Baseline Maintenance.pdf

8/17/2019 Baseline Maintenance.pdf

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1. Baseline Maintenance – Using Earned Value to manage the project budget baselines.

2. Learning Objectives

• Understand the concepts associated with EVM baseline maintenanceo Explain the meaning of the five EVMS revision and data maintenance guidelines

o Define the terms associated with baseline maintenanceo Recognize and interpret the EVM Contract Performance chart and the CV / SV EVM metric

charto Define front-loaded baselines, rubber baselines, over-target baselines and single-point

adjustmentso Recognize the effect of contract modifications, management reserve use, front loaded

baselines, rubber baselines, over-target baselines, and single point adjustments on contractperformance and CV metric charts.

The primary learning objective for this module is for you to understand the concepts associated with EVMbaseline maintenance.

After completing this module you should be familiar with the five EVMS guidelines and the three terms

associated baseline maintenance. You will also be able to interpret the two most common charts used byearned value managers: the EVM variable or Contract Performance chart and the cost / schedulevariance EVM metrics chart. Additionally you should understand what a front-loaded baseline, rubberbaseline, over-target baseline, and single-point adjustment mean in the context of earned valuemanagement. Finally you should recognize the effect that contract modifications, management reserveuse, front loaded baselines, rubber baselines, over-target baselines, and single point adjustments on thecontract performance and cost variance charts.

3. Baseline Maintenance Introduct ion

• Review the definitions of the EVM variables• Review the SV, CV, VAC EVM metrics• Summarize the five EVM guidelines related to baseline revision and data maintenance• Define rebaselining, replanning and reprogramming• Explain the contract performance and cost/schedule variance trend EVM charts• Apply contract performance and cost variance trend charts to explain contract modifications,

management reserve use, over-target baselines, single-point adjustments, front-loadedbaselines, and rubber baselines

This slide is an introductory slide which describes the organization of this module.

The establishment of the performance measurement baseline or PMB is fundamental to earned valuemanagement, but in reality, this baseline changes as the contract and risks mature. We’ll begin thislesson by reviewing the definitions of the EVM variables, schedule variance, cost variance and varianceat completion from module one. We’ll then review the five EVM guidelines associated with EVMS revision

and data maintenance. We’ll continue by defining rebaselining, replanning, and reprogramming which arethree terms associated with baseline maintenance. We’ll then examine the two most commonly usedEVM charts: the contract performance chart; and the cost / schedule variance trend chart. We’ll concludethis module by using these charts to demonstrate the effects of contract modifications, managementreserve use, over-target baselines, single point adjustments, front loaded baselines, and rubberbaselines.

4. Review Earned Value Independent Variables


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This slide is anintroductory slidewhich reviews theDefense AcquisitionUniversity’sdefinitions for thefive independentEVM variables ofBCWS, BCWP,

ACWP, BAC andEAC.

These variableswere first reviewedin the fundamentalsof earned valuecontinuing educationmodule 1. All earnedvalue metrics arederived from thesefive variables.Remember that: B CW S is the dollarizedvalue of all workscheduled to be accomplished in a given period of time and represents the planning function required byearned value management; B C W P is the dollarized value of all work actually accomplished in a givenperiod of time and represents the completion of work; A C W P is the costs incurred and recorded forperformance measurement purposes within a given period of time and simply stated actuals are actuals;the B A C variable represents authorized work and the EAC variable represents the contractor'sindependent E A C which is also called the L R E or latest revised estimate. This module primarilyfocuses on how the BCWS andBAC variables are maintainedand or manipulated as the

project evolves.

5. EVM Performance MetricsReview

This is an introductory slidewhich reviews the two forms ofthe three most common EVMmetrics.

The Defense AcquisitionUniversity’s Gold Card liststhree EVM performancemetrics: the cost variance andcost variance percent; theschedule variance andschedule variance percent andthe variance at completion.These EVM metrics are usedto status a project’s currentand cumulative performance and to forecast contract overruns and underruns. Negative performancemetrics are unfavorable and positive performance metrics are favorable. The dollar value metrics report


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variance magnitudes where the percentage metrics allow comparison among control accounts andcontracts. The DAU Gold Card can be downloaded from the Acquisition Community Connection’s EVMSpecial Interest Area.

