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Summary Level Planning Packages (SLPPs) Misnomer and Alias

By Humphreys & Associates / May 1, 2018 / EVM Consultant, EVMIG, Summary Level Planning Packages (SLPPs)

Origins

One of the confusing terms in the world of Earned Value terminology is “Summary Level Planning Packages” or SLPPs. The term first appeared in Section 1 of the Earned Value Management Implementation Guide (EVMIG), published in 1996 which read:

Summary Level Planning Packages (SLPP) – “When it is clearly impractical to plan authorized work in control accounts, budget and work should be identified to higher WBS or organizational levels for subdivision into CAs at the earliest opportunity.” At this time, EIA-748 was still in draft form.

When 748-1998 was released, the SLPP reference was included with a slight modification to its use being limited to; “work scope for business reasons, is not yet allocated to responsible control accounts”.

With that being said, the term was never specifically included in the EVMS Guidelines (neither the original 35 criteria nor the initial 32 EIA Standard Guidelines)! The concept itself was again put forth in 748-B where the title changed to “Higher Level Account”, but the SLPP was still not referenced. With 748-C, the same phrasing is found. Throughout this time, Guideline 8 has not changed, where it continues to say (underlines added):

“Budget for far-term efforts may be held in higher-level accounts until an appropriate time for allocation at the Control Account level.”

Higher Level Accounts

The term was “Higher Level Accounts” (HLA if you prefer an acronym), and that is the only mention in any of the Guidelines themselves. In their 25 June 2015 Cross Reference Checklist, however, the DCMA felt the need to clarify the term in several spots:

8.a.(2) Higher level WBS element budgets (where budgets are not yet broken down into control account budgets) also known as a Summary Level Planning Package?

b. Does the Contractor’s system description or procedures require that the sum of control accounts, Summary Level Planning Package (SLPP) budgets, Undistributed Budget(UB), and Management Reserve(MR) reconcile and trace to the CBB or Negotiated Contract Cost (NCC) plus the estimated cost of AUW) for any recognized OTB?
b. Are ETCs developed at the work package, planning package, and Summary Level Planning Package (SLPP) levels, or where resources are identified if lower than the work package level?
j. Are VACs calculated and analyzed with corrective actions at the control account (at a minimum) and Summary Level Planning Package (SLPP) levels?

Created to Help

The term “Higher Level Accounts (HLA)” was created to help contractors comply with the government requirement to distribute budgets from Undistributed Budget (UB) within two full accounting periods after definitization of the contract value. Many contractors on large, long term contracts were struggling with distributing work and budget for far-term effort about which they were not yet sure where or by whom the work would be performed.

The government allowance to create Higher Level Accounts enabled the contractors to “distribute” the scope and budget to an account – as though it were a Control Account – where someone would “tend it” until the contractor could better define where and by whom the work would be performed. While in the HLA status, the assigned higher-level manager (the PM or a functional manager designee) would be responsible to ensure the time phasing of the high-level budget was current and that the EAC for the work in the HLA was up to date (rates and time phasing ). Once the contractor determined the appropriate Control Account Manager responsible for getting the work performed, the scope, schedule, and budget in the HLA would be transferred (distributed) from the Higher Level Account to the Control Account.

Misnomer

As stated earlier, the origin of the term “Summary Level Planning Package – SLPP” is not really known, and it is really a misnomer:

It is not a Summary Level (i.e., other Control Accounts do not summarize into it).
It is really not a Planning Package (the responsible Higher Level Manager does not perform any planning for the work in the HLA – it is just a holding point until it can be distributed to, and planned by, the ultimate CAM).

This last point is where some people become confused. Being called a “Planning Package,” some people think the SLPP is part of a Control Account that is at a higher level within the Control Account than a Planning Package. That is another distinction between an SLPP (HLA) and a Planning Package – an SLPP can NEVER be directly detail planned into Work Packages. The budget in an SLPP must be transferred to a Control Account for that CAM to detail plan the work as necessary over the period of performance of the Control Account.

