Using Program Management Techniques to Be a

Report
Using Project Management
Techniques to Be a Better
Contract Manager
Don Shannon PMP, Lifetime CPCM and CFCM
[email protected]
Overview
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Project / CM
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Roles and responsibilities
Integrated Project Teams
Program Management Techniques
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Chartering
Planning
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Program Management Plan
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Program Schedule
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Program Budget
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Communications Plan
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Scope Management Plan
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Change Management Plan
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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
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PM Exclusive roles
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Technical management of program
Technical documentation
Represents upper management with
respect to the project
Profitability
CM Exclusive roles
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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
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PM1
Contracts1
Safety
Quality
Accounting / Finance
Engineering
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Logistics
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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
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Meet often
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“Concurrent engineering”
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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
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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”)
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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
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Be accountable for meeting
schedules / deadlines
Represent Contracting at team
meetings
Offer solutions not roadblocks when
problems arise
Program Management Techniques
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Chartering
Project Planning
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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
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Management Plan (from PM)
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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
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Conformance to contract and SOW
Program Management Planning as
Applied to Contract Management
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Project budget/spend plan
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Project team
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Who says what to whom and when?
Quality management (see
subordinate plan)
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Roles and responsibilities
Communications Management
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Time phased budget
Funding requirements
Does it follow contractual
requirements
Requirements Management / Scope
Management (see subordinate plan)
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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
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Technical Changes
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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
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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
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Implementation (e.g., FAR 52.234-2 or
DFAR 252.234-7001 or -7002) can be
expensive
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Usually reserved for large programs (> $20M
– $50M)
Usually reserved for programs > 1 year
ANSI Standard 748 requires compliance
with 32 separate guidelines
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Oftentimes the processes needed are in
place – especially in ISO 9000 organizations
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Full implementation is not needed unless
required by the contract
 Significant benefit can be derived by
simply using EVMS techniques to monitor
performance
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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:

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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
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EVM Performance Factor Based EAC
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Regression Analysis
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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
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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
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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
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Adjusted to fit the organization’s needs
Should Include
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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
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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

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