Posted by: EVMConsulting.Com | December 2, 2011

Oh Good Grief! Incomplete CDRL Requirements on FFP Contracts?

In a previous post, I talked about EVM requirements on a FFP contract. Today I would like to talk about non-EVM requirements on FFP contracts. Recently, I reached out to some industry experts for advice on precisely this question and I would love to hear your feedback as well.

There was a scenario where the DIDs were being written for a large-scale FFP contract. The contract would potentially be paid using 5 key milestone events (TBD).

Initially, the requirement would have no cost, burn rate charts or even a CFSR mandated as monthly CDRLs. Since it is a FFP contract most likely these reports would need to be in hours, but it would give you another mechanism for mitigating potential risks.

Additionally, the requirement mandated an IMS but not a resource loaded-IMS nor IMS narrative or IMP.

So I reached out to Gary Humphrey’s of Humphrey’s & Associates, Mark Infanti of SM&A and an industry veteran I have known for years to get their feedback. I thank them all very much for their time and advice.

The verdict?

All answers were very similar and shockingly they were surprised with the lack of a resource-loaded IMS requirement. They would definitely require an IMS Narrative and IMP as well. The CFSR was recommended based on contractual language (is the contractor liable for any overrun or termination cost or any additional costs?) and burn rate charts were suggested as a useful tool.

The importance of a solid risk plan and conducting either an IBR or BER (Baseline Executability Review) were also emphasized.

My general question is this: why on a FFP contract, absent of cost or EVM reporting, would you require an IMS that isn’t resource loaded? No other tool exists to give you better visibility into risks on the program.

Just because you may not be paying for schedule delays, doesn’t mean there won’t be any.

Attention Program Managers: Do yourself a big favor and invest the extra money in good Program Control CDRLs for proper risk mitigation and hire the right professionals to analyze this data. Spend extra time making sure you have the right requirements are in the DID before the RFP is released. You will save yourself big headaches later on, I promise you.

Let me ask you out there-what CDRLs would you require on a FFP contract? What Lessons Learned have you witnessed?

Happy Holidays Everyone:)

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