Earned Value Management - Intent 32 Guidelines Summary
- 2. Sr Guideline Description Management Value Intent Objective Evidence May Be Found In These Typical Outputs
1
Define Work Scope
(WBS)
The Work Breakdown Structure (WBS) is used as the basic building block for
the planning of all authorized work. The WBS is a product‐oriented division
of project tasks depicting the breakdown of work scope for work
authorization, tracking, and reporting purposes that facilitates traceability
and provides a control framework for integrated program management. It
should ensure that the Statement of Work (SOW) is entirely covered and
allow for the integration of technical, schedule, and cost information. The
WBS also facilitates communications as it establishes a common frame of
reference for customers, management, and Integrated Product Teams
(IPTs).
A WBS is a direct representation of the work scope in the project, documenting the hierarchy and
description of the tasks to be performed and their relationship to the product deliverables. The
WBS breaks down all authorized work scope into appropriate elements for planning, budgeting,
scheduling, cost accounting, work authorization, measuring progress, and management control.
The WBS must be extended to the level necessary for management action and control based on
the complexity of the work. At a minimum, the WBS is extended to the level or levels at which
control accounts are established. A WBS dictionary is typically used to define the work scope for
each unique element in the WBS.
1) Only one WBS is used per project and it contains all project
work, including revisions for authorized changes and
modifications.
2) The WBS contains all contract line items and end items.
3) The WBS identifies all WBS elements specified for external
reporting.
4) The WBS is extended at a minimum to the level(s) at which
control accounts are established.
5) The WBS elements should collectively provide a complete
definition of work scope requirements.
6) The WBS may evolve as the project requirements change.
2
Define Project
Organization (OBS)
The OBS helps management focus on establishing the most efficient
organization by taking into consideration the availability and capability of
management and technical staff, including subcontractors, to achieve the
project objectives.
Assign organizational responsibility for the project work. An OBS is used to facilitate the
assignment of responsibility, accountability, and authority for all tasks to be performed. An OBS is
a direct representation of the hierarchy and provides a description of the organizations
established to provide resources as well as to plan and perform the work tasks. The OBS identifies
the organization responsible for each segment of work, including subcontracted and intra‐
organizational effort. The assignment of lower‐level work segments to responsible managers
should provide key control points for management purposes. When effort is subcontracted, the
applicable subcontractor is identified and related to the appropriate WBS element(s) and/or
organization charged with acquiring the subcontracted item.
1) All authorized work is assigned to organizational
elements.
2) Organization elements are work teams, functions, or
whatever organization units are used by the company for
execution of the program work efforts.
3) Major subcontractor work efforts are integrated into
the program structure.
3 Integrate Processes
The integration of planning, scheduling, budgeting, work authorization, and
cost accumulation management processes provides the capability for
establishing the Performance Measurement Baseline (PMB), identifying
work progress, and collecting actual costs, facilitating management analysis
and corrective actions. The WBS and OBS allow summarization of cost data
from the detail level through both the WBS and the OBS to the appropriate
project level needed for management insight and control.
Integrate the technical, schedule, and cost elements of the project through project plans that
include schedules, budgets, authorization of work, and accumulation of costs, all consistent with
the budget plan. The work tasks are assigned to a WBS and OBS and are traceable to the planning
and budgeting system and the cost collection system. Establishment of a unique coding structure
facilitates the linkage between the planning, scheduling, budgeting, work authorization, cost
accumulation, and performance measurement processes.
1) Master, intermediate, and detail level schedules.
2) Manufacturing Requirements Planning (MRP) or
Enterprise Requirements Planning (ERP) operational
schedules.
3) Control account plans.
4) Management performance reports by WBS and OBS.
5) Responsibility Assignment Matrix (RAM).
6) Statement of Work.
7) Work authorizations.
4
Identify Overhead
Management
Visibility into direct and indirect costs is essential for successful
management of a project. Therefore, it is important to have a documented
process and organizations established specifically to manage and control
indirect costs.
Indirect costs are for common activities that cannot be identified specifically with a particular
project or activity and should typically be budgeted and controlled separately at the functional or
organizational manager level. Clearly identify managers who are assigned responsibility and
authority for controlling indirect costs, and who have the authority to approve expenditure of
resources. The process for management and control of indirect costs, including assignment of
responsibility, is typically documented in the organization’s approved accounting procedures.
1) Cost Accounting Standards (CAS) disclosure statement.
2) Organizational chart.
3) Chart of accounts.
