Planning, Scheduling, and BudgetingGuideline 6 –Schedule with Network Logica) Schedule the authorized work in a mannerwhich describes the sequence of work and identifies significant taskinterdependencies required to meet the requirements of the program.Schedulingauthorized work facilitates effective planning, status, and forecasting, all ofwhich are critical to the success of all projects.Thescheduling process documents, and the resulting project schedule, provide alogical sequence of work leading to a milestone, event, or decision pointneeded to ensure that the schedule supports the project objectives. Guideline 7 –Set Measurement Indicatorsb) Identify physical products, milestones,technical performance goals, or other indicators that will be used to measureprogress.Objectiveindicators enable measurement of work accomplished, thereby allowing itsaccurate comparison to planned work.

Meaningful performance metrics enablebetter management insight and decision-making, ensuring that maximum time isallowed for management action to keep the project on plan. Guideline 8 –Establish Budgets for Authorized Workc) Establish and maintain a time phased budgetbaseline, at the control account level, against which program performance canbe measured. Initial budgets established for performance measurement will bebased on either internal management goals or the external customer’s negotiatedtarget cost including estimates for authorized but undefined work. Budget forfar-term efforts may be held in higher level accounts until an appropriate timefor allocation at the control account level. On government contracts, if anover-target baseline is used for performance measurement reporting purposes,prior notification must be provided to the customer.Thetime-phased performance measurement baseline that represents the planned scopeof all authorized work and schedule provides the program manager a reference toassess project performance.

It is controlled and reconciled to the target costplus authorized unpriced work less management reserve. It represents thecumulative, time phased, budgeted cost for work scheduled. The performancemeasurement baseline is a key component of earned value management. Guideline 9 –Budget by Cost Elementsd) Establish budgets for authorized work withidentification of significant cost elements (labour, material, etc.) as neededfor internal management and for control of subcontractors.An essentialpart of project planning and establishing a performance measurement baseline isthe establishment of budgets for all the authorized work. Identification of thebudget cost elements, documents the required resources, and places work scopewith the performing organization. Guideline 10– Create Work Packages, Planning Packagese) To the extent it is practical to identifythe authorized work in discrete work packages, establish budgets for this workin terms of monetary value, hours, or other measurable units.

Where the entirecontrol account is not subdivided into work packages, identify the far termeffort in larger planning packages for budget and scheduling purposes.Budgets,established at the work package level identifying specific resourcerequirements in monetary value, hours, or other measurable units, provide thedetail for effective execution of the baseline plan. The resources are to betime phased the way the detail work is to be accomplished. This approachprovides meaningful product-related or management-oriented events forperformance measurement. Where a control account cannot be planned in workpackage detail, the work scope, budget, and schedule requirements are held inplanning packages.

The master schedule may have more detail below the workpackage/planning package level to support the development of a realisticcritical path, as applicable. Guideline 11– Sum Detail Budgets to Control Accountf) Provide that the sum of all work packagebudgets plus planning package budgets within a control account equals thecontrol account budget.Theintegrity of the performance measurement baseline requires that the budget ofthe control account equal the sum of its work package and planning packagebudgets. When the budget of the control account equals the sum of its workpackage and planning package budgets, it prevents duplicate recording ofbudgets.

 Guideline 12– LOE Planning and Controlg) Identify and control level of effortactivity by time phased budgets established for this purpose. Only that effortwhich is not measurable or for which measurement is impractical may beclassified as level of effort.Meaningfulproduct/management oriented events are critical for performance measurement.Objective measurement of Level of Effort (LOE) activity is impractical andprovides little, if any, visibility into actual performance; therefore, its usemust be minimised.Each task onthe project needs to be assessed to determine the best method to budget andmeasure its progress toward completion.

LOE is defined as having no measurableoutput or product that can be discretely planned at the work package level. LOEmust be limited to those activities that are unable to be measured discretelyto avoid distorting project performance data. LOE work packages should beseparately identified from discrete effort work packages and apportioned effortwork packages. Budgets for LOE activity must have a sound basis of estimate andbe time phased to properly reflect when work will be accomplished. LOE budgetsmay be planned at either the control account level or at the same level asdiscrete or apportioned work packages. Guideline 13– Establish Overhead Budgetsh) Establish overhead budgets for eachsignificant organizational component of the company for expenses which willbecome indirect costs.

Reflect in the program budgets, at the appropriatelevel, the amounts in overhead pools that are planned to be allocated to theprogram as indirect costs.The overallvalue of establishing indirect budgets lies in the ability of companymanagement to manage cost elements that cannot be directly assigned toindividual cost objects (products). By comparing actual indirect expenses toestablished indirect budgets, the company can determine if the absorption ofindirect expenses based on existing documented allocation schemes is on trackor if allocation rates will need to be adjusted. The accurate assignment ofindirect expenses, therefore, ensures that each program will only receive itsfair share of indirect costs. Guideline 14– Identify Management Reserve and Undistributed Budgeti) Project managers must realize that theperformance measurement baseline planning process contains risks andopportunities, and should identify a Management Reserve (MR) contingency accountfor unplanned activity within the project scope. Unexpected work scope growthwithin the contract SOW, rates changes, or schedule slips are examples ofsituations that may make the amount of performance measurement budget assignedto an individual control account manager inadequate. This facilitatesmaintaining budgets for work accomplished and provides effective performancemeasurement data for management.

To ensurethat budget for newly authorized efforts remains tied to the associated scopeduring the initial planning process, Undistributed Budget (UB) has beendesignated as the short-term holding account. Once the responsibleorganization(s) has been identified, the budget will transfer fromundistributed budget to the appropriate control account(s). This ensures budgetand scope will not be transferred independently.

 Guideline 15– Reconcile to Target Cost Goalj) Provide that the program target cost goal isreconciled with the sum of all internal program budgets and managementreserves.A projectbaseline that reflects the common agreement between the two parties provides acommon reference point for progress assessment. It provides recognition ofcontractual requirements and precludes unauthorized changes to the performancemeasurement baseline. The project target cost must be reconciled with theperformance measurement baseline and management reserve.


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