DOE N 4700.5, Project Control Systems Guidelines

U.S.DepartmentofEnergy Washington, D.C. NOTICE r -.._..— DOE, h L700,5 1 L... ~...__._.-.----J 8 21-92 EXPIRE: 8 2193 PROJECT CONTROL SYSTEM GUIDELINES SUBJECT: 1. PURPOSE. To establish the Department cf Energy (DOE) policy for applying control systems for overall manigernent of projects, including Major System Acquisitions (MSAS), Major ‘rejects (MPs), Other Line Item projects, General Plant Projects (GPP$I. a’.ldoperating funded projects and contracts within those project$ 2. CANCELLATION. DOE 22!501D, COST ANC~$ “DJLE CONTROL SYSTEMS CRITERIA, of 6-12-92. 3. BACKGROUND. Previously, DOE used t,he~ ::[and Schedule Control Systems Criteria (CSCSC) to evaluate manageme~~t :::ystemson selected contracts primarily for MSAS and MPs. Use of t$e CSCSC were normally neither required nor encouraged for all other p o.jects. Consequently, the Department has no existing policy for u ;“lication of overall, integrated project controls to the wide range of OE projects. Replacing the CSCSC with more comprehe]~sive guidelines an...~~,quiringapplication of these guidelines to all corlst.ructionano erw~wrlment.alprojects will significantly expal~clfundamental corItI I Dross the spectrum of DOE projects. 4. DISCUSSION. a. A cornerstone of the Department” project management policy is the concept of accountability at appropriate levels for project control and management. Project managers, as accountable managers, must be directly invo’1ed in the application of overall project controls. “Thispolicy P sures that the accountable project manager is responsibl~ ‘ r appropriate application of overall pro jet control: b. An essential element of account~oi ’lityis overall project control of technical $cope,, COSt, and so~edule baselines as well as associated research and develc)r)fi~nt(R&D), transition planning and baseline chanqe.s This policy ~~f”]ectsDepartmental concern with all elements of project control ard expands the earlier CSCSC to encompass ove”all control by pi [;,inggreater emphasis on control of technical, schedule, and m! baselines and baseline changes. c. The previous CSCSC Order focu:e principally on MSAS and MPs; however, the Department is resp n::,itllefor many other types of projects, This policy direct; co$t effective, graded approach to application of project cantrd:, providing flexibility in application t[:all projects arIc lcontr-act.s,MSAS or other, On the ,,,, DISTRIBUTION: INITIATED BY. All Departmental Elemenf ]fftie of Procurement, Assistance ir)jProgram Management DOE N 4700.5 8-2192 basis of the scale and type and ~nlque needs of each project. Although the principles of projet control apply equally to a“ projects, project control for a !1 million GPP should be less complex and less costly than for a $100 million MSA. Project controls should be applied accor]ing to the needs of the spec project commensurate with techni a“l,schedule, and cost risks d. This Notice provides Project Confrol System Guidelines 1 fic (Guidelines)” (see Attachment 2), which expand upon and replace the earlier CSCSC The management systems needed to properl,y control the direction and progress of DOE projects reach beyond control of costs and extend to control of t(!chnicd and schedule baselines which significantly impact projef:tcosts. The Guidelines emphasize management control system re:slultsand de-emphasize the process to obtain the results. ‘rheGuidelines apply to all projects; however, full implementation of each guideline is not required. The DOE Project Manager wil”lassess each contract and project to determine the appropriate degree of Guidelines application b~sed on project risl(

e. The Guideline$ are assembled int~ three primary categories: (1) Baseline Develo~ment. Thi:;category includes management actions necessary to define project scope and responsikiliiies, est.abli:~~baselines, and plan the project. (2) Pro,iect,.,PerformanceeThis category includes management actions after work commenfes that are necessary to monitor project status, report ano analyze performance, and maintain visibility of identified {ro.jectrisk. (3) Chanqe Management. This;fategory includes management actions necessary to ensure adequate control of changes to project baselines, irrcludng the performance measurement baselin~? f. The Project Control System (PCS retains use of the Uniform Reporting System’s standardized report formats. However, the PCS also encourages use of nonstand,:irdreports to depict technical performance indicators, critics path schedule status and other project and contract-specific rpc~rts. 9. Through publication of this Not ce, the formal CSCSC contractor validation process is replaced y a cc~mpliance review process consisting of a review of the s~st,emdescription followed by a functional appraisal. The revivw responsibility has been assigned to each DOE Field Office with P~ogram Secretarial Officer (PSO) participation. PSOS sponsoring MSAS without direct DOE Field Office projec:t,management shall be responsible for conducting compliance r~wiews of their contractors’ systems. DCJEN 4700.5 3 8-21-.92 h. Assistance in implementation l~fthis new policy is available. A reference manual is available tclprovide implementation guidance. The manual addresses application of the Guidelines through a risk- based, graded approach. The manual clarifies, and provides examples in application of each guideline element. Additional sections address roles and re:~pcmsibilities, project status analysis, reporting, and the (compliance review process. A Project Control System (PCS) Advisory Team is available through the Office of Program/Project Management and Control to provide assistance as required. 