To be fair to the CAM receiving the HLA/ SLPP scope, schedule, and budget, the project should also have a “Rolling Wave Planning” approach for the HLA/SLPP, one that is at least 30 days in advance of the normal CAM Rolling Wave Planning process. This would give the CAM time to incorporate the work and budget time phasing into the Control Account (generally in one or more Planning Packages within the Control Account) in order to then be prepared for any necessary detail planning into Work Packages as part of the normal Rolling Wave Planning process.

Final Thought

Some people do not even consider Higher Level Account to be an appropriate description since the HLA/ SLPP is essentially at the same level as the Control Account. The “Higher Level” aspect means it is assigned to a higher level manager than a Control Account Manager (CAM) for that manager to “tend to” the scope, schedule, and budget until it is distributed to a CAM.

So even though HLA is what it is, SLPP is what it has become.

Higher Level Accounts or Summary Level Planning Packages can be confusing and often an area where projects need some help. A Humphreys & Associates EVM Consultant can provide the guidance you need for your unique production or development project. Please contact us for more information.

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Program Manager / Project Manager Use of Management Reserve

By Humphreys & Associates / April 3, 2018 / Earned Value Management System Description (EVMSD), EVM Consultant, Management Reserve, Management Reserve (MR), Management Reserve Log (MRL), Performance Measurement Baseline (PMB), Program Manager, Project Manager

Earned Value Management System Description (EVMSD), EVM Consultant, Management Reserve, Management Reserve (MR), Management Reserve Log (MRL), Performance Measurement Baseline (PMB), Program Manager, Project Manager

What is Management Reserve?

Management Reserve (MR) is developed and managed by the Program Manager / Project Manager. This discussion will provide guidance for establishing and using Management Reserve to effectively manage a project.

H&A description– The standard definition of management reserve is an amount of contract budget set aside for management control purposes (known unknowns) rather than designated for the accomplishment of one or more tasks. It is not part of the performance measurement baseline (PMB) but is included in the contract budget base.

DOE guidance – The ability to establish MR allows project management to react to unforeseen in‐scope situations that arise during the life of a project. It is budget for handling project risk and in‐scope unanticipated events. Management Reserve is not a source of funding for additional work scope or for the elimination of performance variances. It is an amount of the project budget set aside for management control purposes by the contractor. Management Reserve is the contractor’s budget and provides the project manager with a budget for unplanned activities within the current project scope. Because MR is budget that is not yet associated to work scope, it is not part of the PMB.

The Earned Value Management System Description (EVMSD)

The contractor must include a clear definition of MR in the EVM SD. For clarity and consistency, the EVM SD must describe the process and list allowable conditions under which it may be approved and allocated to the control accounts managers. Management Reserve cannot be used to offset accumulated overruns or under runs. Authorized uses of it include:

Previously unrecognized tasks or realized risks consistent with the general scope of work of the contract.
Change in execution strategy (e.g., make/buy decisions).
Unexpected future internal scope growth within the currently authorized scope of the project.
Direct and indirect rate changes and currency fluctuations.
Risk and opportunity handling (not for cost or schedule variance based risks).
Work that needs to be repeated (not the result of inaccurately reported progress).
Changes to the future budget of work not yet started (e.g., subcontractor activities that are negotiated post project award).

Baseline Planning

The first step in the process the PM must accomplish is establishing the Management Reserve at the initiation of the Performance Measurement Baseline development. The project manager has authority and control of the development and use of the MR budget.

