Using Program Management Techniques to Be a
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Transcript Using Program Management Techniques to Be a
Using Project Management
Techniques to Be a Better
Contract Manager
Don Shannon PMP, Lifetime CPCM and CFCM
[email protected]
Overview
Project / CM
Roles and responsibilities
Integrated Project Teams
Program Management Techniques
Chartering
Planning
Program Management Plan
Program Schedule
Program Budget
Communications Plan
Scope Management Plan
Change Management Plan
Subcontracting Plan
Funds Management
Sub-supplier Management
Deliverable Management
Risk Management
Program Management / Baseline Reviews
Project / Contract Management
Which are you? Which do you choose to be?
Project, Program, Contract
The Project is a defined set of tasks leading to a desired end result.
A Program is a collection of projects or a single large project
comprised of smaller units of work which could be called projects.
A contract is a legal agreement that enables a project or a program to
be performed for the benefit of another.
Today I will mix these terms together but understand they are actually
different facets of the same entity.
If I wish to differentiate between the contract (as a legal construct)
and the work to be done I may use the terms “Technical” “Program” or
“Project” interchangeably to describe the work
PM/CM Roles and Responsibilities
PM Exclusive roles
Technical management of program
Technical documentation
Represents upper management with
respect to the project
Profitability
CM Exclusive roles
Contractual Management of
program
Scope
Cost
Compliance with terms and
conditions
Advocate for company or agency
Lead negotiator
Contract documentation
Project Team
PM/CM Shared roles
Customer interface and
communication
Financial management
How/where funds are spent
Staying within budget
Customer satisfaction
Team management approach
Sometimes called “Integrated
Project Team” (IPT)
Led by technical PM
CM is advisor on areas of
expertise
IPT Membership
PM1
Contracts1
Safety
Quality
Accounting / Finance
Engineering
Logistics
Mechanical
Electrical
Software
Training
Spares
Documentation
Manufacturing
Key Subcontractors / Suppliers
Others as required
1. PM and Contracts are the “Voice of the Customer”
IPT Best Practices
Meet often
“Concurrent engineering”
Frequently in early phases
where impact is greatest
Adjust frequency as program
evolves
Allows interaction among
disciplines to identify and
resolve issues up front
Reduces cost impact of
design changes
Why is this important to CM?
Co-locate team members if
possible
Conduct team building
exercises
Contract Manager Competencies1
Using effective
communications
Attend contract kick-off
meetings
Conducting periodic status
reviews
Preparing written status
reports
Observe and monitor
performance
Document performance
1. Contract Management Body of Knowledge, 4th Edition
Active vs. Passive Management
Active management means:
Getting out from behind your
desk
Meeting with stakeholders to
discuss requirements and
performance
Taking the lead on addressing
contract issues
Being informed
Contract Management as a
Customer Service Discipline
CM supports PM
Advisor for contractual
matters
Acquisition strategist
Contract/subcontract
type
Competition
Manages business matters for
subcontracts and consultants
Agreements/subcontracts
Payment
Non-disclosure
General Techniques to Improve
Customer Service
Go on “walkabouts” (Management
by Wandering Around aka “gemba
walk”)
Promotes informal communications
with PMs and team
Improves understanding of
technology and potential issues
Demonstrates approachability and
willingness to be a team player
“Own” the contract / procurement
process
Be accountable for meeting
schedules / deadlines
Represent Contracting at team
meetings
Offer solutions not roadblocks when
problems arise
Program Management Techniques
Chartering
Project Planning
Program Management Plan
Program Schedule
Program Budget
Communications Plan
Scope Management Plan
Change Management Plan
Subcontracting Plan
Funds Management
Sub-supplier Management
Deliverable Management
Risk Management
Program Management / Baseline Reviews
Chartering
Give me a clear statement of what to do and the authority to do it …
Chartering
Official management
statement empowering PM
(e.g., letter of appointment
etc.)
CM needs similar charter to
empower them to bind the
company
signature authority for
contract documents
negotiation authority
Program/Project Planning
Plan it like you will do it; do it like you planned it ….
Program Management Planning as
Applied to Contract Management
Management Plan (from PM)
Identification of stakeholders
Project roles and responsibility
matrix
Schedule baseline
Technical
Work Breakdown Schedule
Program tasks
Time phased actions
Resources
Contract Management
Required reports/meetings
Project milestones
CM’s should review and offer
appropriate input to these plans
Conformance to contract and SOW
Program Management Planning as
Applied to Contract Management
Project budget/spend plan
Project team
Who says what to whom and when?
Quality management (see
subordinate plan)
Roles and responsibilities
Communications Management
Time phased budget
Funding requirements
Does it follow contractual
requirements
Requirements Management / Scope
Management (see subordinate plan)
Is there a change management plan
in place
Who is authorized to direct changes
What is the change process
Communications Plan – What’s in
it?
