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Humphreys & Associates Joins Project Management Institute’s Registered Consultant Program

By Humphreys & Associates / January 9, 2015 / EVM, EVMS, pmi, project management, project management institute

EVM, EVMS, pmi, project management, project management institute

Humphreys & Associates Joins Project Management Institute’s Registered Consultant Program

Online Project Management resource helps organizations connect with consulting firms

IRVINE, Jan. 09, 2015 — Humphreys & Associates today announces that it has joined the Project Management Institute’s (PMI) Registered Consultant Program, an online resource that provides organizations with the convenience of accessing a PMI-maintained list of consulting firms that are able to improve their project, program and portfolio management practices.

As more organizations adopt project management as a strategic competency for achieving business results, many are seeking the advice of consultants to enhance their project management capabilities. The PMI Consultant Registry is complimentary to organizations, as is the PMI-developed A Guide on How to Select a Project Management Consultant.

The guide walks organizations through the necessary steps to best identify a consultancy that meets their requirements. Each firm listed in the directory provides one case study per area of expertise that highlights its previous consulting engagements.This feature gives organizations insight into the consultancy’s engagement style and its ability to meet the unique needs of a project.

Humphreys & Associates’ project management consultants have worked with all branches of the U.S. Department of Defense (DoD), the Department of Energy (DOE), NASA, other U.S. government agencies, and with foreign governments. “Our associates and teams have great admiration for the Project Management Institute’s global advocacy, education, collaboration, and project management research. As PMI is such a comprehensive resource for project managers Humphreys & Associates therefore is quite pleased to join PMI’s Consultant Registry,” asserted Gary C. Humphreys, President and CEO, Humphreys & Associates.

Humphreys & Associates joins more than 140 consulting companies in more than 35 countries that participate in the Program.

About Humphreys & Associates

Humphreys & Associates, led by Gary Humphreys, is the established leader in earned value management consulting and training. H&A has provided EVMS consulting services to over 850 companies and government agencies worldwide and we have trained over 900,000 individuals at all EVMS functional and management levels.

About Project Management Institute (PMI)
Project Management Institute is the world’s leading not-for-profit professional membership association for the project, program and portfolio management profession. Founded in 1969, PMI delivers value for more than 2.9 million professionals working in nearly every country in the world through global advocacy, collaboration, education and research. PMI advances careers, improves organizational success and further matures the profession of project management through its globally recognized standards, certifications, resources, tools academic research, publications, professional development courses, and networking opportunities. As part of the PMI family, Human Systems International (HSI) provides organizational assessment and benchmarking services to leading businesses and government, while ProjectManagement.com and ProjectsAtWork.com create online global communities that deliver more resources, better tools, larger networks and broader perspectives. Visit us at www.PMI.org, www.facebook.com/PMInstitute, and on Twitter@PMInstitute.

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Building a Comprehensive EVMS Program Value Transaction Log

By Humphreys & Associates / November 19, 2014 / EVM, EVMS, EVSR, IBR, PVTL

EVM, EVMS, EVSR, IBR, PVTL

EVM Program Managers are subject to change requests and direction in the internal scope, schedule, and budget baselines from a number of sources. Integrated Baseline Reviews (IBRs), Program Reviews with customers, Earned Value Surveillance Reviews (EVSRs), and Control Account Manager (CAM) requests via Baseline Change Requests (BCRs) are some of the ways that can result in changes to the baseline. The Earned Value Management System (EVMS) Guidelines require detailed, accurate, and current reporting of contract budgets, earned value, and actual costs, including incorporation of baseline changes.A Program Value Transaction Log is one way to ensure reports containing budget information that are submitted to both internal and external customers are always reconcilable to contract documentation. It is more than the standard EVMS Contract Budget Base (CBB) Log or a Performance Measurement Baseline (PMB) Log, because while this log incorporates both of those logs, it can also contain more information on two levels; the contract price and the internal distribution of budget.

The Earned Value budget traceability starts with the Negotiated Contract Price, and then reduces for any appropriate fees to derive the Contract Target Cost (CTC). The cost value of any Authorized Unpriced Work (AUW), or the contractor proposed cost of customer authorized scope that has not yet been negotiated, is added to equal the Contract Budget Base (CBB). When the value of the Management Reserve (MR) budget is identified by the Program Manager, that amount is subtracted from the CBB to yield the Performance Measurement Baseline (PMB); Undistributed Budget (UB) is then subtracted from the PMB, with the remainder being budget that will be distributed to Control Accounts (CA) and Summary Level Planning Packages (SLPPs). The graphic below illustrates this process.