5~~ REFERENCES. a. DOE 1332.1A, IJNIFORMREPORTING SYSTEM, of 10-15-85, which establishes and provides implementing instructions for a uniform system of reporting the accomplishments under contracts b. DOE 4240.lK, DESIGNATION OF MAJOIR SYSTEM ACQUISITIONS AND MAJOR PROJECTS, of 6-23-92, which lsts specific DOE projects which have been designated as Major Sy$,t[!mAcquisitions and Major Projects. c. DOE 4700.1, PROJECT MANAGEMENT SYSTEM, of 3-6-87, which establishes the DOE project management system and provides imple- menting instructions, formats,,and procedures, sets forth the principles and requirements which govern the development, approval, and execution of [10[‘s outlay program acquisitions. d. DOE 5700.2D, COST ESTIMATING,,ANALYSIS, AND STANDARDIZA”TION, of 6-12-92, which establishes th~!policy and responsibilities for developing and reviewing project cost estimates, preparing independent cost estimates and analysis, standardizing cost estimating procedures, and improving overall cost estimating and analytical techniques, cost database, cost and economic. models escalation, and cost estimat,irq systems, 6. DEFINITIONS. See Attachment 1 7. POLICY. a. PSOS, field elements, and their contractors are expected to comply with the Project Control System Guidelines in management of all projects by applying guideline elements in a graded approach to reflect the degree of each pr[ject’s and contract’s technical, schedule, ar~dcost risks

b. The Guidelines shall be used to evaluate contractors’ project control systems to assure that the systems are sound and that progress reports to DOE management are reliable. 4 DOE N 4700.5 8-2192 c. In accordance with SEN-6E, DEPARTMENTAL ORGANIZATIONAL AND MANAGEMENT ARRANGEMENTS, of 2-21-92, the DOE Field Office Manager is accountable to a Lead PSO cln institutional and crosscutting issues. The Lead PSO is responsible for developing an Implementation Plan for his/her DOE Field Office. The Implementation Plan shall be applicable to all projects managed by the DOE Field Office. The Lead PSO shall be responsible for coordinating concurrences with all other PSOS sponsoring projects which are managed through that,DOE Field Office. d. Each DOE Fidld Office shall formulate an Implementation Plan for this Notice which outlines the graded approach to projects, addresses applicability, delinfiates responsibilities, and details the compliance review process. This Implementation Plan will be reviewed and approved by the L~+adPSO and other PSOS sponsoring projects managed through the DOE Field Office, and the Office of Procurement, Assistance and Pr:,]gramManagement, through the Office of Program/Project Management lnd Control. e. PSOS managing MSAS without d~r~ct. DOE Field Office project management :,upportshall formulate an Implementation Plan which outlines the graded approach t.(;II contracts, addresses applicability, delineates responsibilities, and details the compliance review process. Th~s Implementation Plan shall be approved by the PSO and the Office of Procurement, Assistance and Program Management, through t$f Office of Program/Project Management and Control. f. PSOS shall ensure implementation of timely and cost-effective project controll systems in com~lliance with these Guidelines for all their projects by participating in the compliance review process and concurrence in com~liance review results. 9- An Advisory i’eamwill be chartered by the Office of Program/Project, Management and Control to provide expertise and guidance to rvnsurea practical,,cost-effective interpretation of the Guidelin~s, This team will provide assistance in determining compliance fr]runusual circum:it,incesand will recommend resolution of discrepan~:,,iesthat arise it ~etermining acceptability,, h. This Notice does not apply to IWwer Marketing Administrations or facilities and activities cov~r’d under Executive Order 1,2344. 8. OBJECTIVES. a. Provide a basis for application of project management controls and when to apply these controls to all DOE projects and project- related contracts,, DOE N 4700.5 5 8-21-92 b. Provide project managers the flexibility to tailor requirements, encourage formulation of customized project control strategies for each project or group of projects, and emphasize the appropriate degree of application for each guideline element to effectively control technical, schedule, ald cost risks. c. Provide contractor and DOE maniigement with timely, useful information to manage a projecf, or contract and communicate information to senior DOE management. The Guidelines establish ii framework tc]: (1) Properly define and orqaize project and contract work; (2) Establish and maintain t’chnical, schedule, and cost baselines; (3) Develop practical, meanirlgful performance indicators to provide early warnings of project problems; (4) Ensure management visibility for control of technical, schedule, and cost basel nes;