What will be communicated
Status Reports
CDRL Requirements
Event driven communications
(LOF/LOC)
Technical communications
Who will (is authorized to)
communicate
When will information be
communicated
Where (or to whom) will
communications be
transmitted
Communications Planning
Develop mailing/distribution list
To primary individual(s) e.g.,
PCO etc. as per CDRL or other
guidance
Copy to your PM
Update these lists as
appropriate
Pre-print labels
CD Labels, address labels etc.
Create boilerplate letters
Transmittal of periodic reports
Limitation of Funds
Set-up reminders in Outlook or
other program.
Change Control Plan
Technical Changes
Design changes must be processed by
Engineering / Configuration Control
function and approved by customer
In-scope
Generally to address performance or
reliability issues
May reflect value engineering or
address obsolescence
Paid for by contractor
Out of scope
Adding functions or features
Revising requirements
Changes to delivery location or date
Generally paid for by customer
Generally results in a contract
modification
Administrative Changes
Appointing officials such as COR
Address changes
Incremental funding
Change Order Processing
Configuration Management
Product oriented change
management
Configuration Control Board
Establish engineering baseline
Once baseline is established
CCB must approve all changes
to engineering baseline
Identify and quantify change
impacts
Is Contracts a member of your
configuration management
team?
DEMAND a seat at the table!
Change Management
Change order request/proposal
Capture costs of change
Identify ‘who pays’
Unique job number for each
change
Track incurred costs for change
Ensure proper accounting of
costs
Subcontracting Plan
Not to be confused with small
business subcontracting plan
Part of “make/buy”
determination
What work will be
subcontracted and by what
basis
Teaming agreements
Small business set-asides
Competitive subcontracting
Procurement of materials
Subcontracting
Contracts Manager
Responsible for ‘flow-down’
requirements
Creates and negotiates
agreement1
Monitors subcontractor
performance1
Coordinates funding
requirements1
Coordinates payment issues1
1. This function may be delegated to a sub-contracts or supply chain management function
Funds Management
Money is the lifeblood of a project: the Contract Manager’s job is to keep
the arteries full and monitor the blood pressure ...
Funds Management
How much funding do you
need?
When do you need funding?
How much funding remains?
Can you complete the contract
effort with the allotted funds?
Cost / Funds Management
Consequences rely on contract
type
Cost contract
Overrun
Stop work
Incomplete effort
Fixed Price
Profit/loss
Long term future of the
enterprise
CM must provide appropriate
notices
Limitation of Funds
Limitation of Cost
Special requirements
Guaranteed Final Report clause
Sample Project
4 Primary Tasks
System design
Hardware Design
Software Design
Functional Prototype
12 Month Duration
Approximate $4,000,000 total cost
Incrementally funded CPFF Contract
Sample Project Schedule
Sample Project Cost
Sample Project Funds Planning
$4,500
$4,000
$3,500
$3,000
LOC
$2,500
$2,000
$1,500
LOF1
$1,000
$500
$0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Planned
LOF1 Notice
1Assumes FAR 52.232-20 & -22 parameters are 60
LOC1 Notice
days and 75%
Dec
Funded
Commitments
Commitments =
Purchase Orders
Materials
Components
Subcontracts
Incremental funding
Termination costs
Can not commit in excess of
funding
“Spent = actual +
commitments”
Adding Commitments to Cost
$4,500
$4,000
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
Jan
LOF Notice
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Commitment
Planned
Funded
Actual
Actual + Commitment
Estimate @ Complete
Nov
Dec
Cost Performance Monitoring
May be required for contracts > 1 Million and > 6 Months. Contractor format is acceptable. DIDDI-MGT-81468 provides for tailoring requirements to ensure only minimum information required
for effective management control is obtained from contractor. Generally N/A to FFP contracts
Schedule Performance Monitoring
Earned Value Management
System
Implementation (e.g., FAR 52.234-2 or
DFAR 252.234-7001 or -7002) can be
expensive
Usually reserved for large programs (> $20M
– $50M)
Usually reserved for programs > 1 year
ANSI Standard 748 requires compliance
with 32 separate guidelines
Oftentimes the processes needed are in
place – especially in ISO 9000 organizations
Full implementation is not needed unless
required by the contract
Significant benefit can be derived by
simply using EVMS techniques to monitor
performance
Tracking cost performance
Projecting Estimate at Completion
EVMS = Cost + Schedule
Monitoring
Variance Analysis
On/Slightly Behind Schedule. Why?
$21,000 Under Cost. Why?
Why Costs Never Meet
Projections
Driving by rear-view mirror
Assume future costs or
performance will mimic past
performance
Any anomalies were ‘bumps in
the road’
Straight line projection based
on known spend rates.
