This preview shows page 1. Sign up to view the full content.
Unformatted text preview: formance Reporting We now turn our attention to government earned value reporting. The number of different reporting formats the government uses depends upon the size of the contract. As of the writing of this chapter, there are two cases. If the contract is not a firm fixed price contract and its price exceeds $70 million (in 1996 calendar year dollars) in RDT&E, or if it exceeds $300 million in procurement, then the contractor is required to utilize a project management system that meets 32 criteria. It is also required Page 225 that Cost Performance Reports (CPRs) be provided in five different formats. These five formats include a WBS format, an Organizational format, and a Baseline format. If the contract price is less than these limits but exceeds $6 million in calendar year 1996 dollars, and if the project is to last longer than 12 months, then there is a less restrictive requirement that requires a "reasonably objective" project management system and Cost/Schedule Status Reports (C/SSRs) in two different formats, one of which is the WBS format. The Earned Value Chart shown in Figure 8-4 contains some acronyms that have not been explained yet. You are already familiar with the TAB and the Management Reserve shown on the chart. The PMB is represented by the amount (of dollars) below the Management Reserve line. At the upper right of the chart is the acronym "BAC." This stands for "Budget at Completion." It is the same as the PMB, but the emphasis here is on what the PMB component of the TAB will be at completion. You no doubt have already noticed that the actual expenditure curve, the baseline curve, and the earned value curve are Figure 8-4. Earned Value Chart for a government project. Page 226 labeled differently in the government version of the Earned Value chart. The actual expenditure curve (labeled ACWP) also runs past the completion date and exceeds the sum of the BAC (PMB) and the Management Reserve. The acronym ACWP stands for "Actual Cost of Work Performed." That the ACWP exceeds the budget is not surprising, but that it runs past the completion date may appear strange. The reason for this is that the "Completion Date" is the planned completion date, not the real completion date. On government projects, the ACWP is measured in dollars, rather than labor-hours, because the government project offices belong to the customer rather than to the contractor and are more interested in the actual cost than in the actual labor-hour expenditure. The ACWP curve ends at a point labeled EAC. The EAC acronym stands for "Estimate at Complete." The EAC is a type of forecast that is computed by dividing the BAC by the Cost Performance Ratio. This computation can be thought of as modifying the baseline budget by the current productivity ratio. As computed forecasts go, this is one of the better projections. However, using computed forecasts, no matter what the algorithm, does not tend to give nearly as accur...
View Full Document
This note was uploaded on 01/11/2011 for the course ACC 9 taught by Professor Yeetan during the Spring '10 term at Sunway University College.
- Spring '10