(5) Provide timely, valid, :~d traceable baseline performance and trend data; and (6) Ensure accurate, timel;j ~nd properly controlled baseline changes; d. Ensure consistent Guidelines (oplication throughout the life of the contract or project. e. Promote consistent evaluation of contractors’ systems and provide assurance that such systems ae sound and cost effective. f. Compliance reviews for new MP should be completed within 120 days after KD1 and for MSAS within 180 days after KD1. 9, APPLICABILITY OF_GUIDELINES. a. The Guidelines shall be used Iy all PSOS for controlling all MSAS, MPs, other line item projects GPPs and operating funded projects. The Guidelines are applicable to al-lprojects whether for production, facility modifications, or research and development using a risk-based, graded aporoach. b. The Guidelines shall be appli{:able to DOE contractors performing DOE project.work. The Guidelnes reflect the needs of sound project management while provding flexibility. Flowdown of Guidelines to individual cont~-actors within a project, and the degree of ~pplication of each guideline element, shall consider risk, duration, cost, managem{’nt.utility, cost effectiveness, and 6 DOE N 4700.5 8-21-92 contract type. Fixed-price contracts will normally be required to implement selected guideline elements; schedule status reporting, problem reporting, and change management are examples of guideline elements that may be required in fixed-price contracts c. The Guidelines are not applicable to managing and operating (MAO) contractors performing normal ,ite operation functions; however, the Guidelines are applicable ‘o project work performed by M&O contractors 10. RESPONSIBILITIES A~ AUTHORITY. a. Director of Procurement, Assis~@lce and Proqram Manaciement, throuqh the Associate Directo,~~~ Proqram/Pro.iect Management and Control, shall: (1) (2) (3) (4) (5) (6) (7) (8) Define and update the Guidelines and other documentation, and develop the policy f}r guideline use and application. Provide assistance on application and interpretation of problems encountered dur:ng compliance reviews. Review and concur with tne DOE Field Office or PSO Project Control System Guideline [mpleme~tation Plan. Participate in compliancy l~eviews for MSAS and concur with review findings and recwlmendations. Develop and provide implementing clauses and procurement reguldt,ions for use in ~ ]1 Monitor compliance with h Department Approve technical training citations and contracts. s Notice throughout the courses developed by the Director of”Professional and Technical Training and Development for implementation of this I’w}tice. Establish and chair a f)tiAdvisory Team as the focal point for interpretation and a~]plication of the Guidelines. b. Director of Administration and Human Resource Management, throuqh the Director of Professional ad Technical Traininq and Development, shall develop and conduct training courses for implementation of this Notice and the Guidelines, within the framework of the Departmental training program. c. Lead Proqram Secretarial Off:~t~ shall: (1) Ensure development of a ~roject Control System Guidelines Implementation Plan for ‘he cognizant DOE Field Office. DOE N 4700.5 7 8-21-92 (2) Coordinate Implementatlor Plan concurrences with other PSOS responsible for projects managed by the DOE Field Office and coordinate Implementatior~ F’Ianconcurrences with the Office of Procurement, Assistance and Program Management..

(3) Participate in complianc,l reviews at their respective DOE Field Offices. d. Proaram Secretarial Officers W.MI Projects Manaqed Throuqh DOE Field Office~l shall: (1) Review and concur with It Field Office Implementation Plans, (2) Review and concur with tle M&O contractors’ and other DOE prime contractors’ pro,]pt control systems. (3) Participate in reviews o contractor systems. (4) Concur with project rnanaqer recommendations for extent of Guidelines application tlal.contractors will be required to implement for their MSA! aridMPs. e. Manaqers of DOE Field Off@> hall: (1) (2) (3) (4) Designate a primary responsibility organization to prepare and maintain an overall ‘reject Control System Guidelines Implementation Plan cove ing all projects managed within the field element and monito adherence to the plan. The plan will specify the extent f Guidelines application for all projects using ~ risk-bii d, graded approach. Coordinate with the cogn zant PSOS and Program/Project Managemet and Control Implementation Plan. a e~essarya Chair the contractor sys’erncompliance the Office of to update the review and provide personnel for participant on on the review. Notify the cognizant PSO and the Of(ice of Program/Project Management and Control of the compl iancereview. Incorporate Guidelines ilnp”lementationrequirements into existing contracts, new ontracts, and solicitations as appropriate. Provide perspective contractors with informa- tion on Guidelines’ requ rements. After contract award or modification of existing contracts, conduct compliance review~ of contractor