An example from a sample excerpt of a Program Value Transaction Log (PVTL) is shown below (first as an EVMS PVTL Excel spreadsheet and then also as an EVMS PVTL screen-shot). It stops at the “Distributed Budget Total $” column, but the shaded columns show that the actual distribution of budget can be very detailed, even down to the overhead costs and the elements of cost, if EVMS program management so desires.

Or, it can be the abbreviated version shown below, or even abbreviated further by beginning with the “Contract Target Cost column”, and going through Column 7, “Total Distributed”.

The utility of the Program Value Transaction Log (PVTL, or any other name) is that one can keep track of contract changes and internal changes. By going to the monthly summaries at the end of each accounting month, the amounts that should be reported in the Integrated Program Management and Data Analysis Report (IPMDAR) database are traceable.

Building a Comprehensive EVMS Program Value Transaction Log Read Post »

EVM: The IPMR and Subcontract Flowdown

By Humphreys & Associates / November 12, 2014 / EVM, EVM Contractor, EVM Contracts, EVM Flowdown, EVM Subcontractors, EVMS Contractors, IPMR

EVM, EVM Contractor, EVM Contracts, EVM Flowdown, EVM Subcontractors, EVMS Contractors, IPMR

EVM Contractors, EVM Subcontractors, IPMR & Flowdown

For decades government EVM project managers performed the task of integration of all prime and subcontractor performance and the associated data on a project. In the late 1960s things changed. The U.S. Federal Government mandated that the prime contractor become the integrator of the performance and the data. Many contractors undertook this responsibility nicely. However, for many contractors in this new role their subcontract management expertise and data accumulation capabilities were lacking on large R&D, SDD, and LRIP subcontract efforts in particular. The primes needed to include all of the data from their subcontractors that comprised as much as 80% of the contract effort. The timing of subcontractor reports became very important. However, software was “what it was” in the 1960s and ‘70s, and many EVM subcontractors were unable to meet the required delivery dates.

In the early 1980s the National Security Industrial Association [now the NDIA] conducted a survey and found that 40% of the subcontractor data was delayed by a month [additional reference, 2008 – NDIA.org source]. Consequently, January data from subcontractors would not be entered into the prime contractor’s performance reports [now IPMR or CPR] until the prime’s February report which may be delivered around 15 March. Today’s software has improved extensively and many EVM subcontractors recognize the importance of timeliness of data; they are also prime contractors on other EVM projects.

Many companies have not yet begun delivering performance data using the new Integrated Program Management Report (IPMR). Companies that are using the IPMR appear to be adapting well to the new requirements, specifically in regards to the submission date and successful retrieval of subcontractor data. The new IPMR Data Item Description, DI-MGMT-81861, specifically requires that “Formats 1-6 shall be submitted to the procuring activity no later than 12 working days following the contractor’s accounting period cutoff date. This requirement may be tailored through contract negotiations to allow submission as late as 17 working days, provided the contractor and Government agree that contract complexity and/or integration of subcontractor and vendor performance data warrant additional time and will yield more accurate performance.”

The table below illustrates the results of a survey H&A conducted of fifteen major contractors. While the sample size is small, the survey found that five prime contractors had an IPMR requirement flowdown to a subcontractor with NTE 12 working days submission CDRL requirement. In all five cases, the prime contractors were able to successfully incorporate subcontract data in time to meet the submission requirement.

While it has taken over 40 years, it is now recognized by both the government and contractors that timely incorporation of subcontractor performance data in the prime’s performance report helps validate the project data–the purpose of early visibility and prompt decision making.

Our survey found that those contractors submitting the IPMR are successfully incorporating subcontractors’ performance data in their IPMRs as the DID Instructions stipulate. It is hoped that the era of the “one-month lag” with subcontractor performance data has ended; and the government will be receiving accurate, timely IPMR performance data from its prime contractors.

