1. Session C01

2. Successful Implementation of an Over Target Baseline/Schedule from a Government Perspective 1 Session #C01 Name:Joseph Annunziato and Daniel Donaldson, Tecolote Research, Inc. Bopha Seng, Arlene Ferreira, Kris Yoon, Sylvin Edwards, and Susan Yanagi, Space & Missile Systems Center Date Monday July 30, 2012 Time: 4:00p-5:15p

3. 2 Over Target Baseline (OTB)/Over Target Schedule (OTS) –Background Information –Implementation –Examples/Lessons Learned –Summary –Backup Resources Acronyms Agenda

4. What is an OTB & OTS? 3 OTB –An established performance budget that exceeds the value of the negotiated contract OTS –An established schedule that extends beyond the contract milestones or delivery dates Earned Value Management (EVM) analysis performed on adjusted baseline Contract compliance, fee assessments based on original Contract Budget Base Source: DoD Earned Value Management Implementation Guide, October 2006 Performance Measurement Baseline Management Reserve Performance Measurement Baseline Management Reserve Contract Budget Base Over Target Budget Total Allocated Budget Before Overrun After Overrun

5. 4 The budget and schedule for performing the remaining work is unrealistic Why Do an OTB/OTS? Pros Restores control to contract Restores control to contract Provides executable baseline Provides executable baseline Renews buy-in from team Renews buy-in from team Meaningful performance metrics Meaningful performance metrics Cons Resource-Intensive Leads to Increased Oversight Leads to Increased Oversight

6. When Should an OTB/OTS be Done? 5 Source: OTB/OTS Handbook (May 7, 2003) Source: DAU Earned Value Management ‘Gold Card’, February 2012 Work/Percent Complete Projected Cost Growth Remaining Schedule Benefit Analysis

7. 6 What problems caused the contractor’s performance-to-date leading to the need for OTB? –Have they been fixed? How good is the contractor’s system discipline to maintain baseline integrity and compliance with the intent of the industry/government guidelines and the contractor’s EVM system/ system description? Considerations/Expectations Resolve contractor performance/EVMS discipline issues prior to finalizing OTB/OTS Resolve contractor performance/EVMS discipline issues prior to finalizing OTB/OTS

8. 7 Significant difference between ETC, BCWR, CPI CUM, TCPI EAC, VAC, CV CUM OTB/OTS Indicators—Cost BCWR= BAC – BCWP CUM TCPI EAC = (BAC-BCWP CUM )/(EAC-ACWP CUM )

9. 8 Lack of confidence in EAC due to frequent MR allocations OTB/OTS Indicators—Cost (cont’d)

10. 9 Control account budgets for work remaining that do not represent a reasonable chance of success (1) The existence of zero-budget control accounts (2) OTB/OTS Indicators—Cost (cont’d) (1) (2)

11. 10 High level concurrency Significant negative float in critical path Unrealistic relationship logic and activity duration Fixed start/finish dates and frequent reserve reductions Significant difference between BEI and SPI OTB/OTS Indicators—Schedule

12. Expected headcount does not line up with budget and schedule Expected headcount does not line up with budget and schedule 11 Increasing levels of risk indicated by project’s risk management analyses Schedule does not correlate to budget or ETC phasing Project Manager unable to effectively use performance data OTB/OTS Indicators—Risk

13. EAC BAC 12 Baseline movements Unstable EAC Lack of Corrective Action Plan Unexplained variances Management challenges EV  actual progress OTB/OTS Indicators—Data Accuracy Example 2 Month-to-month changes in the EAC Example 2 Month-to-month changes in the EAC Example1 Frequent changes to Baseline (Fmt 3) can distort the SPI Example1 Frequent changes to Baseline (Fmt 3) can distort the SPI

14. The OTB Process Flow 13 Schedule Review & Concurrence Develop Revised IMS Statement of Need for OTB Consensus on Remaining Scope Finalize OTB Cost & Schedule CAM Reviews & ETC “Scrubbing” Input ETC into EVM System Revise Detail Schedules & Prepare ETCs Issue Guidance to Replan Cost Accts * Source: OTB/OTS Handbook May 7, 2003