pr ,jectcontrol systems in accordance with d,p“lanand schedull ~~!reedupon between the PSO, the 8 (5) (6) (7) DOE N 4700.5 8-21-92 DOE Field Office, and the Office of Program/Project Management and Control. Plans and schedules for incorpora- ting the Guidelines intc existing contracts shall be included in Implementation Plans. Obtain PSO and Office 01 Program/Project Management and Control concurrence for MSA contractors’ project control systems acceptance follc~wing compliance reviews; and for other projects, program ~ffice concurrence for other con- tractor-s’ project contrfl systems following compliance review!, Assure that the Project [Management Plan or other documentation, as appro[ piate, is the basis for Guidelines implementation. PSOS managing projects rot managed through a DOE Field. .. ... Office shall perform thf functions in paragraph 10e(l=) through (6), above f. Project Manaclers shall: (1) (2) (3) (4) (5) Identify the degree of applicability of guideline elements to their particular project and selected contracts therein, and forward recommendations to the DOE Field Office and PSO, as required, prior to the compliance review and participate in the compliance revie~ process, as appropriate. Prepare a Project Management Plan using the work breakdown structure and the techni::al, schedule, and cost baselines as the basis for Guidelin~’! implementation. Specify the frequency of reporting and establish variance analyslis)thresholds for ~ffective management. Develop project-specific procedures for use and allocation of contingency, as requiwd. Provide written comments or findings to the contractor for clearly established management action and resolution following the review of ‘he system description and functional appraisal and nDtify the contractor when findings have been satisfactorily r~solvedm BY ORDER OF THE SECRETARY OF ENERGY:

C\--,<, @)) DOLORES L. ROZZI I Director of Administrationi:t # # and Human Resource Management, ,..,>$7 DOE N 4700.5 Attachment 1 8-21-92 Page 1 1. 2. 3. 4, 5. 6. 7. 8. 9. 10. DEFINI~,JfiJ ACCOUNT STRUCTURE. A formal organi~ation of accounting codes used to collect costs for control account wt~rk.which provides needed information, segregated as necessar~, for reporting costs. ACTUAL COST. The Actual Cost of Work Performed (ACWP) is the cost incurred and recorded in the accounting system for accomplishing the work performed within a specific tine period. AUTHORIZED WORK. Work that has bee~ clefinitized and is included in the contract value as well as work that has been authorized in writing, but contract value has not been determi~ecl and agreed. BASELINE. A quantitative expressior~ c~fprojected technical, schedule and cost base, or standard for measurement during the performance of an effort: the established plan aqains which the status of resources and the objectives BUDGETED COST. budgets for al within a given CHANGE CONTROL of a project ca~ be measured. The Budgeted Cost o’ Work Scheduled (BCWS) is the sum of cont,rol accounts Fo work scheduled to be accomplished time period. A ciocumented proce s applying technical and management review and approval of changes to tchnica’1, schedule, and cost baselines. ‘“ COMPLIANCE REVIEW. An assessment [~)the contractor’s project management control system. The assessment norlnally occurs in two steps: a. The contracto} submits a description of its-management control” system to the Department of Energy (DOE) for revi:w against specific applicable Project Control System Guidelines a~d the DOE Field Office or Program Office Implementation Plan; and b. A review team conducts a functional analysis of the contractor’s system to determine adherence tcIthe published description ~nd integrity of contractor data. COMPLIANCE REVIEW CHAIRMAN. The Ch~irman is normally a DOE Field Office or PSO representative. The Chairmav\ is responsible for day-to-day activities, Typica”l activities include planning and scheduling the review, organizing and leading the review team, resolving identified system discrepancies with the cont,r~ctor, and preparing the review report. COMPLIANCE REVIEW TEAM. A team representing the DOE Field Office organization or PSO, as appropriate which evaluates a contractor’s project control :~sltem CONTINGENCY. An ~mount of budget t cover costs that may result from incomplete desigr, unforeseen and unpredictable conditions, or uncertainties. (~lntingency is conto”lled by DOE and not included in the performance meas~,’ement.baseline Attachment 1 DOE N 4700.5 Page 2’ 8-21-92 11. 12. 13. 14. 15. 16. 17. 18. CONTROL ACCOUNT. The management control point at which actual costs are accumulated and performance determined. It represents the defined work assigned to one responsible organizational element for the lowest level work breakdown structure element and must contain the specific scope of work, definite schedule, assigned budget, unique identification and method of measuring performance. The control account concept is applicable to all prc~jects;large projects may have a series of control accounts which may be divided into wclrkpackages and planning packages, if desired; small prc~jectsmay have [PIlyone control account consisting of a single charge number.