Earned Value Management Systems
REF :ANSI/EIA‐748 Intent Guide
The 32 Guidelines Summary
1 Summarized By : https://linkedin.com/in/muhammad-el-chammakh-pmp-rmp-6853a580
- 3. Sr Guideline Description Management Value Intent Objective Evidence May Be Found In These Typical Outputs
Earned Value Management Systems
REF :ANSI/EIA‐748 Intent Guide
The 32 Guidelines Summary
5
Integrate WBS/OBS to
Create Control
Accounts
The careful establishment of the control account structure ensures the
proper level of management is established based on the complexity of the
work and the capability of the organization. It also establishes the lowest
level of performance measurement necessary for program management.
The integration of the WBS and OBS creates control accounts that facilitate schedule and cost
performance measurement.
The control account is the point where the WBS tasks and OBS responsibility intersect. It is
defined as the point where a single functional organization or integrated product team has
responsibility for work defined to a single WBS element. There may be multiple control accounts
within a responsible OBS element when the effort within a WBS element must be segregated for
management control purposes driven by scope and exit criteria (i.e., completion of task scope).
The establishment of multiple control accounts should be determined by the control account’s
scope of the management tasks and consideration for planning and control of budgets, schedules,
work assignments, progress assessment, problem identification, and corrective actions.
1) Control accounts.
2) Responsibility Assignment Matrix (RAM).
3) Management performance reports.
6
Schedule with
Network Logic
Scheduling authorized work facilitates effective planning, statusing, and
forecasting, all of which are critical to the success of all projects. The
integration of the technical, schedule, and cost aspects of the project
results in the:
1) Expected sequence of work.
2) Establishment of significant interdependencies between work packages
and planning packages (or lower‐level tasks/activities) that determine total
work time and critical path through the project.
3) Time‐phasing of authorized discrete work for use as a performance
measurement baseline.
The scheduling process documents and the resulting project schedule provide a logical sequence
of work leading to a milestone, event, or decision point needed to ensure that the schedule
supports the project objectives. The master schedule aligns to the contractual period of
performance except when an Over‐Target Schedule (OTS) has been approved for implementation.
There is a clear definition of what constitutes commencement and completion of each work
package and planning package (or lower‐level task/activity). While no specific scheduling software
is required, there must be horizontal and vertical integration of the schedule through the
framework of the WBS and OBS.
Government development programs or significant development efforts typically schedule the
discrete authorized work through the use of a network schedule. Production programs typically
schedule using a Manufacturing Requirements Planning (MRP) or Enterprise Requirements
Planning (ERP) tool employing a line of balance schedule that supports the project objectives.
1) Integrated network schedules including master,
intermediate (if any), and detailed schedules.
2) MRP or ERP schedules, or planned order reports.
3) Control account plans (may be separate plans or detail
schedules).
4) Work authorization documents.
7
Set Measurement
Indicators
Objective indicators enable measurement of work accomplished, thereby
allowing its accurate comparison to planned work. Meaningful performance
metrics enable better management insight and decision‐making, ensuring
that maximum time is allowed for management action to keep the project
on plan.
1) The purpose for identifying objective indicators is to provide a means to measure the quantity
of work accomplished – the earned value. There is a direct relationship between the budget at
completion and earned value. The time‐phased budget assigned to the work scope is the basis for
computing the earned value for work accomplished. Performance measures are one aspect of an
integrated program management system as other processes control the quality and technical
content of the work performed.
2)Identify objective interim performance measures within control accounts (or lower‐level
tasks/activities) to enable accurate performance assessment each month. The master schedule
includes key program and contractual requirements. It enables the team to predict when
milestones, events, and program decision points can be expected to occur. Lower‐tier schedules,
when utilized, must contain specific control account (or lower‐level task/activity) start and finish
dates that are based on physical accomplishment and are clearly consistent with program time
constraints.
1) Integrated schedules including master, intermediate (if
any), and detailed schedules that identify contract
milestones and key events.
2) MRP or ERP production planned order reports.
3) Control account plans (may be separate plans or detail
schedules).
8
Establish Budgets for
Authorized Work
The time‐phased performance measurement baseline that represents the
planned scope of all authorized work and schedule provides the program
manager a reference to assess project performance. It is controlled and
reconciled to the target cost plus authorized unpriced work less
management reserve. It represents the cumulative, time‐phased, budgeted
cost for work scheduled. The performance measurement baseline is a key
component of earned value management.
