Schedule Margin July 2013 NAVY CEVM Welcome to CEVM training for Schedule Margin

Outline Definition Program Management Perspective Background Policy/Standards Managing/monitoring Summary We’ll begin this training module with a definition of schedule margin and talk a bit about the program management perspective. We’ll then discuss some of the background of schedule margin and recent policy updates and new standards related to its use. Next we’ll provide guidance on managing with schedule margin and monitoring its usage. We’ll conclude with a summary

Definition Schedule margin generally refers to a baselined task(s) that has no actual scope/budget, serves as a time- reserve, and therefore effectively increases the likelihood of meeting milestone deliveries According to IPMR DID DI-MGMT-81861: “Schedule margin is an optional management method for accommodating schedule contingencies. It is a designated buffer within the schedule and does not have any resources assigned to it. Schedule margin shall have a baseline and be under the control of the contractor’s program manager.” The Keys in the IPMR DID requirements for schedule margin Optional technique No resources can be assigned. It must be baselined. It must be under the control of the contactor’s program manager.

Program Management Perspective The program manager is responsible for managing scope, schedule, and budget risk. Management reserve serves as hedge against cost risk. It is a reserve of budget dollars. At the program manager’s discretion, MR budget can be distributed to create plans for mitigating risk In a similar fashion, schedule margin serves as a hedge against schedule or time. It serves effectively as a reserve of “days”. At the program manager’s discretion, schedule margin may be decreased to acknowledge schedule slips that can not be recovered by refining the logic and durations of discrete tasks without significantly increasing schedule risk This period of time can be represented as a “gap” or as a task The program manager is responsible for managing schedule. Typically the role of Management Reserve is understood from a cost risk perspective. Schedule Margin is used to create contingency in the schedule to increase the probability of schedule delivery when required. Schedule Margin can also be an effective management tool as to the increase or decrease of schedule risk as we will look at later.

Background The concept of schedule margin has been debated at various conferences and forums for years The visibility to and sheer number of such margin tasks has often been a point of contention Historically, DCMA has issued level 3 findings if schedule margin tasks were included in schedules In June 2012, the IPMR DID and its related IPMR Implementation Guide provided schedule margin standards and officially recognized it as an effective, albeit optional, program management tool for managing schedule risk The definition of schedule margin, schedule contingency, and other titles has been a contentious issue for several years. Historically it has been embraced by many contracts but drawn criticism an been the source of findings by DCMA. The 2012 IPMR DID and the related IPMR Implementation Guide set standards for the use of schedule margin and recognize it as an effective, albeit optional program management tool.

New IPMR Implementation Guide on Schedule Margin Agreement with DOD and industry, approved by PARCA From the IPMR Implementation Guide: “4.14.2 Intent Regarding Schedule Margin (with Examples). Schedule margin (aka schedule contingency, buffer, reserve, or any other term which meets this definition) is any task not associated with specific scope or resources, and is used to increase the probability of on-time completion of the contract events. The term “contract events” includes major logical integration points, such as, contract events, major test and integration milestones, or end item deliverables. Schedule margin, if used, is typically set at the time the baseline is established and set with the baseline and forecast duration equal…Schedule margin may be in the critical path with discrete predecessors and successors” The merits of Schedule Margin will never be a unanimously agreed upon, but the IPMR DID provides a base set of standards to promote consistency. Although the Navy and DCMA both proposed a more restricted definition, the final consensus is as described here. From the IPMR Implementation Guide, lets review a few key take-aways: Schedule margin is to be used prior to “contract events” which are clarified to refer to “major test and integration milestones, or end item deliverables” It is recommended that each NAVY contract define what the “major logical integration points” are that are unique to that contract. Schedule margin may be within the critical path. Typically the successor is the contract event, integration milestone complete, or contract deliverable. It is normally the point for which float is controlled in the schedule with a deadline or constraint (Contract or deliverable only) The DOD position is that anything without resources and without discrete scope, regardless of its title, is considered schedule margin and shall be planned on DOD programs in the manner specified.

Schedule Margin Standards Schedule Margin may be a “gap” or a task within the critical path with discrete predecessors and successors Use should be limited to choke points in the schedule (contract events, major test and integration milestones, or end item deliverables) Any schedule margin planned as a task shall be clearly labeled “SCHEDULE MARGIN” Allows for identification and removal for schedule risk analysis All schedule margin is owned by the Program Manager All schedule margin tasks must have a baseline No resources or budget may be applied to schedule margin This summarizes the requirements as specified in the DID and Guide.

Schedule Margin “gap” vs. task Discrete Task Contract Complete (IMP Event) Constraint Discrete Task Discrete Task gap Discrete Task In the top example, Schedule Margin is reflected as a gap between the final discrete task and the major program milestone. The end date of the final task is fixed by a constraint. In the bottom example, Schedule Margin is reflected as a task with baseline and forecast duration, but no work. Its predecessor is the final discrete task, and its successor is the major program milestone. Contract Complete (IMP Event) Discrete Task Discrete Task gap Schedule Margin

Managing Schedule Margin Each month as schedule status changes require, the contractor PM decides whether or not a change to schedule margin (SM) duration is warranted or if the logic/durations of other tasks may be altered to hold the SM forecast start and duration. SM must be controlled by the contractor PM The baseline and forecast duration of each SM task and the delta between them should be compared and reported monthly SM tasks must be baselined with a baseline duration Comparison of the % of schedule margin used with the contract % complete can serve as a guide for SM health If they differ by greater than 10%, risk is increasing or decreasing So how is schedule margin managed? Practically speaking, each month as schedule status changes require, the contractor PM decides whether or not a schedule margin duration change is warranted, or if the logic and duration of other tasks may be altered in order to hold the schedule margin forecast start and duration. For each SM task, the difference between baseline and forecast duration should be calculated. This difference represents the number of days of schedule margin consumed by the critical path. By further dividing this delta by the schedule margin baseline duration, one can determine the percentage of SM used, and compare this with the contract % complete to evaluate the rate of schedule margin duration use. Some combination of these metrics along with the schedule margin forecast duration should be tracked and reported monthly. This approach underscores the importance of maintaining both a schedule margin baseline, and contractor PM control of schedule margin.

Schedule Margin Summary Schedule Margin is a option for the PM to manage schedule risk Schedule Margin is restricted within the IMS to natural significant integration points. The requirements of schedule margin are such that it can be easily identified and removed by the Government. It is typically removed from a schedule risk analysis (SRA) The baseline for schedule margin must be controlled The final point is the schedule margin is a tool the PM can use to manage schedule risk. It is normally removed for SRA which measure the risk of particular milestones. By comparing the baseline and forecast for SM we get an effective measurement of managing schedule risk. Other techniques without schedule margin include measuring the critical path float from the original baseline to the current forecast.

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