COST BASELINE. A budget that has been developed from the cost estimate made at approval of the technical ba:eline, and the majority of the budget has been time-phased in accordance with the project schedule. The cost baseline is referred to as a baseline since it is integrated with the technical and schedule base”ines and subject to formal change control. The cost baseline normally contains direct and indirect budget; management reserve budget; undistributed budget and higher level budgets; contingency amount; and amo[l~tfor fee, as appropriate. DIRECT COST. Any cost that is specifically identified with a particular project or activity, including salar es, travel, equipment, and supplies directly benefiting the project or a~t,ivity. EARNED VALUE. The value of completed work expressed in terms of the budget assigned to such work. Also ~:ferred to as the Budgeted Cost of Work Performed (,BCWP), ESTIMATE AT COMPLETION (EAC}. The a(:tual cost incurred to date plus the estimated cost (direct and indirect) of all remaining work, including authorized work that,has not been de;rlitized. FUNCTIONAL APPRAISAL. An on-site review of the use and effectiveness of a contractor’s project control system whereby system deficiencies are noted and recommendations made for corrective action. GRADED APPLICATION. A flexible sele~,,,tionprocess that enables the project manager to include or omit individual guideline elements and, within elements, choose a less rigorous,application. This flexibility allows tailoring the project control needs to the specific project or contract, considering risks and complexities of the project, For example, the guideline element, “Plalnningand Scheduling,” for a complex Major Systems Acquisition (MSA) may ecluire multi-level, critical path, logic based schedules, as compared to a simple Gantt chart with a completion milestone for a small Gen’ral Plant Project. INDIRECT COST. The cost incurred by an organization for common or joint objectives which cannot be identifie! specifically with a particular project or activity DOE N.4700.5 Attachment 1 8-21-92 Page 3 19. 20. 21. 22. 23, 24. 25. 26. 27. INTERFACE POINT. The functional, physical, or system characteristics at a common boundary between two or mor~ project participants. LEAD PROGRAM SECRETARIAL OFFICER (Lead PSO). The PSO assigned line management responsibility and accountability for Headquarters and field operations and to which one or more nu”lti-prograrnDOE Field Offices report directly. LEVEL OF EFFORT (LOE}. Support effort that cannot be measured in terms of discrete accomplishment. LOE is characterized by a sustained rate of activity for a specific period of tine. MANAGEMENT RESERVE (MR). That portiln of the contract or project budget controlled by the contractor for mand(j(~ment. purposes and not designated for the accomplishment of specific ttsl~s;when MR is used it is distributed to specific accounts ORGANIZATIONAL BREAKDOWN STRUCTURE (0]~. The hierarchical arrangement for a company’s management organization, graphically depicting the reporting relationships. Normally, the OBS is limited to showing only managerial positions, but may depict lower organizational levels. The structure may also show subcontract ‘relationshipsdepending upon the purpose of the OBS PERFORMANCE MEASUREMENT BASELINE (PM~. The total allocated budget less management reserve. It is the time phased budget plan against which contract performance is formally mea:,ured. The performance measurement baseline includes budgets assigned t I:ontrolaccounts and undistributed budgets.

PROJECT. A unique major effort withn a program which has firmly scheduled beginning, intermediate, a’~dending date milestones; prescribed performance requirements, prescribed costs; and close manage- ment, planning, and control. A proj~:ct is a basic building block in relation to a program which is indivr,dually planned, approved, and managed. A project is not constrained to any specific element of the budget structure (e.g. operating exp!n~e or plant and capital equip- ment) . Construction, f required, i , part of the total project. Authorized, and at least partially a~)propriated, project will be divided into three categories: MSAS, Major “)rojects,and Other projects. PROJECT CONTROL SYSTEM The planninq, scheduling, budgeting, estimating, work =rization, cost accumulation, performance measurement, reporting, change contr~l, and other systems used by a contractor to plan and control the w~rl<,, PROJECT CONTROL SY~EM GUIDELINES. )01 established characteristics that contractors’ internal management control systems must possess to assure effective planning% management, and c]ntrolof projects and contracts. Attachment 1 DOE N 4700.5 Page 4 8-21-92 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. PROJECT CONTROL SYSTEM GUIDELINES IMPLEMENTATION PLAN. A DOE Field Office or PSO plan for implementing the Project Control System Guidelines. The plan includes implementation policy, describes the graded application of guideline elements to projects and contracts, delineates responsibilities, and outlines the compliance review process. PROJECT RISK. A factor, element, constraint, or course of action on a project that introduces an uncertainty of outcome and the possibility of technical deficiencies, inadequate p~rformance, schedule delays, or cost overruns which could impact a Departmental mission. Evaluation of project risk must consider the poten+ ial impact and the probability of occurrence. SCHEDULE BASELINE. The time phased plan with a logical sequence of interdependent activities, milestone: and events necessary to complete the project. The schedule baseline ha,llbe formally changed during the execution of the pro,jectwhen requ-irld. TECHNICAL BASELINE. A configuration identification dccument or set of documents formally designated and apprc~ved by DOE. The Conceptual Design Report (CDR) will become the nitial project technical baseline. The initial technical baseline, plus DOE approved changes to that baseline, constitutes the current tehnical baseline. TOTAL ALLOCATED BUDGET (TAB). The sl~mof all budgets allocated to the contract or project, as applicable. TcjtalAllocated Budget consists of the performance measurement baseline plus management reserve. TOTAL ESTIMATED COST (TEC). The budfqet.edcosts for land, design, construction, equipment, escalation ind contingency for a given project. For further clarification, see DOE 4’00.1. TOTAL PROJECT COST (TPC). The cost ~f the project including all of the TEC, the cost of all preliminary desgn, conceptual engineering, research and development, project sul:]portfor a given project, and the cost of transition to operations. F r further clarification,, see DOE 4700.1. UNDISTRIBUTED BUDGET (UB). Budget within the performance measurement baseline applicable to the work effot that has not yet been identified to both a responsible organization ~,d a WBS element.