1) The Contract Budget Base (CBB) represents the value of all authorized work. This includes the
negotiated contract cost (NCC) plus the estimated cost of any authorized unpriced work (AUW).
This CBB value forms the basis for program budgeting.
2) The assignment of budgets to scheduled segments of work produces a plan against which actual
performance can be compared. This is called the Performance Measurement Baseline (PMB). The
establishment, maintenance, and use of the PMB are indispensable to effective performance
measurement. The PMB should be in place as early as possible after project award or
Authorization to Proceed (ATP).
3) The PMB represents the time‐phased scope, schedule, and associated budget through the end
of the contract. It is the sum of the control accounts plus any summary level planning packages
(SLPP) and undistributed budget. Undistributed budget is a transient account that is distributed to
control accounts, summary level planning packages, or management reserve as soon as practical
after definitization, or as contractually directed.
1) Control account plans.
2) Summary level planning packages.
3) Performance measurement baseline.
4) Undistributed budget logs.
5) Notification to the customer of an over‐target baseline
or over‐target schedule.
6) Work authorization document.
2 Summarized By : https://linkedin.com/in/muhammad-el-chammakh-pmp-rmp-6853a580
- 4. Sr Guideline Description Management Value Intent Objective Evidence May Be Found In These Typical Outputs
Earned Value Management Systems
REF :ANSI/EIA‐748 Intent Guide
The 32 Guidelines Summary
9
Budget by Cost
Elements
An essential part of project planning and establishing a performance
measurement baseline is the establishment of budgets for all the
authorized work. Identification of the budget cost elements documents the
required resources and places work scope with the performing
organization.
Through a work authorization process, establish budgets for all authorized work to be done by the
responsible organizational elements. No work should begin before the effort is authorized by an
initial work authorization. As budgets and schedules are established and approved for all the
authorized work at the control account level, the work authorization is updated as required. The
work authorization at the control account level is where the approved work scope, period of
performance, and budget are integrated. The control accounts identify the appropriate cost
elements (labor, subcontract, material, and other direct costs). It is important to include all
resources required to accomplish the work scope.
1) Control account plans by element of cost.
2) Work authorization documents.
3) Performance measurement baseline.
4) Undistributed budget logs.
5) Bills of Materials (BOM).
6) Responsibility assignment matrix .
7) Schedules, if resourced.
10
Create Work
Packages, Planning
Packages
Budgets, established at the work package level identifying specific resource
requirements in dollars, hours, or other measurable units, provide the
detail for effective execution of the baseline plan. The resources are to be
time‐phased the way the detail work is to be accomplished. This approach
provides meaningful product‐related or management‐oriented events for
performance measurement. Where a control account cannot be planned in
work package detail, the work scope, budget, and schedule requirements
are held in planning packages. The master schedule may have more detail
below the work package/planning package level to support the
development of a realistic critical path, as applicable.
Effort contained within a control account is distributed into either work packages or planning
packages. Work packages are single tasks assigned to a performing organization for completion
and are natural subdivisions of control account effort, resulting in a definable end product or
event. Work package descriptions must clearly distinguish one work package effort from another.
When work packages are relatively short, little or no assessment of work‐in‐progress is required.
As work package length increases, work‐in‐progress measurement becomes more subjective,
unless objective techniques, such as discrete milestones with pre‐assigned budget values or
completion percentages, subdivide them. A key feature, from the standpoint of evaluating
accomplishment, is the desirability of having work packages that incorporate frequent, objective
indicators of progress.
1) Control account plans divided into work packages and
planning packages.
2) Control account schedules.
3) Control account time‐phased budgets.
11
Sum Detail Budgets to
Control Account
The integrity of the performance measurement baseline requires that the
budget of the control account equal the sum of its work package and
planning package budgets. When the budget of the control account equals
the sum of its work package and planning package budgets, it prevents
duplicate recording of budgets.
All control accounts must contain a budget, schedule, and scope of work and should realistically
represent the work assigned and budgeted to the organizational units. In all cases, the value of
the budget assigned to individual work packages and planning packages within the control
account must sum to the total value authorized for the control account. A control account
manager should not have a budget without an assigned scope of work. Conversely a control
account manager should not have authorized scope without associated budget.
1) Control account plan total budget.
2) Work package budget.
3) Planning package budget.
12
LOE Planning and
Control
Meaningful product‐ or management‐oriented events are critical for
performance measurement. Objective measurement of Level of Effort (LOE)
activity is impracticable and provides little, if any, visibility into actual
performance; therefore, its use must be minimized.