15. 14 80% confidence level needs to be established on cost and schedule –Schedule and Basis of Estimate jointly agreed to Government and Contractor need to agree up front on project scope to go and duration for execution Top level cost/schedule growth estimates may be generated up front, but should not be used to constrain the final OTB/OTS results OTB implementation training for government and contractor Establish joint weekly tag-up meetings Establish realistic OTB/OTS implementation schedule Do not suspend EVM reporting against original baseline Government and Contractor agree to method for adjusting variances Establish culture of teamwork, realism, and open communication OTB/OTS goal is one-time implementation with CPI/Schedule Performance Index (SPI) greater than 1.0 Ground Rules & Assumptions (GR&A)

16. Example–STS Evaluation Sheet 15 Basis of Estimates (BOE) –Description of work and products –Estimate of the resources required –Expenditure profile of estimated resources STS Evaluations –Scope, Schedule, Resources, Government- Furnished Equipment (GFE), Remaining Work, & Margin Span are assessed for definition and achievability Risk Assessment (allocated to MR) –List any risks to the EAC –Determine dollar value –Recommend BOE or MR add –Summarize for STS Agreement Shoulder-to-Shoulder (STS)

17. 16 Signature of CAM and Government Action Officer indicates that the basis-of-estimate review took place The tasks described in the BOE are technically correct and are consistent with the hours and non-labor dollars STS Agreement Example–STS Agreement

18. Example—Letter of Declaration 17

19. Example—OTB Implementation Schedule Comparison 18 GR&A/Joint Training & Prep/ OTB Kick-Off Draft BOE & STS Reviews Stage Two BOE & STS Scrub Joint Preliminary Schedule Wall Walks Perform SPA for OTB/Cost & Schedule Adjustments Jointly Approved Joint Review of Draft OTB Values Comp. Joint Scrub Update s/ Draft MR Revie w/ STS Outbrief Joint Finalization of MR Reviews Contractor Delivery of Performance Report with OTB Adjustments Variance Proposal Complete FY20XX JANFEBMARAPRMAYJUNJULAUG FY20XX JANFEBMARAPRMAYJUNJULAUG Contractor-Developed BOEs, Schedule Extensions, and MR Adjustments Proposed to the Customer OTB Updates Baselined Customer OTB Kick-Off/Contractor OTB Plan Reviewed/Accept or Reject Good Bad

20. 19 Scheduled rework, margin, and storage –Realistic and achievable baseline Example—Schedule Adjusted for OTB JFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJ 2008200920102011 Thermal Test Final Integration Test ReworkMargin Launch Ops StorageAcoustic Thermal Test Final Integration Test ReworkMargin Rework Launch Ops Built-In Self Test Space Vehicle Integration Storage Acoustic Thermal Test Final Integration Test Margin Launch Ops

21. 20 OTB/OTS –Improve managerial control over execution of remaining work Culture of teamwork, realism, and open communication continues through execution Establish strong GR&As up front and hold to them Resolve previous performance/systemic issues prior to implementation Shoulder-to-shoulder process to reach agreement on technical, schedule, cost Key Points

22. 21 OTB and OTS Handbook, May 7, 2003 –https://acc.dau.mil/CommunityBrowser.aspx?id=19576&lang=en-US Department of Defense Earned Value Management Implementation Guide, October 2006 –http://guidebook.dcma.mil/79/EVMIG.dochttps://acc.dau.mil/CommunityBro wser.aspx?id=22907&lang=en-US Defense Acquisition Guidebook, January 10, 2012 –http://at.dod.mil/docs/DefenseAcquisitionGuidebook.pdf Defense Acquisition University ‘Gold Card’, February 2012 –https://acc.dau.mil/CommunityBrowser.aspx?id=19577 DFARS 252.234-7002 Earned Value Management System –http://www.acq.osd.mil/dpap/dars/dfars/html/current/252234.htm Resources

23. 22 AcronymDefinition ACWPActual Cost Work Performed BACBudget at Complete BCWPBudgeted Cost Work Performed BCWRBudgeted Cost Work Remaining BCWSBudgeted Cost Work Scheduled BEIBaseline Execution Index BOEBasis of Estimate CAMControl Account Manager CBBContract Budget Base CPICost Performance Index CVCost Variance ETCEstimate to Complete EVMEarned Value Management Acronyms AcronymDefinition GFEGovernment-Furnished Equipment GR&AGround Rules & Assumptions IMSIntegrated Master Schedule MRManagement Reserve OTBOver Target Baseline OTSOver Target Schedule PMBPerformance Measurement Baseline SPISchedule Performance Index STSShoulder-to-Shoulder SVSchedule Variance TABTotal Allocated Budget TCPITo Complete Performance Index VACVariance at Complete