6. Cost Variance (CV) and Cos t Variance Percentage (CV%) Review

• EVM metrics that measure cost overruns and underruns to date• CV metrics may lag SV metrics• Unlike SV metrics, CV metrics trends are independent of the contract maturity

This is an introductory slidewhich reviews the costvariance EVM metric.

Cost variance metricsmeasure cost overruns andunderruns to date. The CVdollar metric is computed bysubtracting the actual cost of

work performed from thebudgeted cost of workperformed. The CV percentmetric is computed byconverting the cost variancedivided by the budget cost ofwork performed into apercentage. Cost variancemetrics often lag the schedulevariance metrics and unlikeschedule variance metricsthey do not improve as thecontract nears completion. A

plain language definition for a minus 10 K cost variance, is that $10,000 more was spent to complete thework than was budgeted for the work. Likewise a positive 15% cost variance percentage would indicatethat work completed to date cost15% less then was budget for the work.

7. Schedule Variance (SV) and Schedule Variance Percentage (SV%) Review

• EVM metrics that measure work accomplishment• Leader / Predictor metric• SV & SV% metrics trend to zero at end of contract• SV% metric is closely correlated to the critical path for projects behind schedule• Unfavorable schedule variances do not necessary mean a contract schedule slip—that can only

be determined by reviewing the critical path schedule

This is an introductory slide which reviews the schedule variance EVM metric.

Schedule variance metrics measure work accomplishment as they relate to the original plan also calledthe PMB. The SV dollar metric is computed by subtracting the budgeted cost of work scheduled from thebudgeted cost of work performed. The SV percent metric is computed by converting, the schedulevariance divided by the budget cost of work scheduled, into a percentage. Since BCWS and BCWP willalways be equal at the end of the contract, the schedule variance and schedule variance percent arealways zero, at the end of the contract; even if the contract actually finishes late. For this reason,accomplishment variance might be a better name for this metric. Unfavorable schedule variance metrics


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are a good indication offuture unfavorable costmetrics. The SV% metric ishighly correlated to thecritical path schedule forprojects that are behindschedule. Unfavorableschedule variances indicatedthe potential for a contractschedule slip, but this cannotbe absolutely determinedwithout a reviewing thecritical path schedule.

A plain language definitionfor a ($10,000) schedulevariance, is that $10,000worth of work scheduled tobe completed was not completed. Likewise a positive 15% schedule variance would indicate that 15%more work was actually completed then planned for completion.

8. Variance at Completion(VAC) and Variance atCompletion Percentage(VAC%) Review

• EVM metrics thatmeasure forecastoverruns and underruns

• Empirical researchsupports that forcontracts more than

15% - 20% complete,the overrun (VAC) atcompletion will not beless than the overrun(CV) incurred to dateand the percent overrun(VAC%) at completionwill be greater thanpercent overrun (CV%)incurred to date

This is an introductory slidewhich reviews the variance at

completion EVM metric.

The VAC dollar metric is computed by subtracting the estimate at completion from the budget atcompletion. The VAC percent metric is computed by converting, the variance at completion divided by thebudget at completion, into a percentage. Variance at completion metrics forecast project overruns andunderruns. Empirical research supports that for contracts more than 15% - 20% complete, the variance atcompletion will not be less than the cost variance incurred to date and the variance at completionpercentage will be greater than cost variance percentage incurred to date. A plain language definition fora minus 10 K variance at completion is, the project is forecasting a $10,000 cost overrun at completion.


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Likewise a positive 15% variance at completion is, the project is forecasting a 15% underrun atcompletion.

9. Revisions and Data Maintenance EVM Guidelines

• Incorporate authorized changes in a timely manner, recording the effects of such changes in

budgets and schedules. In the directed effort prior to negotiation of a change, base such revisionson the amount estimated and budgeted to the program organizations.

• Reconcile current budgets to prior budgets in terms of changes to the authorized work andinternal replanning in the detail needed by management for effective control.