“Political” Pressures
Must finish within budget
Advocacy by Program staff
Estimate at Completion (EAC)
EAC = Actual Costs to Date + Estimate to
Complete (ETC)
Estimate to Complete = Budgeted Cost of All
Work – Budgeted Cost of Work Performed
adjusted for:
Cost performance to date (CPI)
CPI = Budgeted Cost of Work Performed ÷
Actual Cost
.85M Budgeted ÷ 1.0 M Cost = CPI = .85
CPI > 1 is good
If CPI < 1.0 project is overrunning
cost
If 2M in work remains and CPI = .85 the cost
to complete (ETC) is likely to be 2.35 M
Cost at completion (EAC) would be 1M +
2.35M = 3.35M
Risk assessment
Risk events can impact costs and their
impacts should be considered
How? Stay tuned ….
Defense Acquisition University
EAC Fundamentals
Recurring Themes in EAC
Research
PM’s are optimists
Things will get better
Just a bump in the road
Programs Do NOT improve
over time
EVM based EAC can provide
insights
Three Categories of EAC
EVM Performance Factor Based EAC
Regression Analysis
Easiest to do re: previous example on slide 42
Use Cumulative CPI to adjust estimated cost of
work remaining
Several techniques possible - provides a range
of values rather than single point
Fit a curve to project cost based on historic
data
Extrapolation errors possible when estimating
outside the data’s range
Risk Based – Forward Looking
Uses Monte Carlo simulation tool to estimate
remaining risks
Best when combined with a Program
Evaluation and Review Technique Schedule
Uses range of data for task duration
rather than single estimate
Optimistic, pessimistic, and most likely
Provides range of values and confidence
intervals
Deliverables Management
Deliverables fulfill contract requirements. Make sure they are on time,
conform to requirements, and that you document their delivery and
acceptance.
Deliverables Management
List of deliverable items
Schedule of deliveries
Soon to come due listing
Memory ‘ticklers’
Transmittal documents
DD250
Letter of transmittal
Notice to invoice
Create and Maintain a Deliverable
Item List / Schedule
Risk Management
Murphy was an optimist ….
Implement a Risk Management
Program
Identify contract (program)
risks and document them in
a risk register
Risks include opportunities
as well as negative events
Perform a qualitative risk
assessment for each risk
Likelihood of occurrence
Consequences
Prioritize risks based on
composite score
Develop mitigation,
transference, or avoidance
strategies for top scoring
risks
Quantitative Risk Analysis
Statistical techniques used to
quantify risk
Assign probability or confidence
interval to events
Estimate cost or impact
Best when integrated with
schedule
Identify likely completion
date(s)
Identify final cost
Software based solution
May take special training to use
or interpret results
Performs complex analysis
including interaction and ‘what
if’ scenarios
Risk Management is an Ongoing
Effort
Periodic meeting to review and
reassess risks
Monthly during first stages of
project
At least quarterly thereafter
Mitigation strategies should be
reassessed over time
Still viable
Has risk changed
Update the risk register to add
new risks or retire risks that no
longer threaten
Program Reviews
The program team must be accountable for the performance of their
projects …
Program Reviews
Coordinate actions and inform
stakeholders
Monitor progress
Identify / discuss program /
contract issues
Approve decisions
Program Review Content
Adjusted to fit the organization’s needs
Should Include
Technical accomplishments
Schedule update
Items completed since last review
Deliveries made
Delays or issues requiring assistance
Get well plan for late activities
Financials
Performance to date
Funds remaining
Additional funds required
May include
Upcoming events
Staffing
Problems or solutions needing approval
Lessons learned
Summary
What to take with you as
you leave
Key Points
Contract Management requires involvement
Get out from behind your desk and talk to people
Take responsibility for the contract
Budget
Deliverables
Property management
Reports
Take the initiative to identify and resolve problems
Key Points
Contract Managers are team players
Get to know your teammates and learn how to work with
them
We’re not gatekeepers so our approach should be “Tell me
what you want to do and I’ll tell you what we need to do
that”
Be proactive
Don’t wait for a problem to bite you if you can head it off
beforehand
Offer solutions to perceived problems
Key Points
Stealing from the other guy’s toolbox is OK
Be sure you understand your charter
Participate in project (program) planning and share input with the
team
Change Management
Communications Management
Cost Management
Plan it like you’ll do it … Do it like you planned it.
Using advanced tools such as EVMS and Risk Management will
enhance your ability to do your job
Learn the basics
Learn the lingo
Apply the techniques
Key Points
Program reviews are necessary
Be prepared to brief contract status
Funds issues such as LOF or LOC
Payment or invoicing as required
Period of Performance etc.
Reports and deliverables
Be prepared to assist others
Notifying appropriate officials of issues or changes required
Offer strategies for success
That’s all folks!
Don Shannon PMP, CPCM
The Contract Coach
[email protected]
http://www.contract-coach.com