Earned Value Management blog by Humphreys & Associates

Including Level of Effort (LOE) in the Integrated Master Schedule (IMS)

by Humphreys & Associates on November 1, 2024

A recent H&A blog titled “Level of Effort (LOE) Best Practice Tips” discussed different approaches for handling LOE to avoid generating false variances. That discussion did not elaborate on including the LOE tasks in the integrated master schedule (IMS). This blog is a follow on to that earlier discussion with a focus on options for including LOE in the IMS along with notes on best practices, tips, and customer expectations.

In the general sense of an earned value management system (EVMS), the LOE scope of work is contained in summary level planning packages (SLPPs) or control accounts as subordinate planning packages or work packages. The budget values for those elements will most likely come from a resource loaded IMS or a resource loading mechanism aligned with the IMS. Not all organizations resource load the IMS activities but instead extract time buckets from the IMS for resource loading using other mechanisms. Resource loading the IMS activities is the recommended practice because it assures cost/schedule integration, but it can be difficult.

LOE work might not appear in the IMS since it is considered optional by some customers such as the Department of Defense (DoD). The Department of Energy (DOE) requires LOE tasks to be included so you can expect it to be in the IMS when DOE is the customer.

Before we talk about LOE in the IMS we must think about the type of work the LOE tasks represent. LOE might be a general task such as “Control Account Management” that is not directly related to other work except perhaps in the time frame in which they happen. But some LOE tasks such as support tasks are related to other discrete work. Modeling the LOE in the IMS starts by understanding what type of effort is involved and can help to determine the approach for linking activities.

LOE Best Practice Tips Related to the IMS

The Level of Effort (LOE) Best Practice Tips blog included these points related to the IMS:

“When LOE activities are included in the schedule, they should not drive the date calculations of discrete activities in the integrated master schedule (IMS). They should also not appear on the critical path.”
“LOE must be segregated from discrete work effort. In practice, this means a work package can only be assigned a single earned value method.”
“Consider shorter durations for the LOE when that LOE is supporting discrete effort. Should the first occurrence of the LOE trigger a data anomaly test metric, it can be proactively handled along with any future replanning. The remaining LOE would already be in one or more separate work packages so there won’t be any criticism for changing open work packages.”

Government Agency and Industry Guidance on LOE on the IMS

Is there any guidance that can help clarify how best to handle LOE tasks in the IMS? Let’s take a look at three of the guidance documents that may be useful for your environment.

The Integrated Program Management Data and Analysis Report (IPMDAR) Data Item Description (DID), DI-MGMT-81861C (August 2021). This DID is typically placed on contracts with the DoD or NASA that exceed the contract value threshold for EVM reporting or EVMS compliance. Relevant mentions of the data requirements for the IMS in the DID are as follows.

“2.4.1.1 Content. The Schedule consists of horizontally and vertically integrated discrete tasks/activities, consistent with all authorized work, and relationships necessary for successful contract completion.”

Note: This is where the option to exclude LOE from the IMS appears since this requires only discrete tasks/activities. The following sections provide additional guidance when LOE is included in the IMS.

“2.4.2.7 Level of Effort (LOE) Identification. If tasks/activities within an LOE work package are included in the Schedule, clearly identify them.”

“2.4.2.9 Earned Value Technique (EVT). Identify the EVT (e.g., apportioned effort, level of effort, milestone).”

National Defense Industrial Association (NDIA) Integrated Program Management Division (IPMD) Planning and Scheduling Excellence Guide (PASEG) (Version 5.0). The PASEG is a widely recognized industry guide on scheduling best practices in government contracting environments. Section 5.8, Level of Effort (LOE) provides a discussion on the topic including things to promote and things to avoid. Excerpts from the PAGEG follow.

“There are pros and cons around including or excluding LOE tasks in the IMS. Including LOE tasks in the IMS allows for a more inclusive total program look at resource distribution, which aids in the maintenance and analysis of program resource distribution. However, if modeled incorrectly, including LOE tasking in the IMS can cause inaccurate total float and critical path calculations.”

“Tasks planned as LOE in the IMS should be easily and accurately identifiable. This includes populating the appropriate Earned Value Technique field (as applicable) and possibly even identifying the task as LOE in the task description.”

“Consider adding an LOE Completion Milestone to tie all LOE tasking to the end of the program.”

“LOE tasks should not be networked so that they impact discrete tasks. Incorrect logic application on LOE can lead to invalid impacts to the program critical path.”

“Level of Effort tasks should have no discrete successors and should therefore never appear on critical/driving paths.”

DOE Guide 413.3-24 Planning and Scheduling (April 2022). This document provides guidance for acceptable practices in a DOE contractual environment. The discussion on LOE can be found in Section 7 Planning and Scheduling Special Topics, 7.2 Level of Effort, and 7.3 Inclusion of Level of Effort in the Integrated Master Schedule. Excerpts and image from the Guide follow.

“Overview: Activity-based methods either cannot, or impracticably can measure the performance of LOE WPs and activities. Include all activities, both discrete and LOE, in the IMS.”