• Control retroactive changes to records pertaining to work performed that would change previouslyreported amounts for actual costs, earned value, or budgets. Adjustments should be made onlyfor correction of errors, routine accounting adjustments, effects of customer or managementdirected changes, or to improve the baseline integrity and accuracy of performance measurementdata.

• Prevent revisions to the program budget except for authorized changes.• Document changes to the performance measurement baseline.

This slide supports the first learning objective for this lesson which is to explain the meaning of the five

EVMS revision and data maintenance standards.

Five of the thirty-two EVMS guidelines specifically address revisions and data maintenance. These clearlyestablish that changes to the performance measurement baseline are not only allowed but expected.

The first revision and data maintenance guideline states: Incorporate authorized changes in a timelymanner, recording the effects of such changes in budgets and schedules. In the directed effort prior tonegotiation of a change, base such revisions on the amount estimated and budgeted to the programorganizations. This guideline requires that work scope for authorized changes be incorporated into thePMB in a documented, disciplined and timely manner. Adherence to this guideline ensures that budget,schedule, and work remain coupled.

The second states: Reconcile current budgets to prior budgets in terms of changes to the authorized workand internal replanning in the detail needed by management for effective control. This guideline ensuresthat budget changes are controlled and understood in terms of scope, resources, and schedule. It alsorequires that current budgets reflect authorized work and that budget revisions are traceable to authorizedcontractual targets and control account budgets.

The third states: Control retroactive changes to records pertaining to work performed, that would changepreviously reported amounts for actual costs, earned value, or budgets. Adjustments should be madeonly for correction of errors, routine accounting adjustments, effects of customer or management directedchanges, or to improve the baseline integrity and accuracy of performance measurement data. Thisguideline requires control of retroactive adjustments to costs, allowing only routine accountingadjustments, customer-directed changes, or data entry corrections. This is necessary to ensure baselineintegrity and accuracy of performance measurement data.

The fourth states: Prevent revisions to the program budget, except for authorized changes. This guidelineprevents unauthorized revisions to the PMB and requires that project changes be approved andimplemented following a baseline management control process which precludes the inadvertentimplementation of a budget baseline greater than the project budget.

The final revision and data maintenance guideline states: Document changes to the performancemeasurement baseline. This criteria requires the PMB, to reflect the most current plan for accomplishingthe effort; to require authorized changes to be quickly recorded and incorporated into all relevant planningand to ensure that planning and authorization documents are updated prior to the beginning of new work.


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10. Terms Assoc iated with PMB Changes

• Rebaseliningo Major realignment of the PMBo Improves correlation of work plan and PMBo May be either reprogramming or replanning

• Replanningo Realignment of remaining schedule and / or reallocation of remaining budgeto Accomplished within existing contract constraints

• Reprogrammingo Comprehensive replanning of remaining PMBo Results in an over-target baseline (OTB) and / or over-target schedule (OTS)

This slide supports the second learning objective for this lesson which is to define terms associated withbaseline maintenance.

Once the PMB is established, we can expect changes. Three terms associated with major realignment ofthe PMB are: Rebaselining; Replanning and Reprogramming. Rebaselining is the general term used fordescribing a major realignment of the performance measurement baseline to improve the correlation

between the work plan and the baseline budget, scope, and schedule. Rebaselining may refer to eitherreprogramming or replanning.

Replanning is a realignment of schedule or reallocation of budget for remaining effort within the existingconstraints of the contract. In this case, the TAB does not exceed the CBB, nor is the schedule adjustedto extend beyond the contractually defined milestones.

Reprogramming is a comprehensive replanning of the remaining performance measurement baseline thatresults in a total budget and/or total schedule that exceeds the contractual requirements. Reprogrammingis the process that results in an Over-Target Baseline or OTB an Over-Target Schedule or OTS, or both.

An OTB includes additional budget which exceeds the contract target cost. An OTS, is the term used todescribe a condition where work is scheduled and the associated budgets are time phased beyond thecontract completion date.

11. EVM Contract Performance Chart


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This slide supports the third learning objective for this lesson which includes being able to recognize andinterrupt the EVM Contract Performance chart.

