Earned Value and Negative Float
Quick. What do Bankers, Ship Captains and Program Managers have in common? Answer: They all want to address negative float issues in a timely manner.
While those of us working in program management are not concerned so much with a ship’s ability to stay afloat or financial maneuvers, we should be concerned with earned value and negative float in the schedules. It is an important warning sign that one or more of the Program’s schedule goals cannot be met with the current plan.
As described above, the term ‘negative float’ has different meaning to different people even within the project management community. To be precise, the term refers to a property assigned to each task or milestone in the schedule called Total Float, or Total Slack in Microsoft Project. The values in the property usually represent days and are assigned as a result of a scheduling analysis run. These numbers can be positive, zero or a negative number of days:
- For tasks with positive numbers assigned to the Total Float property, the tasks can be slipped by that number of days before impacting a milestone or the end of the project.
- When the task Total Float value is zero, the task cannot slip at all. Conditions 1 and 2 should be the norm, with all tasks having zero or higher total float values. If the schedule were well constructed, has realistic task durations and includes all discrete scope, the schedule indicates the project has a good plan in place to achieve its goals, albeit contractual or internal.
- When tasks have negative float values, the schedule is sounding an alarm. Tasks with negative float values indicate probable failure to meet one or more completion goals. These goals are represented in the schedule as date constraints assigned to tasks or more preferably, milestones. These date constraints represent necessary delivery deadlines in the schedule and if the current schedule construct is unable to meet those delivery deadlines, negative float is generated on every task that is linked in that potential failure. The more tasks with negative float, and the larger the negative float values on those tasks, the more unrealistic the schedule has become.
If the schedule contains tasks with negative float, the first step is to quantify it. This can be performed in the tool using filters or grouping by float values. Analysis tools, such as Deltek’s FUSE, Steelray or the DCMA’s new Compliance Interpretive Guide (CIG), are used to evaluate contractor delivered data and provide metrical analysis to Auditors prior to a review. The tolerance threshold in the CIG (current nickname ‘Turbo’), as in all schedule analysis tools, is 0 (zero) percent of tasks with negative float.
Once identified, the next step is to determine the cause of the issue(s). Because negative float is generated by a date constraint in the schedule, if the end point can be determined, then the predecessors can be identified that are forcing the slip to the end point. One of the easiest ways to do this is to group the schedule by float and sort by finish date. This is because most of the string of tasks that push a task/milestone with a delivery date constraint share the same float values; look for those groups of tasks with the same negative float values.
The final step is to take action. Planners, CAMs and their managers should meet and collaborate to determine the cause and options available to solve the issues. These meetings should result in a corrective action plan to solve the problem. In general, there are five options available to the program team:
- Change durations – if the negative float leading up to a delivery point were low, perhaps additional resources assigned to those tasks may help reduce the durations of the activities and relieve the negative float issues. It is important to understand that reducing durations just to avoid a bad metric reading for negative float is just putting off the issue until the ultimate surprise is delivered; a delay in delivery, and all the pain associated with that delay (penalties, lost award fees, lost business if consistently late, etc).
- Change relationships – perhaps some tasks may be run in parallel instead of in series. A review of all the logic contributing to the negative float condition should be performed and adjustments should be made only if they make sense.
- Review date constraints in the Integrated Master Schedule (IMS) – for example, if subcontractors could deliver product earlier, that could also help solve the issue. If waiting for customer-provided equipment or information, perhaps the effort can be accelerated to relieve the stress on the schedule.
- Consume Schedule Margin – If there is still negative float leading up to a major contract event or contract completion, and if all of the above options have been exhausted, the PM has the option to use a portion of the Schedule Margin to relieve the negative float pressure leading up to the milestone. If the Schedule Margin were represented by a bar, it means decrementing the forecast duration of the bar. If the Schedule Margin were represented as a milestone, the date constraint on that milestone can be changed to a later point in time, but not later that the contractual delivery date assigned to it.
- Ask for relief – if, after all processes above have been completed and the schedule still has negative float indicating an inability to meet schedule deadlines, it is time to have a discussion with the customer. It is usually better to have these bad news discussions earlier rather than later when there is still time to implement work-around or corrective action plans. The customer has been reading the same schedule and may have helpful suggestions to solve the problems or could potentially provide contractual relief for the delivery dates. As a last resort, the contractor can inform the customer and seek concurrence that an Over Target Schedule (OTS)* should be instituted to relieve the schedule condition and a more realistic schedule developed. This is an option of last resort and should not be taken lightly unless all of the other options have been thoroughly explored. *See our blog: Is it OTB/OTS Time or Just Address the Variances?
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Summary
The definition of a schedule is a time phased plan that defines what work must be done, and when, in order to accomplish the project objectives on time. Earned value and negative float is a condition in the schedule that indicates the project will be unable to meet one or more of its objectives. It should not be ignored, or worse, marginalized with slap-dash tricks to get rid of it such as deleting relationships or reducing durations to zero.
Instead, negative float should be quantified, analyzed and addressed with a corrective action plan which includes steps and follow-up reviews to ensure adequate remediation of the problem. It is a zero tolerance metric with most customers and, if not addressed internally, will most likely be identified by the customer for action.
Contact Humphrey’s & Associates, Inc. with questions or information on how to set up a corrective action plan for earned value and negative float.
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