“LOE is planned in the IMS so that it does not impact discrete work. Figure 6 shows the recommended linkages in the IMS for planning level of effort.”

Interpreting this DOE Guide diagram for the recommended modeling of LOE in the IMS, notice the inclusion of a “LOE Complete” milestone following the Critical Decision (CD) 4 milestone with no constraint. CD4 in this diagram represents the end of contract effort. The purpose of this LOE-complete milestone, with no constraint, is to provide a successor for all LOE tasks where one is needed. That will prevent generating issues where tasks have no successors.

This recommended modeling is done so that the LOE tasks are not linked to the end of the contract work and thus will not push it. The LOE tasks will also not appear on the critical path since they are not in the path that established the end date.

Also note that the LOE tasks in green are linked as successors to discrete work which is a logic linking approach intended to keep the LOE work aligned with the discrete work but off the critical path. Study the logic and you see that a movement to the right of a discrete task will drag along its related LOE task.

DOE requires the use of Primavera schedule tools so the relationships shown here can be accomplished in that tool. That may not be true of all tools. Know how your tools work before you generate any guidance.

Additional Relevant Guidance Search

H&A earned value consultants recently conducted a survey of the various government and non-government documents regarding the IMS and collected relevant guidance related to LOE among other things. The table below lists the results from a search for “LOE” wording. Note: this is a representative sample of typical government agency and industry IMS references. You should verify current references before you generate your own internal IMS guidance.

Source Document	Guidance for Capturing all Activities, LOE in IMS
DCMA EVMS Compliance Metrics (DECM) Checks (version 6.0)	06A210a: Do LOE tasks/activities have discrete successors? (0% threshold) 12A101a: Are the contractor’s Level of Effort (LOE) WPs supportive in nature and/or do not produce technical content leading to an end item or product? (≤ 15% threshold) 12A301a: Does the time-phasing of LOE WP budgets properly reflect when the work will be accomplished? (≤ 10% threshold)
IPMDAR DID DI-MGMT 81816C	If tasks/activities within an LOE work package are included in the Schedule, clearly identify them.
DOE Guide 413.3-24 Planning and Scheduling, Appendix A Schedule Assessment Principles	Principle 20. No LOE on critical path.
GAO Schedule Assessment Guide: Best Practices for Project Schedules (December 2015)	Selected excerpts: LOE activities should be clearly marked in the schedule and should never appear on a critical path. LOE activities … derive their durations from other discrete work. Best Practices for confirming the critical path is valid: Does not include LOE activities, summary activities, or other unusually long activities, except for future planning packages.
NDIA IPMD PASEG (version 5.0) (as noted above)	Tasks planned as LOE in the IMS should be easily and accurately identifiable. LOE tasks should not be networked so that they impact discrete tasks. Level of effort tasks should have no discrete successors and should therefore never appear on critical/driving paths.
PMI Practice Standard for Scheduling (Second Edition)	Since an LOE activity is not itself a work item directly associated with accomplishing the final project product, service, or results, but rather one that supports such work, its duration is based on the duration of the discrete work activities that it is supporting.

Conclusion

Based on the various sources of guidance, it is possible to structure the IMS to include LOE in a way that provides cost/schedule integration and keeps all work correctly aligned yet does not cause issues with the critical path and the driving paths. From this guidance, it should be a straightforward effort to generate your own internal scheduling procedure defining how to handle LOE in the IMS if you choose to include it or if you are required to include it.

Need help producing a clear and concise scheduling procedure or tool specific work instructions? H&A earned value consultants and scheduling subject matter experts have worked with numerous clients to create easy to follow guides that help to ensure schedulers are following your company’s best practices using the scheduling tools of choice. Call us today at (714) 685-1730 to get started.

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Improving Integrated Master Schedule (IMS) Task Duration Estimates

by Humphreys & Associates on October 1, 2024

One of the top reasons projects fail is because of poor task duration estimating for an integrated master schedule (IMS). Without accurate and consistent estimates, project outcomes can become unpredictable, leading to missed deadlines, budget overruns, and overall project failure. A realistic schedule is required to place the necessary resources in the correct timeframe to adequately budget the work as well as to produce credible estimates to complete and to forecast completion dates. While missed deadlines and budget overruns are detrimental for any project, there can be additional business ramifications when producing schedules in an Earned Value Management System (EVMS) contractual environment.

While there are effective methods available to improve task duration estimates, they are often underutilized. A common reason for this oversight is the lack of time allocated to developing the project schedule and determining task durations.

During the proposal phase, initial durations are typically estimated at a more summary level than the detailed execution phase. The proposed work is often defined at a level one to two steps higher than where the actual tasks will be performed. After project initiation, the team’s initial effort is to break the work down into more manageable tasks. This decomposition is crucial for achieving more accurate estimates. It’s no surprise, then, that the initial breakdown efforts often result in duration estimates that don’t align with the proposed durations.