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Using the Same Rate for BCWS and BCWP

By Humphreys & Associates / November 6, 2014 / ANSI, BAC, BCWP, BCWS, EVM, EVMS, NDIA

ANSI, BAC, BCWP, BCWS, EVM, EVMS, NDIA

There is often an EVMS project managers debate regarding which rates to use for common budget costing EVMS data elements. For Actual Cost of Work Performed (ACWP), it is fairly obvious as the most recently approved actual rates are applied. A planning rate is generally used for BCWS and BCWP, but many in the EVM project management industry use incorrect rate application for the BCWP calculation. In some cases EVM contractors use a weighted average rate; the percent complete in hours multiplied by the dollarized BAC to derive the BCWP in dollars. This method is noncompliant with the EIA-748 Guideline 22 which states that if work is planned on a measured basis, then the BCWP must be calculated on a measured basis using the same rates and values. In other words, the rate and methods used to calculate BCWS and BCWP must be the same. As shown in Example #1, it can be seen that work planned in hours (BCWS) was performed as scheduled (BCWP) each month. Each hour was planned at a rate of $100/hour until the end of the calendar year when the rate increased to $105/hour. In this example, the rates used to calculate BCWS and BCWP are the same.

Example #2 below illustrates a very common scenario. In this example work that was planned in November and December was not completed until the next year. In January, the rate increased from $100 to $105. What should the BCWP in dollars be for both January and February?

For both January and February, the original 10 hours planned was earned at $105/hour equaling $1,050. The work that was planned in November and December, but completed late in January and February, was earned at its planned rate of $100/hour resulting in $1,000 of BCWP. The sum ($1,050 + $1,000) equals the BCWP of $2,050 in each month. See the Example #3 graphic below:

Even though the rate was escalated in the new year, the BCWP that should have been earned in the prior year is calculated using the rate that was originally planned. The same approach would be logical if the work planned at $105 per hour were performed ahead of schedule in let us say, December of the prior year. It would be earned at $105 per hour even though it was performed in a time frame where the planning rate is $100 per hour. In some instances, business systems are programmed to earn as a percent of the entire Budget at Completion (BAC). This could result in an inaccurate BCWP dollar value. As an example, let us assume 10 hours are earned in September. If those 10 hours were 1/8 of the total BAC, then the BCWP dollars associated with this 10 hours would be $102.50 per hour and the contractor would be earning too much for those 10 hours. They must earn at the planned $100 per hour! Thus the rate used for BCWP is the same as for BCWS and is compliant with Guideline 22; one earns in the same manner as they plan to earn.

In summary, EVM concepts require that in order for the work to be complete, cumulative values of BCWS and BCWP must equal the BAC. So, from a common-sense standpoint, if BCWP is earned at a different rate than that used for planning the BCWS, the Control Account (or even the Contract) cannot be closed properly. Examples:

If BCWP earns at a lower rate, the BCWP would be, say, 98% of the BAC when the actual work is done.
Likewise, if BCWP earns at a higher rate, the BCWP would be, say, 105% of the BAC when the actual work is concluded.

Both of these scenarios violate the EVM concepts.

Using the Same Rate for BCWS and BCWP Read Post »

Incorporating Stop Work Orders Part 3 – The Role of the Claims Process

By Humphreys & Associates / October 31, 2014 / EVM, FAR, SWO, SWO Claims Process

EVM, FAR, SWO, SWO Claims Process

Revised December, 2020

Recap of Stop Work Orders (SWOs)

An SWO is a temporary suspension of work enabling the customer to re-evaluate the contracted work.

The customer has a number of reasons to issue a Stop Work Order:

A change in mission requirements eliminating the need for some or all of the contract scope,
A need to complete some or all the work scope within funding limitations.
Advancement in the state-of-the-art that alters the contract requirements.
Production or engineering breakthroughs that change the current contractual approach.
Realignment of programs that changes the emphasis on the current contract.

A Stop Work Order could affect the entire contract or could be focused on a specific deliverable item, component, or function. A key concept of Stop Work Orders is that they are temporary. The Federal Acquisition Regulations (FAR) envision that Stop Work Orders are resolved within 90 days but allow that the timeframe can be different subject to customer and contractor agreement. The resolution of a Stop Work Order could result in a revised work scope approach (technical, schedule, and/or cost) or possibly the cancellation of the contract.

With respect to a Stop Work Order (SWO), a contractor may file a legal Claim and/ or make a Request For Equitable Adjustment (REA) to cover the impacts of the SWO.

While the Claims and REA processes are not typically considered part of Earned Value Management (EVM), they certainly occur simultaneously with EVM actions, and are critical to a contractor’s administration of the contract. Asserting the right to submit a Claim or REA for a Stop Work Order must be timely, and appropriate supporting data must be generated for both actions to ensure the contractor receives fair consideration for the customer’s interruption of contract execution.

A Claim vs. a Request for Equitable Adjustment (REA)

Even though some people often use the terms interchangeably, it is important to know that they are two different actions, and that either or both can be filed as a result of a Stop Work Order (SWO).