VARIANCE. The difference between pl~nned and actual performance. Variances that exceed established thresholds normally require further review, analysis or action. Established thresholds should be revised during the life of a project to en:ue meaningful analysis. WORK AUTHORIZATION. A contractor’s Internally documented process or system that ensures work is properl,yauthorized and assigned at the appropriate organi~ational levels ir o~’to beginning the work. DOE N 4700.5 Attachment 1 8-21-92 Page 5 (and 6) 38. WORK BREAKDOWN STRUCT~. A multi-tiered framework which organizes and graphically displays elements representing work to be accomplished in logical relationships. The WBS may cr may not be product-oriented; orientation may be towards products, project phases, key decision points, various budgeting units of measure, e.g. activity data sheets, or a combination. The WBS should be organized such that each element can be estimated, ,cheduled, budget~c , and work progress reported. 39. WORK PACKAGE. Subdivisions of the lowest level WBS element accorded detailed scope, schedule (start and [ompletion points), budget, a description of SCODP (including acli~ ities) and responsible manager. DOE N 4700.5 8-21-92 Attachment 2 Pac]e 1 PROJECT CONTROL SY~l:~.GUIDELINES 1. GENERAL. a. The Project control systems usld by contractors in Plannin9 and controlling the perfo~mance of their contract work sha-llmeet Guidelines set forth in this a!t.achment as directed by the Contracting Officer. The Guidi~l-lnescontained herein are the basic requirements. The specific Guidelines and Guide”lines elements applicable to a contr,ict or project will be as determ by Department of Energy (DOE). Nothing in these Guide”lines is intended to iiffect the basis o which costs are reimbursed and he ned progress payments are made, an! nothing herein will be construed as requiring the use of any sig-le system, or specific method of management control or evaluati n of performance. b. For contractors responding to -,,solicitation to perform project work, an element in the evaluation of proposals will be the offeror’s systems for planning and controlling contract performance. “Theofferor will fully describe the system to be used. The ~ystem described in the proposal will be evaluated to determine whether it meets the necessary project management control Guidelines promulgated b;ythis notice. 2. PROJECT CONTROL SYSTEM GUIDELINES (G~IllELINES). The Guidelines are divided into three categories: base’’ine development, project performance, and change management a. Baseline Develo~ment. This ca!.egory includes management actions necessary to define project c ~pe and responsibilities, establish baselines, iindplan the proj~c , (1) Techni~l Baseline and,.,~olkSco~e Definition. (a) Ob.iective. To stricture the project’s technical work to ensure defined ~bjectives are achieved. Establish the framework to ilt,egrate all elements of the Guidelines. (b) ~~!ements. 1 Establish and maintain the approved projectL. technical baseline (work scope typically established in the Conceptual Design Report) in a manner that ensures it is subject to formal change contr]l 2 Define all authorized project work in a Work. Breakdown !;tlaucture(WBS) that represents the way the work will be estimated, scheduled, budgeted, :~c-formed and managed. Maintain the Attachment 2 Page 2 DOE N 4700.5 8-21-92 (2) WBS to be cc}nsistent with project needs throughout the life of the project, ensuring changes to tne WBS are made within a formal change cont~~l process.