Parkinson’s Law tells us that work expands to fill the time available. If task durations are excessively long, costs will inevitably rise. To counter this, it’s important to require estimators to provide both the estimated effort and the duration needed to accomplish the task. This approach helps to gain a better understanding of the scope of the task and to avoid unrealistic estimates. If you see a task that requires 10,000 hours with a duration of 2 weeks, then you immediately would suspect something is wrong with the estimates.

Techniques for Developing More Accurate Task Duration Estimates

What are your options? H&A earned value consultants and senior master schedulers often employ the following techniques to help a client produce a more realistic IMS.

Establish a Probability Goal. It is essential to set clear expectations for the estimating team. Without guidance, teams may default to estimates with a 50/50 probability of success, which is a recipe for failure. Instead, directing the team to aim for estimates within a 75% to 80% probability range can lead to better outcomes.
Break Down Tasks. Decompose tasks into smaller, more manageable components. The further out the task’s horizon, the greater the variability in estimates. For example, asking someone to estimate the drive time from Washington, DC, to Boston without specifying the vehicle, route, limitations, or conditions introduces unnecessary uncertainty.
Use Professional Judgment. Engage someone with experience in the specific type of work required for the task. A seasoned expert will provide more accurate duration estimates based on their knowledge and experience. Often, we ask the potential task manager to do the estimate, but that person may not be the one with the most related experience or knowledge about the work.
Leverage Historical Data. If the task or a similar one has been done before, use that historical data to inform the estimate. This approach provides a realistic benchmark for future estimates.
Use generative AI. If you have access to an AI capability along with access to historical data, that could be an option to leverage the source data using specific prompts to glean relevant information. As with all AI tools, always verify the generated results to ensure it is a useful basis to substantiate the estimate.
Apply Parametric Estimating. When possible, use parametric analysis to estimate the durations. For example, if it took a specific number of days to clean up a certain amount of toxic waste under similar conditions, this data can be used to estimate the duration of a new but comparable task.
Engage Multiple Estimators. Gathering estimates from more than one person helps to reduce individual biases and provides a more rounded estimate.
Apply the Delphi Method. This technique involves three knowledgeable individuals providing estimates or three-point estimates. The initial estimates are analyzed, and the results are shared with the estimators without attributing specific values to any individual. After discussing the findings, the estimators revise their estimates based on the collective insights, leading to a more refined and accurate duration estimate.
Use Three-Point Estimates. Ask estimators to provide best-case (BC), most likely (ML), and worst-case (WC) durations, along with their reasoning. Applying a formula like the Program Evaluation and Review Technique (PERT) duration formula (1BC+4ML+1WC)/6 can yield an adjusted and realistic estimate. You can vary the best and worst case estimate for risk if you have information on that.

To see how this simple approach can work, walk through this exercise. Ask yourself how long it takes you to drive to work most of the time. Let’s say the answer is 45 minutes. Then ask yourself how long it would take on a Sunday morning in the summer when the roads were dry (the best case). Let’s say your answer is 25 minutes. Then ask yourself how long it would take on a Monday morning in the winter during a moderate snow event (the worst case). You tell yourself 90 minutes. Now you have enough information to calculate the PERT duration.

Best Case = 25 minutes
Most likely = 45 minutes
Worst Case = 90 minutes
PERT Duration = (25 + 180 + 90)/6 = 49 minutes

Finally, let’s say you ask yourself how likely it is that you end up on the high side instead of the low side. If your answer is it is much more likely to encounter conditions that slow you down, you would modify the formula to use one and a half times the worst case (25 + 180 + 135)/6 = 57 minutes. That longer duration shows the impact of your impromptu risk analysis and provides a duration that has a much higher probability of being achievable.

Now think about the same scenario but conducted by you interviewing three people who drive the same route to work. That would approximate the Delphi method.

All or something less. It may not be necessary to analyze every task to the degree suggested. Even if you could do the analysis along the top several critical paths that would be an improvement. If you were to apply numerical factors to the tasks in related portions of the project that would be impactful. For example, all mechanical design tasks or all software development tasks.

What is the best approach?

You will need to analyze your project and determine which approach or approaches would yield useful information at a reasonable cost. If you apply your own thinking on how to improve your duration estimates, you will undoubtedly find a method most suitable for your situation. Depending on a project’s complexity and risk factors, you may also find it useful to take a more formal approach. Conducting a schedule risk assessment (SRA), a probabilistic assessment of a project’s outcome, can help you gain a better understanding of where the duration risk exists in the schedule.

H&A earned value consultants and scheduling subject matter experts often assist clients to establish basic guidance to help scheduling personnel to get into the habit of adequately defining tasks and using techniques to improve duration estimates. This is critical to be able to produce well-constructed and executable schedules to improve the likelihood of achieving project technical, schedule, and cost objectives.

H&A offers a range of project scheduling training workshops that can help schedulers to implement industry best practices. These workshops also cover how to take the next step to implement advanced scheduling techniques such as schedule risk assessments to ensure the schedule is realistic and achievable. H&A earned value consultants and master schedulers often provide one-on-one mentoring using the scheduling tool of choice to help scheduling personnel work through the learning curve of using advanced network scheduling techniques to produce executable schedules.

Call us today at (714) 685-1730 to get started.

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