The EVM contract performance chart is routinely briefed to the Under Secretary of Defense for AcquisitionTechnology and Logistics as part of the Defense Acquisition Executive Summary or DAES reviewprocess. This single chart depicts all five EVM variables and the three EVM performance metrics. Lets

now build this chart by starting with an X Y graph. Time is plotted on the X axis and dollars are plotted onthe Y axis. The performance measurement baseline is established by plotting the cumulative BCWS. Theend point of this plot is the budget at completion. By plotting the total allocated budget we can visualizethe management reserve by comparing the BAC line and the TAB line. Lets now add a time now line andplot the cumulative BCWP and ACWP EVM variables. By comparing the BCWP and BCWS lines we canvisualize an unfavorable schedule variance, because more work was scheduled to be completed thanwas actually completed. By comparing the BCWP and ACWP lines we can visualize an unfavorable costvariance because the work that was completed cost more to completed than was budgeted for the work.We can also project the BCWP line to completion to visualize the potential for a schedule slip. Byprojecting the Actual Cost Work Performed line we can visualize the EAC and a resulting project overrun.By comparing the BAC and EAC we’ll see an unfavorable variance at completion metric. This single chartdisplays current status and project projections.

12. Typical Cont ract Performance Chart


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This slide supports the third learning objective for this lesson which includes being able to recognize andinterrupt the EVM Contract Performance chart.

This line graph is a leading EVM software package’s version of the Contract Performance chart. Note likeslide 11, dollars are plotted on the Y axis and time in years is plotted on the X Axis. The X axis range isdefined by the contract start and finish dates. Note that BCWS; BCWP; and ACWP are represented by a

red cross-line, a green x-line ; and a blue triangle-line respectfully. The BAC variable is labeled as theCBB/TAB and is represented as a purple diamond-line. The contractor’s EAC or LRE EVM variable ispictured as a red asterisk-line. The program office’s independent EAC is the black square-line. Note alsothat cumulative values for each of the variables are numerically reported in the legend underneath thechart.

13. Typical Cost / Schedule Variance Trend Chart


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This slide supports thethird learning objective forthis lesson which includesbeing able to recognizeand interrupt the CostVariance / ScheduleVariance EVM metriccharts.

Cost and schedulevariances can be difficult tovisualize on the contractperformance chartbecause often the BCWS,BCWP and ACWP plotsoverlap. For this reason avariety of cost varianceand scheduled variancemetric charts haveevolved. This is arepresentative costvariance and schedulevariance trend chart. Thisspecific line graph is a leading EVM software package’s version of the second EVM chart routinely briefedas part of the DAES review process. Variance dollars are plotted on the Y axis and time is plotted on theX axis. The X axis is drawn through zero on the Y axis which is the nominal value for CV and SV dollarEVM metrics. Unfavorable variances are negative and plotted below the X axis and favorable variancesare positive an plotted above the X axis. This chart is sometimes called a cone chart because of the 10%BCWP threshold bands plotted with black x-lines. The red cross-line indicates a $3.6M unfavorable ornegative cumulative cost variance. The downward slopping trend is also an unfavorable indication. Thegreen X-line indicates a $2.9M unfavorable or negative schedule variance. Remember schedule variancewill trend back to zero by the end of the contract. The positive $1.4M blue triangle-line represents theremaining management reserve. Remember that the MR is not part of the PMB but is part of the contract

budget baseline. For this reason should the relatively flat MR trend continue to the end of the contract, thefinal contract overrun would be lowered by the amount of MR remaining. The final two data points on thischart are the contractor’s current VAC represent by the red square and the program offices VACrepresented by the bar X. Both of which appear optimistic when compared to the CV trend. Note also thatcumulative values for each of the variables are numerically reported in the legend under the chart.

14. Hypothetical EV Baseline Contract

• Hypothetical Performance Measurement Baselineo Period of Performance - 38 Monthso 1000 Uniform Control Accounts scheduled to approximate a Rayleigh distributiono Control Account Budgets - $ 10 / each (BCWS)o Actual Control Account Costs - $ 11 / each (ACWP)

• Assume that there are no schedule issues BCWP = BCWS• For teaching purposes, we’ll assume the contractor has purposely underestimated costs to win

contract - This is a buy-in contract.