Roles, and ResPonsibil it-M. (a) Objective. To identify all the project’s participants, ther responsibilities, and the role each performs on ‘he project. (b) ~lements. 1 Clearly identify, utilizing an Organizational—. Breakdown S+.ructure (OBS) approach, to the control account level, each manager responsible for all project work. In addition, identify their functional and technical scope responsibil ities, their limits of authority, and interface p~]intswith other project participant. , 2 Identify t.h~+persons with the authority and responsibil tty for controlling indirect costs. 3 Perform control account management at the level consistent with management responsibilities, organizatio~ll:itructure and the contractor’s commonly ac epted practices. 4 Ensure that each control account is assigned to a person wh~ has the authority and responsibil ity to control the resources and work activities ,~ithinthe written technical, schedule, dnd cost baselines. 5 Ensure that the control account and the schedule-. status are Irecordedon a timely basis to maintain c.ul’rentperiod, cumulative-to-date and at-completion records. 5 As early as practical throughout the per of the project, ensure that each control is assigned to a specific project partic manager or subcontractor manager who wil- responsible f[]rthe planning and control work scope .ompris,ingthat account. ormance account pant be of the DOE N 4700.5 8-21--92 Attachment 2 Page 3 (3) (4) Cost Estimating. (a) Ob.iective. To p“lace emphasis on cost estimating as an integral and key i~spect of baseline budget development, emphasize the importance of accurate estimates-at-completion, and retain the separation of expense and capiti~l monies. (b) Elements. ~ Prepare cos! estimates using appropriate estimating methodologies that are integrated with the WBS, and the DOE cost structure as specified b;~the DOE, for all contract work. Ensure that all estimates are consistent with DOE 5700.2D and in accordance with FAR 15.804, “Cost and Price Data Analysis,” as applicable. Prepare estimates, as applicable, in accordance with establ shed project phases, maintaining a distinction between Total Estimated Cost and Total Proje.t Cost. Maintain an appropriate cost estimating capability to accommodate project estrnates-to-complete and est,imates-at- completion Planninq and Schedu~ng (a) Objective. To en,ure that all known requirements affecting a proje[t are identified and considered in the development of project baselines; ensure visibility of critical path activities and DOE milestones; and ensure that all project work is scheduled using a disciplined approach, and properly integrated with other guideline elements. (b) Elements. 1.- Ensure that a process is established and is in operation throughout the project life to iden- tify programmatic, operational, legislative, institutioniil, and other requirements or con- straints which may affect technical, cost, or schedule baselines and ensure that such baselines properly reflect such potential impacts,, ~ Develop schedules that integrate with the WBS and cost estimate, and represent all work scope regardles, ]f funding source. Use activity Attachment 2 Page 4 - DOE N 4700.5 8-21-92 logic to depi[t all work scope, constraints, and decision points. Estimate and assign durations to activities representing work accomplishment.

3 Establish an approved schedule baseline which clearly depicts critical path activities and milestones from which actual performance for all activities and milestones can be compared, and from which forecast data can be generated. Resource-load activities, as required and at the appropriate level, to develop time-phased budgets that ~re integrated with the schedule. Permit only a~thorized changes to the schedule baseline. 4 Summarize the detail schedule activities to form master and intermediate level schedules as required. Maintain identification of milestones with approprii~t[?schedule levels. (5) Cost BaseM. (a) 03ectives. 1 To ensure tha: an account structure is established t, collect costs against specific scopes of wor~ , and to measure performance; ~ To ensure tha! budgets for labor, services, subcontracts, and materials are established at the proper levels and time phased in accordance with the proj-ct schedule; \,,.,. To ensure tha’ the TPC is accounted for within the system; a c1 4 ‘Toensure thal the project direct costs and indirect co’;t are identified and managed. (b) Elements. J Develop a control account structure that is integrated with the WBS, and facilitates collection of expense and capital costs, by organization dnd cost element as appropriate. Establish and implement a process for controlling t’lleopening and closing of control accounts for ‘he life of the project DOE N 4700.5 8-21’-92 Attachment 2 Page 5 ~ Identify, In each control account, the work scope for that account. Establish a budget fc}r the”work, ensuring the budget is time phased accordance with the schedule baseline and the availability of resources. Ensure the contro” account budget basis is reconcilable with the cost estimate and subsequently approved revisions n ~ Ensure th;it all work is represented in contro”l accounts, and the sum of all control account budgets, plus contingency, and management reserve at~dfee, equals the TPC or contract value, as appropriate. Ensure that budget values us~!dfor planning purposes, that are not included In the approved project baseline, are identifie~las such, ~ Establish a practical and effective method of measuring performance in the control account prior to beginning work. Maintain continuity of the measurement method throughout the life of the control account. Ensure that values used for performimce determinations are verifiable and consistent with schedule performance. ~ Establish and maintain an auditab”le system for the development, maintenance, analysis and control o~ indirect budgets and costs. jj When a management reserve is established, ensure that procedures are in place to control its establishment, use, and replenishment. b. Pro.iect Performance. This category includes management actions after work commences that are necessary to monitor project status, report and analyze performance, and manage risk. (1) Funds Manacrement. (a) Objective. To provide a process that integrates the management of funds with other guideline elements, and ensures that funding impacts are reflected in project or contract ba:~lines as appropriate. (b) Elements. ~ Ensure that the commitment and expenditure of funds wi”’1not exceed the authorized limits. Provide (arly warnings that funding limits are about to w exceeded. Attachment 2 Page 6 DOE N 4700.5 8-21-92 ~ Evaluate the impact of changes to planned funding limits and, in turn, on technical, cost, and schedule baselines, and ensure that such impacts are appropriately reflected in changes to the baselines.

