Amacom - Modern Project Management (Ocr) - 2001 ! - (By Laxxuss)

831 multibudgeting vs the tab the emphasis in the

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: mercial sector, is postponed until the chapter on risk management. Again, the PMB is that part of the TAB to be managed, the management reserve being a portion of the TAB held in reserve for certain contingencies. The PMB is then decomposed into a number of "Control Accounts" that correspond to the control packages with which we are already familiar, plus the "Undistributed Budget." The undistributed budget is that part of the PMB that has not yet been allocated to work packages. You will notice in Figure 8-1 that the work packages are at the lowest level of the hierarchy, just as in the WBS structures with which you are already famil - Page 218 iar. You will also notice that there are "Planning Packages" in addition to the work packages. You can think of the planning packages as being work packages that are not yet activated, that is, closed work packages that have not yet been opened. But the planning packages can also be a receptacle for planning type work conducted by project personnel. On many large government projects, there is a large component of research and development that needs to be accomplished to enable the actual construction of the output of the project. Consequently, large government projects are often begun without an understanding of how they will be completed. There are commercial projects of this nature, also, and it is useful to understand how to build a WBS that accounts for this phenomenon. 8.3.1— Multibudgeting vs. the TAB The emphasis in the model in Figure 8-1 is on the cost budgets, rather than on the work. In the next section, when we discuss the government version of a WBS, we will see that this emphasis makes a government WBS something different from a commercial WBS, but there are parallels. Before we discuss the government concept of a WBS, let us look a little closer at this cost emphasis of the model. The government has not embraced the concept of multibudgeting, but it understands the problems multibudgeting tries to solve. The concept of multiple budgets on a project seems to the government to be a contradiction in terms. In discussions at the Pentagon's project management office, the author has heard it asked: "How can a project have more than one budget?" In an attempt to treat change orders and variances as part of a single budget, they have devised the following subdivision of the TAB shown in Figure 8 -2. The TAB is viewed as being composed of more basic budgets. First, there is the Negotiated Contract Cost (NCC), which corresponds to our Original Budget. This is the budget based on the cost originally negotiated with the contractor. Then there Page 219 Figure 8-2. The Total Allocated Budget (TAB) model. is the "Authorized Unpriced Work" (AUW), which can include government-authorized changes. This is additional work that has been authorized by the government that is not covered in the NCC and the price of which has not yet been negotiated with a contractor. The sum of th...
View Full Document

Ask a homework question - tutors are online