This slide supports the final two learning objectives for this module which include defining and recognizingthe effect of contract modifications, management reserve use, over-target baselines, single pointadjustments, front loaded baselines, and rubber baselines.


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To define and illustrate the effects of a variety of baseline changes we need to establish a hypotheticalperformance measurement baseline. For the remaining charts, unless indicated otherwise, the PMB isbased on a thirty-eight month period of performance, the PMB is comprised of 1000 uniform controlaccounts each budgeted at $10 per account and time phased as a Rayleigh cumulative distribution. Theactual control account costs will be $11 each, resulting in a 10% across the board unfavorable costvariance. For the purposes of this module, will assume that all the work is completed on schedule, sothere will be no schedule variances and that contractor knowingly underbid the contract.

15. Effect of Cont ract Changes on Contract Performance Chart

This slide supports the finaltwo learning objectives forthis module which includedefining and recognizingthe effect of contractmodifications on contractperformance charts.

Using our hypothetical

contract data from slide 14,the contract performancechart has a Y axis rangefrom $0.00 to $12,000 anda thirty-eight month X axisschedule. The S shapedsolid black PMB – BCWS -BCWP curve is consistentwith the typical cumulativeRaleigh distribution of anEVM performancemeasurement baselinecurve. Our model assumes

that all work is completedon schedule so the BCWP and BCWS lines will be the same. The original contract budget baseline isrepresented by the green short- dash line. The first EVMS revision and data maintenance guidelinerequires that authorized changes be incorporated in a timely manner, recording the effects of suchchanges in budgets and schedules. Change one to the contract occurred in month 8 and resulted in 50new control accounts each budgeted at $12 and time phase from month 8 to month 32. With this newwork the total allocated budget increases by $600 and the PMB is adjusted to the brown long-dash line.Change 2 of the contract occurred in month 18 resulting in 50 new $14 control accounts between months18 and 34, a revised change 2 TAB of $11,300 and the revised red square-dot line PMB. With eachcontract mod, the PMB was adjusted, but not rebaselined. This is what should be expected for contractchanges. By now adding the ACWP blue short-dash line we can visualize an unfavorable cost variance.This will be more apparent in slide 16.


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16. Effect of Contract Changes on CV Chart

This slide supports thefinal two learningobjectives for this modulewhich include defining

and recognizing the effectof contract modificationson cost variance charts.

Plotting the cumulativecost variance metric fromslide 15 we get a CV chartwith a Y axis range from($1,200) to $200 and athirty-eight month X axisschedule running throughzero on the Y axis. Letsnow plot the original cost

variance metric for ourhypothetical contractassuming that there wereno contract modifications.This results in anunfavorable $1,000cumulative cost variance and we can see from the black solid-line that the CV metric is unfavorable fromthe beginning till the end of the contract. Remember the contractor bought into the original contract to winthe contract, but now that the contractor is sole source, we wouldn’t expect he’d continue buy into thecontract mods. So when we plot the effect of the contract mods, the brown long-dash line for the first modand the red square-dot line for the second, the over contract cost variance metric improves to an $800unfavorable cost variance. This is sometimes called getting well on change proposals. It is rare that acontractor can add enough new work to get completely well.

17. Effect of MR use onContract Performance Chart

This slide supports the finaltwo learning objectives for thismodule which include definingand recognizing the effect thatthe use of managementreserve has on contractperformance charts.


contract data from slide 14,the Y axis, the X axis and theS shaped solid black PMB –BCWS - BCWP curve areidentical to slide 15. To ouroriginal baseline, lets now add$500 for management reserveincreasing the total allocatedbudget, represented by thegreen solid-line, to $10,500.


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Remember that MR does not become part of the PMB until it is allocated to control accounts. Lets nowadjust the PMB for MR use in four distinct segments. The first is by using $288 from MR to increase thebudgets of 288 control accounts between month 12 and month 19 by $1.00 each. No new work scope isadded for this additional budget. This is an inappropriate use of MR. In the second segment no MR isspent. In the third segment, five new control accounts are added in month 23 and five in month 24 eachare budgeted at $20 for a total PMB increase of $200. This is an appropriate use of MR. Nothing is addedto the final segment leaving $12 in MR at the end of the contract. The revised PMB is represented by thered square-dot line. The effects of MR use is not readily apparent after adding the blue ACWP short-dashline. We’ll need to review the cost variance chart to see the effect.

