Posted by: EVMConsulting.Com | March 25, 2011

All done, Wow, look at all this MR I have Left!

I have seen a lot of people ask this question recently. Program is ending and I have MR left, so now what?

Well it all depends.

EV is increasingly being used on FFP type contracts (with good reason in my opinion-probably not a popular opinion). If you have unused MR on a FFP type contract, then presto!, you have extra profit. Cool trick huh? Might be a good surprise for your bosses and your bonus at year end. Realistically though, corporate forecast account for these type of things normally with risk weighted forecasts, so a big surprise is probably not in your cards, but who knows!

Can I apply my MR to my VAC?

Now, what about on a cost-reimbursable contract? Well, it is a cost contract. Costs are billed as they are incurred. MR is a temporary holding account for risk that hopefully matches a documented risk profile. If these unanticipated risks did not occur, then they were never billed, so it isn’t really there. Make sense? You wouldn’t bill for MR, so in that way I guess it is sort of “covering” your VAC in abstract terms.

I sure wish I had some MR set aside in my home:) I bet I am not the only one that wishes that either!

Happy Friday everyone.

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