The process steps are:

Reconciling the proposal estimates with the contract award.
The project manager will establish an MR budget based on examination of the contractual scope of work. Factors affecting the MR budget establishment are high technical risk areas, complex schedule problems, or an anticipated shortage in a critical resource area such as labor, material, or support services.
Once anticipated problem areas are isolated, Negotiations between the Project Manager and the Control Account Managerscan begin to determine the Control Account Budgets. This is an iterative process during which the PM will negotiate with the CAMs:
- The budget amount to be withheld from each Control Account(based on the results from step 2 above).
  Evaluating the scope of work, risk associated with the scope of work, maturity of the concepts/ designs/ manufacturing included in the scope of work and the CAMs past performance on similar projects.
- The PM can target a specific percent of the awarded budget based on the complexity, risk and duration of the contract and the scope in each control account
The PM will negotiate and issue budgets to the CAMs and the balance remaining from the authorized budgets and the Contract Budget Base establishes the Management Reserve. Typically, this amount should be 10-15 % of the CBB value.

The next step for the PM is to track the MR budget. This is done by creating a Management Reserve Log. This can be a separate log or part of the Contract Budget Base log.

Record the original amount of MR after the control account budgets have been authorized to the CAMs.
Record changes to MR as additional budgets are authorized to increase or decrease control account values. (Management reserve is decreased to provide budget for unplanned tasks within the contract scope of work or increased whenever work is decreased along with the allocated budget.)
Use the logs to report MR activity in the monthly reports to the customer.

Project Execution

During the actual execution of the project the PM may experience various scenarios that will require the use of Management Reserve. The process to identify, evaluate and authorize MR transactions should include the following steps:

Either the CAMs or the PM can identify new tasks or realized risks to be performed or deleted in the Control Account efforts.
The affected areas in the control accounts will be identified and the impacts quantified (resources/ time …..) for the scope being modified. Tasks identified to be outside of the Control Account scope (but within the overall Project Contract scope) will be authorized and budgeted from the Management Reserve. Reductions to the Control Account scope will be authorized and the appropriate budget and scope returned to the Undistributed Budget, where the SOW is deleted and the associated budget credited to the Management Reserve.
Management Reserve transactions cannot be made without identified scope being added/reduced from the Control Account and the associated budget recorded in the MR Log and updated Work Authorization documentation issued to the Control Account Managers.
Changes in the MR log will be identified and described in the monthly customer reports. If the transaction was for an identified Risk, the Risk Registerwill also be updated and reported to the customer.
Use the Change Control process to document the rationale for all baseline budget and schedule revisions.

Acceptable Uses of Management Reserve (Examples)

Authorize additional budget/ scope for previously unrecognized tasks and identified risks that are consistent within the scope of work of the contract.
Authorize changes in execution strategy such as a make/buy modification.
May be used to offset changes in direct/ indirect rates and currency fluctuations.
May be used for Risk/ Opportunity handling (does not include Cost or Schedule Variance based risks).
May be used for work that needs to be repeated.
May be used to adjust budgets for final negotiations with subcontractors.

Unacceptable Uses of Management Reserve

Cannot be used to cover overruns.
No changes to open Work Packages without customer approval.
MR cannot be a negative value.

Project Manager Authority/ Responsibility

Management Reserve belongs to the Project Manager.
The PM is responsible for controlling MR transactions.
The PM may or may not allocate MR based on the assessment of the CAMs requests and availability of MR balance.
The PM is responsible to ensure that all MR transactions are documented, reported, and traceable.

Summary

Management Reserve is a critical part of the PM’s toolkit. It allows the PM some flexibility in planning for Risks and Opportunities, and for required changes that are in scope to the contract but were not identified in the original baseline planning. The company’s EVM SD is the primary guide the PM should use in determining which MR requests are allowable and those that are not valid.

Some Data contained in this paper came from Humphreys & Associates and from DOE EVMS websites.

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EVM Consulting – Modeling & Simulation

By Humphreys & Associates / March 13, 2018 / deterministic model, Earned Value Consulting, EVM, EVM Consulting, EVMS, EVMS Modeling, EVMS Simulation, IMS, Integrated Master Schedule (IMS), Mesure Analyze Act

deterministic model, Earned Value Consulting, EVM, EVM Consulting, EVMS, EVMS Modeling, EVMS Simulation, IMS, Integrated Master Schedule (IMS), Mesure Analyze Act

Forewarned is Forearmed

Forewarned is forearmed. John Farmer, of New Hampshire, said that in a letter in 1685. But that advice is most likely biblical and very much older. No matter the source of the thought, we should take it as divine guidance if we are project managers. Maybe we should have it cut into a stone tablet, so we can share it with our team members.