What is a Claim?

Per FAR 2.101, a claim is a “written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to the contract.”

When the customer issues a Stop Work Order, this action prevents the contractor from performing activities that fulfill contract requirements (e.g., meeting a delivery milestone, etc.) and may well cause the contractor to incur costs that would not have occurred had the Stop Work Order not been instituted. In Part 2 of this article on SWOs we addressed some of the typical costs that might be cited in a Claim. Those are cited here, along with a couple others:

Termination costs for subcontractors/ vendors
Line shutdown / Startup costs
Retooling costs
Personnel costs (severance pay for lay-off/ rehiring costs)
Inventory/ storage costs
Payment for Deleted Work that was Already Performed – actually a recognized government term called DWAP (if not already paid under the contract)
Interest on any amount that becomes due on a claim

A Claim is the vehicle to provide specific monetary compensation (payment of money) to the contractor for those incurred costs. A Claim is a legal action (i.e., a dispute covered under the Contract Disputes Act) that requires a prompt response from the government (usually 60 days). Unlike a REA, a Claim is a legal action in which the contractor must prove monetary damage caused by the SWO action. There is no proposal to the customer for a Claim, but the contractor must be able to show evidence to substantiate their Claim of a monetary impact.

What is a Request for Equitable Adjustment (REA)?

Per FAR 52.242-15 “The Contracting Officer shall make an equitable adjustment in the delivery schedule or contract price, or both, and the contract shall be modified, in writing, accordingly, if— … (2) The Contractor asserts its right to the adjustment within 30 days after the end of the period of work stoppage; …”

An REA seeks contractual relief for schedule and/ or contract price (and thus budgets) that were impacted by the SWO, for example:

90 or more days of schedule impact while the SWO decision was being made
Budget impacts (i.e., higher costs), including rates changes, caused by the SWO decision period
Increased costs for subcontractor/ vendor work delayed/ canceled because of the SWO
The need to adjust remaining delivery milestones
Contract Administration costs incurred in preparing and submitting the REA (legal and consultant fees, etc.)

The contractor typically has 30 days following the SWO decision to assert its right to submit a REA to the contracting officer. As evidenced in the name, the REA is a “request” to the Government to adjust the schedule and/ or the contract price driven by the SWO action. This “request” is in the form of a proposal to the government identifying those schedule and cost/ price impacts. The word “equitable” (in REA) also means that the adjustment should be fair to both sides, so in theory, an REA is typically a collaborative effort between the contractor and the customer.

Unlike a Claim, however, the government has no deadline to respond to the REA, meaning that the negotiations for an REA could drag on for months (or longer). A contractor may decide at any time to convert the REA to a formal Claim (usually if the government doesn’t respond to the REA or if the negotiations on the REA breakdown). If this conversion is made, the contractor’s Claim may not be allowed to include the “Contract Administration Costs” allowed under the REA (see above list). A Claim, on the other hand cannot be converted to a REA. If a Claim is denied, or the contractor is not satisfied with the government’s decision, the contractor can present its case to a board of contract appeals or to the U.S. Federal Claims Court.

How do SWO-related REAs and Claims Get Started?

When a Stop Work Order is issued, the contractor follows EVM procedures to stop the affected work and move budgets from affected control accounts to Undistributed Budget to await the final SWO decision.

Simultaneously, the contractor should establish budgets and charge numbers to measure progress and collect costs for any work tasks required by the Stop Work Order. These tasks could include responding to customer requests for information related to a revised technical or funding approach as well as preparation of a proposal for the revised contract work scope. These costs would be part of a Request for Equitable Adjustment (REA).
At the same time, the contractor should also establish charge numbers to collect costs for any other expenditures that result specifically from the Stop Work Order, but are not part of the Authorized Unpriced Work described in the Stop Work Order. These “other” expenditures become the basis for a formal Claim. As described in the previous paragraph, good examples of “other” costs would be termination costs, severance pay for furloughed workers caused by the Stop Work Order, and rehiring expenses when the stopped work is restarted.

When are Claims and proposals for REAs submitted and how do they impact EVMS?

REA: Every effort should be made to submit the REA proposal within the 30 days after the work stoppage ends. If this is not possible, at the very least, notify the customer’s contracting officer in writing that your company asserts its right to submit the REA and provide a target date for the REA proposal submission. The intersection of an REA with the EVM System is in the fact that the schedule and cost terms of the contract are being modified. These changes would alter the Performance Measurement Baseline (PMB), the total budget, and the planned end date of the contract.