18. Effect of MR Use on CV Chart

This slide supports thefinal two learningobjectives for this modulewhich include defining andrecognizing the effect ofmanagement reserve useon cost variance charts.

Plotting the cumulativecost variance metric fromslide 17 we get a CV chartwith a Y axis range from($600) to $600 and a thirty-eight month X axisschedule running throughzero on the Y axis. On thischart the black solid-linerepresents cost varianceand the green short-dashline represents

management reserveremaining. No MR wasspent during the firsteleven months of the contract and our expected unfavorable cost variance resulting from the buy incontract is observed. Now in months 12 thru 19 we observe, that as MR is spent, the cost variance levelsoff because the control account budgets are now equal to their actual costs. Once again this is aninappropriate use of MR. Now in months 20 thru 23 the unfavorable trend returns because MR is nolonger being added to the control account budgets. In months 24 and 25 we see a favorable cost variancespike because of new work’s $20 budgets are significantly higher than their $11 actuals. But beginning inmonth 26 and through the remainder of the contract, the cost variance returns to the expectedunfavorable trend consistent with the original baseline performance. Whenever management reserve isused by the contractor, it should be explained in the format five of the CPR.


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19. An Over Target Baseline Contract Performance Chart

This slide supports the final two learning objectives for this module which include defining and recognizingthe effect that an over target baseline has on contract performance charts.

Using our hypothetical contract data from slide 14, the Y axis range has been expanded to $14,000. The

X axis, the S shaped solid black PMB - BCWS – BCWP curve and the contract budget base green solidline are the same as slide 15. The EVMS guidelines define an OTB as replanning actions involvingestablishment of cost or schedule objectives that exceed the desired or contractual objectives on theprogram. An over-target baseline is a recovery plan, a new baseline for management when originalobjectives cannot be met and new goals are needed for management purposes. Using our hypotheticalcontract model we’ll going to increase the ACWP from $11 per control account to $12 for the first 184control accounts and $14 for the next 316 resulting the blue dashed line. This results in a significantunfavorable cost variance and the need for an over target baseline represented by the red square-dotline. The OTB is established by first zeroing the cost variance by setting BCWS and BCWP equal to

ACWP resulting in the addition of $1,632 to the PMB and then by increasing the budgets for theremaining 500 control accounts to $11 each. This results in a new total allocated budget of $12,132pictured as the purple dash-dot line. With an over target baseline the total allocated budget is no longerequal to the contract budget baseline. The work is completed on the remaining 500 control accounts at

$12 per account resulting the final segment of the ACWP blue dashed line.


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20. An Over Target Baseline CV Chart

This slide supports the final two learning objectives for this module which include defining and recognizingthe effect of over target

baselines on cost variancecharts.

Plotting the cumulative costvariance metric from slide 19we get a CV chart with a Yaxis range from ($1,600) to$200 and a thirty-eight monthX axis schedule runningthrough zero on the Y axis.The very unfavorable blacksolid line cumulative costvariance clear establishes that

the original cost objectivescannot be met. The redsquare-dot line spike in month20 depicts the cost varianceadjustment resulting from theover target baseline. Theremainder of the red square-dot line graphs a continuingunfavorable but nowmanageable cost variance trend. An over target baseline does not change the terms or conditions of thecontract it is accomplished for management purposes only. The ultimate overrun or underrun isdetermined by comparing the final cost to the contract budget baseline not to the total allocated baseline.

