Upload
adelle
View
51
Download
0
Tags:
Embed Size (px)
DESCRIPTION
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 - PowerPoint PPT Presentation
Citation preview
Using Project Management Techniques
to Be a Better Contract Manager
Don Shannon PMP, Lifetime CPCM and [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
Mechanical Electrical Software
Logistics 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 Frequently in early phases
where impact is greatest Adjust frequency as
program evolves “Concurrent engineering”
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
CharteringGive 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 Time phased budget Funding requirements
Project team Roles and responsibilities
Communications Management Who says what to whom and when?
Quality management (see subordinate plan) 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 ManagementMoney 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
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
Planned Funded
LOF1
LOC
LOF1 Notice LOC1 Notice
1Assumes FAR 52.232-20 & -22 parameters are 60 days and 75%
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
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
Commitment Planned FundedActual Actual + Commitment Estimate @ Complete
LOF Notice
Cost Performance Monitoring
Sample
May be required for contracts > 1 Million and > 6 Months. Contractor format is acceptable. DID-DI-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 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 Regression Analysis
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 ManagementMurphy 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 ReviewsThe 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
SummaryWhat 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, CPCMThe Contract [email protected]://www.contract-coach.com