Claim: A Claim may be submitted by the contractor as soon as they have collected all the unique costs incurred as a result of the SWO action, which can include Claims and/or REAs filed by subcontractors and vendors. Formal filing of the Claim initiates the 60 day deadline for the government to respond. A Claim really has no intersection with EVMS since it is a request by the contractor (not the program) for reimbursement of unique expenditures, paid by the contractor, that were caused by the SWO, and payment for these expenditures will not show up in the contract as ACWP. [It would make no sense to increase a contract’s ACWP with no budget identified for those expenditures – causing the appearance of an “overrun” for work that is not part of the contract.]

Regardless of the approach used, the contractor must segregate and substantiate costs for both the Stop Work Order AUW (for the REA) and “other” costs incurred as a result of the SWO (for the Claim).

The graphic below illustrates the components and timing of the steps in handling a Stop Work Order and a claim submission and asserting the right for an REA.

Incorporating Stop Work Orders Part 3 – The Role of the Claims Process Read Post »

Is it OTB/OTS Time or Just Address the Variances?

By Humphreys & Associates / August 1, 2014 / EVM, EVM Analysis

EVM, EVM Analysis

No project manager and project team ever wants to go through an Over Target Baseline (OTB) or Over Target Schedule (OTS). The idea of formally reprogramming the remaining work and adjusting variances at the lowest level can be daunting and extremely time consuming. As painful as an OTB/OTS is, a project manager must first determine if the reprogramming is necessary. Several factors should be considered before an OTB/OTS is declared and implemented.

NOTE: This paper addresses a Formal reprogramming as including both an OTB and an OTS. If the Contract Performance Report is the CDRL Requirement, an OTS is not a part of a Formal Reprogramming. It is a separate action.

Performance Data

Projected successful execution of the remaining effort is the leading indicator of whether an OTB/OTS is needed. Significant projected cost overruns or the inability to meet scheduled milestones play a major role in determining the need for an OTB/OTS as these indicators can provide a clear determination that the baseline is no longer achievable.

Leading indicators also include significant differences between the Estimate to Complete (ETC) and the Budgeted Cost of Work Remaining (BCWR). This is also demonstrated by major differences between the Cost Performance Index (CPI) and the To Complete Performance Index (TCPI). These differences are evidence that the projected cost performance required to meet the Estimate at Completion is not achievable, and may also indicate that the estimated completion costs do not include all risk considerations. Excessive use of Management Reserve (MR) early in the project could also be an indicator.

Schedule indicators include increased concurrency amongst remaining tasks, high amounts of negative float, and significant slips in the critical path, questionable activity durations and inadequate schedule margin for remaining work scope. Any of these conditions may indicate that an OTB/OTS is necessary.

Quantified Factors

Various significant indicators in both cost and schedule can provide a clear picture that an OTB/OTS is warranted. The term “significant” can be seen as extremely subjective and vary from project to project. For further evidence, other more quantified indicators can be used to supplement what has already been discussed.

Industry guidelines (such as the Over Target Baseline and Over Target Schedule Guide by the Performance Assessments and Root Cause Analyses (PARCA) Office) suggest the contract should be more than 20% complete before considering an OTB/OTS. However, the same guidance also recommends against an OTB/OTS if the forecasted remaining duration is less than 18 months. Other indicators include comparing the Estimate to Complete with the remaining work to determine projected growth by using the following equation:

Projected Future Cost Overrun (%) = ([(EACPMB-ACWP) / (BACPMB-BCWP) – 1)] X 100

If the Projected Future Cost Overrun percentage were greater than 15%, then an OTB/OTS might be considered. Certainly the dollar magnitude must be considered as well.

Conclusion

There is no exact way to determine if an OTB/OTS is needed, and the project personnel must adequately assess all factors to make the determination. Going through an OTB/OTS is very time consuming, and the decision regarding that implementation should not be taken lightly.

After all factors are adequately analyzed, the project manager may ultimately deem it unnecessary and just manage to the variances being reported. This may be more cost effective and practical than initiating a formal reprogramming action.

If you have any questions about this article contact Humphrey’s & Associates. Comments welcome.

We offer a workshop on this topic: EVMS and Project Management Training Over Target Baseline (OTB) and Over Target Schedule (OTS) Implementation.

Is it OTB/OTS Time or Just Address the Variances? Read Post »