determining the net benefits and risks of a

    proposal investment; and

    6. Provide the means for senior management to obtain timely information regarding the progress of

    an investment, including a system of milestones for measuring progress, on an independently ve-

    rifiable basis, in terms of cost, capability of the system to meet specified requirements, timeliness,

    and quality.‖

    Beyond the legislative background, there is extensive guidance from the Federal Chief Information Officer (CIO) Council, the Office of Management and Budget (OMB), the General Accounting Office (GAO), and others in the area of IT investment management. A list of investment management reference guides and memos is identified in Appendix S. The policy and processes described in this Guide are consistent with this guidance.

1.3 POINTS OF CONTACT

    The CPIC process is primarily supported and maintained by the USDA Office of the Chief Information Of-ficer (OCIO). For further information about this Guide or the CPIC process, please see the USDA CPIC Web site at http://www.ocio.usda.gov/irm/cap_plan/index.html or contact the OCIO CPIC staff via e-mail

    at ocio-cpic@usda.gov. Additional USDA mission area points of contact can be found in Chapter 7.

1.4 SCOPE

    All IT projects within USDA must comply with this CPIC guidance. Exemptions to this guidance are granted only in exceptional circumstances. However, not all IT projects must be reviewed by the E-Board. Only those IT projects that are considered to be ―major‖ and strategic investments for the Department are required to be included in the E-Board executive portfolio. It is expected that each individual USDA agen-cy will have a similar CPIC process, manage its own portfolio, and create associated thresholds. At a min-imum, each agency is expected to use the CPIC process to manage its ―significant‖ investments.

The thresholds for a project to be considered ―major‖ are described in the following section.

1.5 THRESHOLDS FOR MAJOR IT INVESTMENTS

    2Major IT systems meet at least one of the following criteria:

; Total lifecycle costs greater than $50 million

    ; Significant multiple-agency impact

    ; Mandated by legislation or executive order, or identified by the Secretary as critical ; Require a common infrastructure investment

    ; Department strategic or mandatory-use system

     2 The term "major information system" means an information system that requires special management attention because of its importance to an agency mission (mission critical); its high development, operating, or maintenance costs; or its significant role in the administration of agency programs, finances, property, or other resources. All mission critical systems are, therefore, major systems.

April 2004 6 USDA CPIC Guide to Information Technology

    ; Significantly differs from or impacts on the Department infrastructure, architecture, or standards

    guidelines

    ; Financial Systems with lifecycle costs greater than $500,000

    ; Directly tied to the top two layers of the Federal Enterprise Architecture.

    These investments are considered to be strategic for the Department and, thus, have a greater documen-tation burden, including being individually reported to OMB on an Exhibit 300. They are also included in the E-Board executive portfolio.

    Investments that do not meet the above criteria are to be managed by the capital planning functions with-in each individual agency. As such, each managing agency is to have:

; A process for proposing, reviewing, and monitoring its IT investments;

    ; A investment review board responsible for making final investment decisions and overseeing the IT

    investment management process;

    ; Relevant tools for supporting its IT investment management process; and

    ; Supporting documentation showing the ongoing operations of the process.

1.6 ROLES AND RESPONSIBILITIES

    The following decision-making bodies and personnel have been assigned the responsibilities listed below.

    ; Key Decision-Making BodiesThe governing and approval bodies responsible for ensuring that

    proposed investments meet USDA strategic, business, and technical objectives. ; E-BoardResponsible for reviewing and approving strategic investments at USDA. It is staffed by

    the sub cabinet members and is chaired by the Deputy Secretary and vice-chaired by the CIO. (See

    Appendix ABoard Procedures for the E-Board Charter).

    ; OCIOResponsible for setting IT policy, reviewing investments, assessing how potential and existing

    major investments meet capital planning criteria and making recommendations to the E-Board. ; Key Agency PersonnelThe agency personnel responsible for investment management and suc-

    cessful completion of the CPIC:

    ; Agency HeadResponsible for signing CPIC documentation before submission to OCIO.

    ; Agency SponsorResponsible for providing executive sponsorship of the investment; should be a

    senior level executive within the applicable mission area or agency.

    ; Project Sponsor/Functional ManagerResponsible for the strategic business processes under

    development or enhancement and for ensuring their integrity; also serves as the primary user inter-

    face to the OCIO and the E-Board.

    ; Project ManagerResponsible for successful management and completion of one or more IT in-

    vestments.

    ; IT ManagerResponsible for serving as the primary point of contact for technology issues. ; Contracting SpecialistResponsible for serving as the primary acquisition support for the invest-

    ment and interface between the investment and the Office of Procurement and Property Management

    (OPPM).

    ; Capital Planning AnalystResponsible for serving as the primary interface for capital planning be-

    tween the investment and OCIO.

April 2004 7 USDA CPIC Guide to Information Technology

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