Each task on the project needs to be assessed to determine the best method to budget and
measure its progress toward completion. Level of effort is defined as having no measurable
output or product that can be discretely planned at the work package level. Level of effort must
be limited to those activities that are unable to be measured discretely to avoid distorting project
performance data. Level of effort work packages should be separately identified from discrete
effort work packages and apportioned effort work packages. Budgets for level of effort activity
must have a sound basis of estimate and be time‐phased to properly reflect when work will be
accomplished. LOE budgets may be planned at either the control account level or at the same
level as discrete or apportioned work packages.
1) Control account plans identify level of effort work
packages and budgets.
13
Establish Overhead
Budgets
The overall value of establishing indirect budgets lies in the ability of
company management to manage cost elements that cannot be directly
assigned to individual cost objects (products). By comparing actual indirect
expenses to established indirect budgets, the company can determine if the
absorption of indirect expenses based on existing documented allocation
schemes is on track or if allocation rates will need to be adjusted. The
accurate assignment of indirect expenses, therefore, ensures that each
program will only receive its fair share of indirect costs.
Establish indirect budgets at the appropriate organizational level for each pool and cost sub‐
element. It is important to have an indirect budgeting and forecasting process, because indirect
costs can account for a major portion of the cost of any project. As such, the budgetary control
and management of this category of cost cannot be overlooked or minimized. Indirect budgets on
the project are established and planned with the established direct budgets consistent with the
method by which allocation of indirect costs will ultimately be made to the project. This
methodology is normally described in the organization’s accounting procedures.
1) Documented process for managing indirect costs.
2) Organizational structure identifying ownership
responsibility and authority levels.
3) Indirect cost policies and procedures.
4) Chart of accounts.
14
Identify Management
Reserve and
Undistributed Budget
To ensure that budget for newly authorized efforts remains tied to the
associated scope during the initial planning process, Undistributed Budget
(UB) has been designated as the short‐term holding account. Once the
responsible organization(s) has been identified, the budget will transfer
from undistributed budget to the appropriate control account(s). This
ensures budget and scope will not be transferred independently.
1) Identify and control management reserve and undistributed budget. Management reserve is
budget set aside for unplanned events that may arise during the course of the project. Because
management reserve is budget that is not yet tied to work, it does not form part of the
performance measurement baseline. The management reserve budget should be commensurate
with the level of risks and opportunities identified by the project or withheld for management
control purposes.
2) Undistributed budget is budget that is applicable to specific project effort, but has not yet been
distributed below the project level either directly to control accounts or to summary level
planning packages. It is a transient amount because, once it is distributed to either control
accounts or to summary level planning packages, it ceases to be undistributed budget. Because
undistributed budget is budget that is tied to work, it does form part of the performance
measurement baseline. Undistributed budget accounts are to be cleared in a reasonably timely
manner as work scope is finalized and distributed to control accounts or to summary level
1) Project control logs (management reserve,
undistributed budget, performance measurement
baseline, and contract budget base).
2) Management performance reports.
3 Summarized By : https://linkedin.com/in/muhammad-el-chammakh-pmp-rmp-6853a580
- 5. Sr Guideline Description Management Value Intent Objective Evidence May Be Found In These Typical Outputs
Earned Value Management Systems
REF :ANSI/EIA‐748 Intent Guide
The 32 Guidelines Summary
15
Reconcile to Target
Cost Goal
A project baseline that reflects the common agreement between the two
parties provides a common reference point for progress assessment. It
provides recognition of contractual requirements and precludes
unauthorized changes to the performance measurement baseline. The
project target cost must be reconciled with the performance measurement
baseline and management reserve.
Reconcile the project value (target cost plus authorized, unpriced work) with the sum of all control
account budgets, indirect budgets, management reserves, and undistributed budgets.
1) Project control logs (management reserve,
undistributed budget, performance measurement
baseline, and contract budget base) reconciled to project
target cost.
2) Management performance reports.
3) Internal report showing the summarization from cost
account to the performance measurement baseline.
16 Record Direct Costs
Direct cost must be assigned to a project consistent with the pertinent
budgets in order to achieve effective performance management. A project’s
cost‐charging structure established in the accounting system should help
ensure that actual costs collected are directly compared with associated
budgets for that work.