21. A Single Point Adjustment ContractPerformance Chart

This slide supports the finaltwo learning objectives forthis module which includedefining and recognizing theeffect that a single pointadjustment has on contractperformance charts.


contract data from slide 14,the Y axis, the X axis andthe S shaped solid blackPMB – BCWS - BCWPcurve are identical to slide15. A "single pointadjustment" or SPA refersto eliminating cumulativeperformance variances byreplanning the remaining


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work, and reallocating the remaining budget to establish a new PMB. Either cost or schedule variances,or both, can be set to zero during a single point adjustment. In month 19, halfway through ourhypothetical contract the ACWP, at $11 per control account, results in the blue dashed line and a $500unfavorable cost variance. To eliminate this cost variance, a single point adjustment is initiated in month20 by setting BCWS and BCWP equal ACWP this results in a $540 increase to the PMB. A new PMB ,represented by the red square-dot line, is established by adding the $540 single point adjustment to thetotal budget for the remaining control accounts which are now only budgeted at $8.83 each. The work iscompleted on the remaining control accounts at $11 per account resulting the final segment of the bluedashed ACWP line.

22. A Single Point Adjustment CV Chart

This slide supports thefinal two learningobjectives for this modulewhich include defining andrecognizing the effect ofsingle point adjustmentson cost variance charts.

Plotting the cumulativecost variance metric fromslide 15 we get a CV chartwith a Y axis range from($1,200) to $200 and athirty-eight month X axisschedule running throughzero on the Y axis. Letsnow plot the original costvariance metric for ourhypothetical contractassuming that there were

no single pointadjustments. This resultsin an unfavorable $1,000cumulative cost variance and we can see from the black solid-line that the CV metric is unfavorable fromthe beginning till the end of the contract. The red square-dot line graphs the single point adjusted PMBand we can see that the final cost variance is identical to the original PMB. For this reason, single pointadjustments should not occur on a regular basis, nor should they be accomplished solely to improvecontract performance metrics.


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23. A Front Loaded Contract Performance Chart

This slide supports the finaltwo learning objectives forthis module which includedefining and recognizing the

effect that front loadedbaselines have on contractperformance charts.

Using our hypotheticalcontract data from slide 14,the Y axis, the X axis andthe S shaped solid blackPMB – BCWS - BCWPcurve are identical to slide15. In the context of thismodule, a front loadedbaseline is a deceptive PMB

that generates favorablevariances at beginning ofthe contract. It isestablished by purposelyover budgeting controlaccounts at the beginning ofthe contract with budget taken from the control accounts at the end of the contract. The front loaded redsquare-dot line baseline, is created by taking $2.00 from each of the control accounts in months 33 thru38 and adding it to the budgets of each of the control account in months 1 thru 6, and then by taking$1.00 from each of the control accounts in months 20 thru 32 and adding it to the budgets of each of thecontrol account in months 7 thru 19. The front loaded baseline is not obvious by simply comparing the twobaseline curves. By plotting the ACWP, the blue dashed line, we can see that the front loaded baselineinitially displays favorable cumulative cost variances, then neutral cumulative cost variances and thenfinally unfavorable costvariances as the contract iscompleted. This will be moreapparent on the cost variancechart.

24. A Front Loaded CostVariance Chart

This slide supports the finaltwo learning objectives for thismodule which include definingand recognizing the effect thatfront loaded baselines have oncost variance charts.

Plotting the cumulative costvariance metric from slide 23we get a CV chart with a Yaxis range from ($1,200) to$200 and a thirty-eight monthX axis schedule runningthrough zero on the Y axis.


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Lets again first plot the cost variance metric for the original PMB resulting in an unfavorable $1,000cumulative cost variance. We can see from the black solid-line that cost variance is unfavorable from thebeginning till the end of the contract. The front loaded, red square-dot line, baseline is quite different.During the first six months of the contract, the cost variance trends are favorable building a positivecumulative cost variance which remains positive through the entire first half of the contract. Beginning inmonth twenty, the under funded control accounts begin and the cost variance and cost variance trendsimmediate become unfavorable finishing the contract at the same $1,000 cost overrun as the originalbaseline. A purposely deceptive front loaded baseline should not be confused with what is often called afront loaded contract. A front loaded contract purposely schedules more work early in the contract in orderto manage schedule risk. A front loaded contract differs from a front loaded baseline in that a higherpercentage of the work is actually scheduled early in the contract and properly budgeted in a front loadedcontract. Where in a front loaded baseline, the early work scope is purposely overstated and or theresulting budgets are overvalued to generate misleadingly favorable EVM metrics.

