Planning, Scheduling, and Budgeting

Guideline 6 –
Schedule with Network Logic

a) Schedule the authorized work in a manner
which describes the sequence of work and identifies significant task
interdependencies required to meet the requirements of the program.

authorized work facilitates effective planning, status, and forecasting, all of
which are critical to the success of all projects.

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.


Guideline 7 –
Set Measurement Indicators

b) Identify physical products, milestones,
technical performance goals, or other indicators that will be used to measure

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.


Guideline 8 –
Establish Budgets for Authorized Work

c) Establish and maintain a time phased budget
baseline, at the control account level, against which program performance can
be measured. Initial budgets established for performance measurement will be
based on either internal management goals or the external customer’s negotiated
target cost including estimates for authorized but undefined work. Budget for
far-term efforts may be held in higher level accounts until an appropriate time
for allocation at the control account level. On government contracts, if an
over-target baseline is used for performance measurement reporting purposes,
prior notification must be provided to the customer.

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.


Guideline 9 –
Budget by Cost Elements

d) Establish budgets for authorized work with
identification of significant cost elements (labour, material, etc.) as needed
for internal management and for control of subcontractors.

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.


Guideline 10
– Create Work Packages, Planning Packages

e) To the extent it is practical to identify
the authorized work in discrete work packages, establish budgets for this work
in terms of monetary value, hours, or other measurable units. Where the entire
control account is not subdivided into work packages, identify the far term
effort in larger planning packages for budget and scheduling purposes.

established at the work package level identifying specific resource
requirements in monetary value, 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.


Guideline 11
– Sum Detail Budgets to Control Account

f) Provide that the sum of all work package
budgets plus planning package budgets within a control account equals the
control account budget.

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


Guideline 12
– LOE Planning and Control

g) Identify and control level of effort
activity by time phased budgets established for this purpose. Only that effort
which is not measurable or for which measurement is impractical may be
classified as level of effort.

product/management oriented events are critical for performance measurement.
Objective measurement of Level of Effort (LOE) activity is impractical and
provides little, if any, visibility into actual performance; therefore, its use
must be minimised.

Each task on
the project needs to be assessed to determine the best method to budget and
measure its progress toward completion. LOE is defined as having no measurable
output or product that can be discretely planned at the work package level. LOE
must be limited to those activities that are unable to be measured discretely
to avoid distorting project performance data. LOE work packages should be
separately identified from discrete effort work packages and apportioned effort
work packages. Budgets for LOE 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.


Guideline 13
– Establish Overhead Budgets

h) Establish overhead budgets for each
significant organizational component of the company for expenses which will
become indirect costs. Reflect in the program budgets, at the appropriate
level, the amounts in overhead pools that are planned to be allocated to the
program as indirect costs.

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.


Guideline 14
– Identify Management Reserve and Undistributed Budget

i) Project managers must realize that the
performance measurement baseline planning process contains risks and
opportunities, and should identify a Management Reserve (MR) contingency account
for unplanned activity within the project scope. Unexpected work scope growth
within the contract SOW, rates changes, or schedule slips are examples of
situations that may make the amount of performance measurement budget assigned
to an individual control account manager inadequate. This facilitates
maintaining budgets for work accomplished and provides effective performance
measurement data for management.

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.


Guideline 15
– Reconcile to Target Cost Goal

j) Provide that the program target cost goal is
reconciled with the sum of all internal program budgets and management

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.


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