1) Accumulate direct costs in the formal accounting system in a manner consistent with the way
the related work is planned and budgeted. Actual costs reported in the performance reports agree
with the costs recorded in the general books of account (accounting system) or can be explained
as timing differences. At a minimum, actual costs are collected at the control account level to
enable summarization of cost by both the WBS and OBS. Timing differences that may occur
between the accounting system and project performance reports must be reconcilable.
2) Subcontracts also require special consideration. Subcontract costs must be accrued in a timely
manner consistent with the schedule status. This may require the use of estimated costs or the
equivalent import from the subcontractor’s books of record or report.
1) Reconciliation of project costs with the accounting
system.
2) Actual costs are reported at the control account level
at a minimum.
3) Reconciliation of subcontract reported actual costs to
subcontract payments.
4) Internal and external performance reports for
subcontractors.
17
Summarize Direct
Costs by WBS
Elements
Actual costs need to be available at all levels of the WBS to support project
management with performance measurement data. Cost collection
accounts mapped to the WBS. The WBS roll‐up structure contains no
division/allocation of lower‐level cost to multiple higher‐level WBS
elements, which helps to ensure performance measurement data integrity
when summarized by WBS.
A work order/job order/task code charge number structure must exist that uniquely identifies
costs at the control account level allowing for accumulation and summarization of costs to higher
levels of the work breakdown structure. Through the use of this coding structure, allowable costs
collected within the control account by element of expense roll‐up from the control account level
through the WBS to the top level without being divided among two or more higher‐level WBS
elements. Cost collection accounts map to the WBS, and the WBS roll‐up structure contains no
division/allocation of lower‐level cost to multiple higher‐level WBS elements. When common
costs are collected in separate control accounts for like items or services they are allocated to
appropriate control accounts in each project.
1) Cost collection account structure.
2) WBS/cost collection mapping.
3) Management performance reports.
18
Summarize Direct
Costs by OBS Elements
Actual costs need to be available at all levels of the OBS to support project
management with performance measurement data. Cost collection
accounts mapped to the OBS, and the OBS roll‐up structure containing no
division/allocation of lower‐level cost to multiple higher‐level OBS
elements, helps to ensure performance measurement data integrity when
it is summarized by OBS.
Allowable costs collected within the control account by element of expense “roll‐up”, from the
control account level through the OBS, to the top level without being divided at any level among
two or more higher‐level elements. This guideline and the one before it are identical, with the
exception that this one deals with OBS data summarization while the previous one dealt with WBS
data summarization. In either case the intent is the same: actual cost collected at the control
account level may not be rolled up (i.e., summarized) to multiple higher‐level elements. When
common costs are collected in separate control accounts for like items or services, they are
allocated to appropriate control accounts in each project.
1) Responsibility assignment matrix.
2) Organization charts.
3) OBS structure (roll‐up scheme).
4) Management performance reports.
19
Record/Allocate
Indirect Costs
Visibility into direct and indirect costs is essential for successful
management of a project. Therefore, it is important to have a documented
process and organizations established specifically to manage and control
indirect costs.
Indirect costs are for common activities that cannot be identified specifically with a particular
project or activity and should typically be budgeted and controlled separately at the functional or
organization managerial level. Record all indirect costs for the project in the accounting system.
Allocate them to the recorded direct costs per the documented procedure to ensure that all
projects benefiting from the indirect costs will receive their fair share.
1) Cost collection account structure.
2) WBS/cost collection mapping.
3) Cost accounting standards disclosure statement.
20
Identify Unit and Lot
Costs
A manufacturing accounting system capable of isolating unit and lot costs in
a production environment should allow the flexibility to plan, measure
performance, and forecast in a more efficient way when there are multiple
projects in the same production line.
When using equivalent units, or lot costs budgeting, ensure that the accounting system produces
actual unit, equivalent unit, or lot costs for purposes of measuring cost performance. Typically
this is accomplished through the use of a charge number structure, the manufacturing planning
systems, or equivalent capability. On production contracts or projects where multiple similar units
are being delivered, or when units are taken off the line in more or less a random order according
to the delivery agreements of the different customer’s projects, it is sufficient to establish
“equivalent unit cost” (i.e., all things being equal, each unit’s cost is approximately equivalent to
every other unit’s cost).
1) Project cost collection structure (MRP).
2) ERP system supports the identification of unit costs,
equivalent unit costs, or lot costs when needed, including
differentiation of work in process.