25. A Rubber Baseline Contract Performance Chart

This slide supports the finaltwo learning objectives forthis module which include

defining and recognizingthe effect that rubberbaselines have on contractperformance charts.

Using our hypotheticalcontract data from slide 14,the Y axis, the X axis andthe S shaped solid blackPMB – BCWS - BCWPcurve are identical to slide15.

In the context of thismodule, a rubber baselineresults from a deceptivePMB replanning activity.This activity generatesfavorable variances needto zero or balance unfavorable variances at the beginning of the contract. The rubber baseline isestablished by reallocating budget from controls at the end of the contract, to current control accountswithout moving the associated work scope. The first segment of the blue dashed line, is the ACWP for thefirst five months of this buy in contract, and it results in an unfavorable cost variance trend and a $35cumulative unfavorable cost variance. The red square-dot rubber baseline is created to offset theunfavorable cumulative cost variance, and to mask future unfavorable cost variances by taking $2.00from 115 contract accounts in months 32 thru 38, $1.60 from 44 control accounts in months 30 and 31,and $1.00 from 223 control accounts in months 23 thru 29 and then adding $2.00 of this budget to eachof 60 control accounts in months 6 thru 8 and $1.00 of the budget to each of 405 control accounts inmonths 9 thru 20.

The rubber baseline gets its name because when compared to the original PMB, it appears that the twoends have been held and the middle has been stretched like a rubber band to form the new PMB S curve.By plotting the remaining cumulative ACWP, the blue dashed line, we can see that the rubber baselineinitially reverses the unfavorable trend and then suggests an on target cost performance for theremainder of the first half of the contract, after which unfavorable cost variances return. This will be moreapparent on the cost variance chart.


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26. A Rubber Baseline Cost Variance Chart

This slide supports the finaltwo learning objectives for thismodule which include definingand recognizing the effect that

rubber baselines have on costvariance charts.

Plotting the cumulative costvariance metric from slide 23,we get a CV chart with a Yaxis range from ($1,200) to$200 and a thirty-eight monthX axis schedule runningthrough zero on the Y axis.Lets again first plot the costvariance metric for the originalPMB resulting in an

unfavorable $1,000cumulative cost variance. Wecan see from the black solid-line that cost variance isunfavorable from thebeginning till the end of thecontract. The red square-dot, rubber baseline is quite different. During the first five months of the contract,the cost variance trends followed the original baseline before the development of the deceptive rubberbaseline in month six. In months six thru eight the control accounts are budgeted at $12 each resulting infavorable CV trends which essentially zero out the previous unfavorable cost variances. In months 9 thru20 the control accounts are budgeted at $11 each suggesting that the early cost variance issues wereresolved. But beginning in month 21, the under funded control accounts begin and the cost variance andcost variance trends immediate become unfavorable finishing the contract at the same $1,000 costoverrun as the original baseline. Unlike a purposely deceptive front loaded baseline, which might not berealized until later in the contract, a rubber baseline should be apparent by analyzing changes to thecontrol account BACs. If near term control account BACs are increasing at the expense of summary levelplanning package budgets, far term control accounts or undistributed budget, you must consider thepossibility of a rubber baseline.

27. Baseline Maintenance Conclusion

• The EVMS guidelines allow baselines changeso Changes must be incorporated in a timely mannero Changed budgets must be reconcilable with prior budgetso Control retroactive changeso Changes must be authorizedo

Clearly document the change-trail• Two over-arching questions concerning baseline changes

o Do PMB revisions support program goals, objectives and milestones?o Is the new PMB valid?

No one is a perfect planner and program managers should expect that their requirements andperformance measurement baselines will change as the contract evolves. The EVMS guidelines not onlyallow but anticipate the need for baseline changes. They include five revisions and data maintenanceguidelines that require changes to be incorporated in a timely fashion, be reconcilable to past budgets; be


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limited when it comes to retroactive changes; be authorized; and be documented in a manner that allowsauditing. Two over-arching questions that must be ask about each baseline change are:

1) Is the PMB change necessary to support program goals, objectives and milestones2) Is the new PMB valid.

Baseline Maintenance.pdf

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