Most of our work as project managers is spent in the “controlling” phase which is made up of the three steps “measure, analyze, act.” Our EVMS and IMS exist to be able to support this management function. The measuring part is done very well in our EVMS and our IMS; we know where we are and how we got there. The analyzing is equally well handled in the IMS and EVMS. Only the management task of acting is not well supported. Generally, we lack decision making support and tools.

Deterministic Path

No matter how well constructed and how healthy our IMS is, it has a deterministic path forward. The logic links between the activities are there because we expect them to be fulfilled. Indeed, if activity “B” is a finish-to-start successor to activity “A” we fully expect that at some point activity “A” will finish and will provide its output to activity “B”. That is a single path forward and it is a deterministic path. It is also a somewhat simplistic model.

Multiple Outcomes

Our management system asks us to perform root cause analysis followed by corrective action. But what if there is more than one corrective action to be taken. And worse; what if the corrective actions can have multiple outcomes with each enjoying its own probability. That means multiple choices and multiple outcomes. How would we show that in our plan? How would we analyze the multiple possible futures that such a situation presents?

Happily, there are ways to model a future without a set path. And once we have the future model, there are also ways to simulate the outcomes to give the probabilities we need to decide which actions to take. We are talking about probabilistic branching, and we are saying that we can build a probabilistic map of the future to use in making decisions; especially making decisions on corrective actions.

Take a simple example of running a test on the project. The expectation is that eventually we will pass the test. We will keep trying until we do. In the IMS deterministic model the test portion of the IMS might look like this:

Simulation

We can simulate this situation with different expected durations for the test. That is helpful information, but it does not explain or even capture what is going on in those different durations. It looks like we are just taking longer to do the testing but is that really what is happening? What is going on here? We certainly don’t show that.

In the real world, this simple model might have three potential outcomes. There might be three paths we can take to get to the point where we use the product. Each path has a time and money cost. We might run the test and find that we passed. Or we might have to stop the test for issues on the item or the test setup. We might even fail the test and must correct something about the product to improve our chances of passing a rerun. Eventually we will get to a usable product. But what do we put in our estimate and our plan? What do we tell the resources we need? What do we tell the boss? The customer?

Full Future Model

We now have a much better understanding of the future and can explain the situation. We also can simulate the situation to find out the most likely time and cost outcomes, so we can explain the future without any histrionics or arm waving.
If the issue is important enough we can build out the full future model and simulate it.

No matter how far we pursue the model of the future, having a valid model and being able to stand on solid ground are very valuable to us as project managers.

This is not to say that we should model out complex situations as a routine in the IMS. That would be impossible, or at least prohibitively costly. We are saying that when situations arise, we need to be able to use the IMS to help us make decisions.

This type of probabilistic modeling of the future is particularly useful in defining major decision points in our plan. When we reach a decision point the IMS may have multiple branches as successors but that implies we take every branch and that is not valid. Modeling each branch and its probabilities is valid. In the example below, where the milestone represents a decision point, we have shown three possible paths to take. If each were modeled out into the future with time and cost data, we should have the information we need to choose the path we wish to pursue. Without processes and tools like this, we would be flying blind.

Future Blog Posts

This discussion will be continued in future blogs to develop a better foundational understanding of the process and power of probabilistic modeling in our EVMS.

Good information sets the stage for good decisions. The IMS and the EVMS have sufficient information to help us model the pathways ahead of our critical decisions. We just need to learn to take advantage of what we have available to us.

Find out how an experienced Humphreys & Associates EVM Consultant can help you create a full future model and simulation of your most vital EVMS Systems. Contact Humphreys & Associates at (714) 685-1730 or email us.

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