4 Summarized By : https://linkedin.com/in/muhammad-el-chammakh-pmp-rmp-6853a580
- 6. Sr Guideline Description Management Value Intent Objective Evidence May Be Found In These Typical Outputs
Earned Value Management Systems
REF :ANSI/EIA‐748 Intent Guide
The 32 Guidelines Summary
21
Track and Report
Material Costs and
Quantities
1) The establishment of a valid comparison of planned material costs for
completed work with the actual material costs for that work provides the
basis for realistic evaluation of cost deviations and ultimately facilitates
cost at complete projections. Residual inventory provides visibility into
excess material for the current deliverables available for replacement of
failures in the current project or future projects having similar deliverables.
2) Long lead critical material items may require special considerations for
planning and measuring progress. Contracting methods should be
considered that support objectives and promote the use of progress
methods to meet the needs of integrated program management.
Material costs must be accurately charged to contract control accounts using recognized,
acceptable costing techniques. The need for accurate comparison of material costs to material
budgets and earned value requires that the appropriate point of performance measurement for
material is established. The generally acceptable points for measuring material progress are:
1) Point of receipt (acceptance).
2) Point of stock (inventory).
3) Point of issue to work in process (consumption).
1) Management performance reports.
2) Control account plans.
3) Material system reports.
22
Calculate Schedule
Variance and Cost
Variance
Earned Value Management System (EVMS) performance data reconciles to
the general books of account (accounting system) and provides for
management control. Visibility into project performance helps the project
manager to focus resources on those areas in need of attention.
On at least a monthly basis, generate schedule variance and cost variance data that supports
management control needs by allowing the project manager to focus on those areas in need of
attention. The intent of this guideline is to recognize that analysis must be accomplished on a
regular, periodic basis. It is critical that the calculation of earned value (see guidelines 7 and 10) be
based consistently with the manner used to establish the budgets (see guidelines 8, 10, and 12).
This ensures a generation of valid variances for analysis purposes. All data analyzed must come
from, or be reconcilable with, the earned value management system (BCWS, BCWP, and ACWP)
and the accounting system.
1) Monthly performance reports (cost variance, schedule
variance, and variance at completion analysis).
2) Variance analysis data (root causes, impacts at
completion, and management actions).
23
Identify Significant
Variances for Analysis
The ability to analyze deviations from the established plan permits
management at all levels to rapidly and effectively implement corrective
actions in an effort to regain project/contract objectives. Without this
visibility into and the understanding of plan deviations, the success of the
project can be jeopardized. Additionally, insight into future cost and
schedule performance, based on the analysis of variances, will be
facilitated.
1) The purpose of this guideline is to ensure both significant schedule and cost variances are
analyzed, at least monthly, at a level of detail required to manage the effort; i.e., to enable
management decision‐making and corrective action.
2) Comparing the budget value of work completed to the budget value of work scheduled during a
given period of time provides a valuable indication of schedule status in terms of dollars‐worth of
work accomplished. This schedule variance (SV) may not clearly indicate whether or not scheduled
milestones are being met, since some work may have been performed out of sequence or ahead
of schedule while other work has been delayed. Schedule variance does not indicate whether a
completed activity is a critical event or if (or by how much) delays in an activity’s completion will
affect the completion date of the project.
1) Variance analyses (budget based schedule variances
and cost variances).
2) Management action plans.
3) Updated schedule task completion and cost‐at‐
completion forecasts.
24
Analyze Indirect Cost
Variances
Ongoing indirect cost analysis provides visibility into potential indirect cost
overruns and the opportunity to develop and implement management
action plans to meet project objectives.
Indirect rate forecast and control are crucial to meeting project cost objectives. This guideline
requires a monthly indirect cost analysis, by those assigned responsibility, comparing indirect
budgets to indirect actual costs and explaining the cause of resultant variance(s). The importance
of analyzing indirect cost performance requires the exercise of maximum discipline in following
the established indirect cost control procedures. The results of indirect analysis are provided to
program and business managers for their use in forecasting the impact to the program Estimate at
Completion (EAC).
1) Indirect cost variance analyses.
2) Indirect cost management action plans.
3) Indirect cost updated schedule and cost forecasts.
25
Summarize
Information for
Management
Understanding the relationship among scope, cost, schedule, and risk is
critical to successful project execution. Variances provide an understanding
of project conditions, allowing the project manager to properly address
project issues, risks, and opportunities. They also identify significant
problem areas coming from all levels of the organization and project scope
of work, derived from the same data sources. Variances provide valuable
management information.
Use the same data for internal management needs and for reporting to the customer. Since the WBS and
the OBS exist as a formal and disciplined framework for project management and also provide a formal
structure for the comprehensive roll‐up of all data elements, they become the ideal framework for
summarizing data from the control account level to the management reporting level. Summarizing
performance information assists senior levels of management to focus on the significant problems that
require their intervention.
1) Variance analyses.
2) Schedule and cost performance reports.
3) Management action plans.
4) Updated schedule and cost forecasts.
26
Implement Corrective
Actions
Earned value management information provides management with early
insight into the extent of problems. Management action is required to
mitigate the impacts on the project objectives.
1) Identify and implement corrective actions based on earned value variance analysis to achieve project
objectives. Regular monitoring of the performance data helps keep the program within its cost and
schedule baseline objectives.
2) Performance measurement data should be utilized by all levels of management to promote effective
project execution. Because of this, the data produced by the earned value management system must be
available to managers on a timely basis and must be of sufficient quality to ensure that effective integrated
program management decisions can be made as a result of its analysis. The project’s internal reports and
the reports forwarded to their customer must indicate the overall cost and schedule impacts of such
problems on the project.
1) To‐Complete Performance Index (TCPI).
2) Independent completion estimates.
3) Risk and opportunity management data and similar
metrics.
4) Management action plans and review briefings.
5 Summarized By : https://linkedin.com/in/muhammad-el-chammakh-pmp-rmp-6853a580
- 7. Sr Guideline Description Management Value Intent Objective Evidence May Be Found In These Typical Outputs
Earned Value Management Systems
REF :ANSI/EIA‐748 Intent Guide
The 32 Guidelines Summary
27
Revise Estimate at
Completion (EAC)
A properly established and maintained estimate at completion (EAC) will
ensure continuing visibility into the cost, schedule, risks and opportunities,
as well as the resource needs (e.g., labor, material, etc.) for the remaining
work that is essential to project success for both the customer and the
contractor. Accurate estimates support the customer’s ability to provide
sufficient funding to the project and enhance internal management’s
visibility into critical issues and resource requirements.
1) The control account level is where the approved work scope, period of performance, budget, and
estimate at completion (EAC) are integrated. The estimates at completion are summarized up through the
WBS and OBS to the program level for management visibility and control. The control account managers
are responsible for maintaining the control account level latest revised estimate to complete that is
assessed on a monthly basis. Periodically, a comprehensive or bottom‐up estimate at completion should be
prepared using all available information to arrive at the best possible estimate at completion.
2) For the monthly estimates to complete (ETC), the control account manager should review the status of
the expended effort and the achievability of the forecast and significant changes briefed to program
management. This analysis should focus on performance to date within the control account, an assessment
of the effort to complete the remaining work, and an evaluation of the type and quantity of resources
required to complete the effort. Issues, risks and opportunities should also be considered in this analysis.
When updates are made to existing forecasts of the schedule and cost to complete, significant changes are
briefed to program management. Prudent maintenance of the control account‐level estimates at
completion ensures that the EAC reflects a valid projection of project costs.
1) Control account plans.
2) Documented process for developing EACs, including
subcontractor EAC integration.
3) Basis of estimates.
4) Risk and opportunity management plans
(identification, analysis, and handling plans).
5) Updated schedule task completion and cost‐at‐
completion forecasts.
28
Incorporate Changes
in a Timely Manner
A properly maintained performance measurement baseline is crucial to
effective program management. The timely and accurate incorporation of
contractual changes ensures that the information generated from the
execution of the baseline plan provides an accurate picture of progress and
facilitates correct management actions and decisions.
1) Incorporate the work scope for authorized changes into the performance measurement baseline in a
documented, disciplined, and timely manner. The timely and accurate incorporation of authorized and
negotiated changes into the performance measurement baseline ensures that valid performance
measurement information is generated for the new scope being executed. Adherence to this guideline
helps to ensure that budget, schedule, and work remain coupled.
2) For unpriced change orders, the contractor will develop its best estimate for planning and budgeting
purposes for incorporation into the performance measurement baseline. Near term effort should be
planned and have budget in control accounts. Far term effort that cannot be reasonably planned in the
near term may be planned in summary level planning packages or maintained in Undistributed Budget
(UB). Until contractual definitization, the near‐term work is continually planned. After definitization, any
budget remaining in undistributed budget will be planned and budgeted within control accounts, summary
level planning package packages, or management reserve, as soon as practical.
1) Contractual change documents.
2) Change control logs (management reserve,
undistributed budget, performance measurement
baseline, and contract budget base).
3) Control account/work package/planning package
plans.
4) Master schedules, intermediate schedules (if any), and
detailed schedules.
5) Statement of work, WBS, and WBS dictionary.
29
Reconcile Current to
Prior Budgets
The reconciliation of current budgets to prior budgets ensures the baseline
maintains data integrity and reconciliation to the contract value.
1) Budget changes are controlled and understood in terms of scope, resources, and schedule. Budgets
reflect current authorized work. Budget revisions are made when work is added to the contract and are
traceable from authorized contract target costs to the control account budgets or from management
reserve. Management reserve may be used for authorized work that is in‐scope to the contract, but out of
scope to a control account. Management reserve, therefore, may not be applied to completed work
packages, except to compensate for the effect of routine accounting adjustments in accordance with the
organization’s accounting practices.
2)Undistributed budget account should be distributed within a reasonable length of time subsequent to
contract definitization or the program value finalization. It is recognized that some circumstances, such as
delays in program direction, will affect the timely assignment of undistributed budget to control accounts.
1) Contractual change documents.
2) Change control logs (management reserve,
undistributed budget, performance measurement
baseline, and contract budget base).
30
Control Retroactive
Changes
Retroactive changes to the baseline may mask variance trends and prevent
use of the performance data to project estimates of cost and schedule at
completion.
1) Control retroactive adjustments (including those in the current period), making only routine accounting
adjustments, definitization of contract actions, rate changes, and economic price adjustments, customer‐
approved changes, or data entry corrections. Adjustments resulting from definitization of contract actions
should be limited to affected work scope budgets. Changes that would arbitrarily eliminate existing cost
and schedule variance should not be made. Rate changes and economic price adjustments are normal
exceptions.
2) The cumulative values for the budgeted cost for work scheduled and budgeted cost for work performed
are not adjusted for routine direct or indirect cost rate increases or decreases. This is necessary to ensure
baseline integrity and accuracy of performance measurement data. Retroactive budget and/or
performance adjustments may delay visibility of overall project variance from plan, thus reducing the
alternatives available to managers for project redirection or termination.
1) Change control logs.
2) Retroactive change control process including approval.
31
Prevent Unauthorized
Revisions
Changes made outside the authorized baseline control processes
compromise the integrity of performance trend data and delay visibility
into overall project variance from plan, thus reducing the alternatives
available to managers for project redirection or revisions.
1) Prevent unauthorized revisions to the performance measurement baseline. Any changes to the project
must be approved and implemented following the baseline management control process. This control
precludes the inadvertent implementation of a budget baseline greater than the project budget. When the
performance budget or schedule objectives exceed the project plan and are recognized in the performance
measurement baseline, it is identified as an over‐target baseline (OTB).
2) The decision to establish an over‐target baseline may result due to planning future work, planning in‐
process work, and/or adjusting cost or schedule variances. This permits an increase to the amount of
budget for the remaining work. This creates a more realistic amount to adequately provide for reasonable
budget objectives, work control, and performance measurement.
1) Change control logs (management reserve,
undistributed budget, performance measurement
baseline, and contract budget base.
2) Control account/work package/planning package
plans.
3)Master schedules, intermediate schedules (if any), and
detailed schedules.
4) Statement of Work, WBS, and WBS dictionary.
6 Summarized By : https://linkedin.com/in/muhammad-el-chammakh-pmp-rmp-6853a580
- 8. Sr Guideline Description Management Value Intent Objective Evidence May Be Found In These Typical Outputs
Earned Value Management Systems
REF :ANSI/EIA‐748 Intent Guide
The 32 Guidelines Summary
32
Document PMB
Changes
By ensuring that budget and schedule revisions are documented and
traceable, the integrity of the performance measurement baseline is
maintained and can be verified. This provides control account managers
with valid control account plans against which to execute and measure
performance.
The performance measurement baseline should always reflect the most current plan for accomplishing the
effort. Authorized changes must be promptly recorded in the system and incorporated into all relevant
planning. Planning and authorization documents must be updated accordingly, prior to the commencement
of new work.
1) Change control logs (management reserve,
undistributed budget, performance measurement
baseline, and contract budget base.
2) Control account/work package/planning package
plans.
3) Work authorization documents.
4) Management performance reports or other
management reports.
7 Summarized By : https://linkedin.com/in/muhammad-el-chammakh-pmp-rmp-6853a580