3 Maintain the ability to reconcile between forecasts for funding requirements and estimates for costs to execute project work. (2) Accounting._ (a) Objective. To ensure the proper utilization of accounting data in baseline management. (b) Elements. ~. Record on a ‘imely basis, at the control account level, the actual direct costs which have been incurred for resources applied in the perform- ance of work Ensure that such cost assignments are made in ,iccordance with a formal system that is controlle~~ by the general books of accounts. ~ Ensure that ~ctual costs are applied in the same accounting ph:riod that performance is measured and recorded :3 Consistent w~th Federal Acquisition Regulations, Department of Energy Acquisition Regulations, and other applicable regulations, record and apply all indirect costs that are allocated to the projec’ 4 Where allocations of direct costs must be made.— from a singlb collection point to multiple control accoun-ts, substantiate the basis for such allocat ORS. ~ Correct mi~charges and other accounting errors in a timel!’ manner. (3) Work Authorization, (a) Ob.iective. To ensure that after the work is sufficiently defined, organized, and planned, the resulting control ,iccount is authorized by the appropriate level ]f management before the task is executed. DOE N 4700.5 8-21-92 Attachment 2 Page 7 (b) Element. Establi:n and maintain a work authorization process which authorizes the expenditure of resources against baselines;, prevents the expenditure of resources for work or procurement without appropriate plans and approval at the appropriate level of management; terminates authority when funding limits or other limits of authority or constraints would be exceeded; and prevents the expenditure of funds for unauthorized work ]r procurement. (4) Performance Analysis. (a) Objective. To determine project status by analyzing technical, schedul?, and cost performance considering potential problem:,, their impact, and alternative courses of action (b) flements. 1 On a periodic basis,.- identify significant differences between planned and actual cost, schedule ant!technical accomplishments and revise pro,j~rt forecasts, as appropriate. ~ Use an accepted and documented performance measurement process to determine actual technical, schedule, and cost performance, identify problems encountered, the reasons for such problem;, and any impacts and corrective action requi~ed. ~ Periodically, ensure that the validity of estimates-at completion (EACS) are evaluated and revisions generated as required. The EAC must represent a realistic appraisal of the final cost of defi’}ed increments of work and undefined potential fa;tors affecting final cost summarized t ] the total project level, (5) ReRortin~ (a) Ob.iective. To communicate timely, accurate periodic progress reports in the formats and reporting levels stipulated by DOE to the appropriate management level which will enable {~nalysis, evaluation, and corrective action of technics, schedule and cost performance against the approv+d baselines. Attachment 2 Page’8 DOE N 4700.5 8-21-92 (b) ~lements. j Provide narrative status reports, including problems, technical and physical progress, performance objectives, schedule status, and cost performance that includes the contractor project manager’s summary assessment of progress commencing it KD1 or project start.

Provide schedl~le status reports that include critical path visibility and progress against the baseline. The reports must present status of DOE controlled milestones and provide current forecast dates. Status, including early or out of cycle reporting, is to be issued as required in response to an occurrence that unfavorably affects th~ project progress. 3 Provide cost status reports, including both-. direct and indirect costs, that provide current period, cumulative and estimate-at-completion costs repor:ed again~t the time phased cost plan. 4 Provide labor status reports that provide-. current period, cumulative and estimate-at- completion floursreported against the time phased Iab(r plan. ~ J Provide pr{olem reporting that presents the significant issues or concerns of the project manager, w-th proposed corrective actions. Any problem or issue requiring Government action must be reported. Items reported must be maintained Ionthe report until satisfactorily resolved ~ Provide a Iaseline change status report that presents tie status of changes affecting the contract I project as appropriate. 7 Develop pr~:deterrninedthresholds that prescribe.- which varit~nces, issues and problems are significant and warrant a detailed analysis of the causes and actions taken to alleviate the problem, j~ Provide vi ibility of project technical, schedule, ~nd cost risks through the narrative status r~p r-laddressing contract claims, impa(:t~~~ m new or revised DOE Orders or DOE N 4700.5 8-21-92 Attachment 2 Page 9 (and 10) requirement:i, environmental, safety and health concerns. or ther probable high impact risk areas. 9 Provide trend charts that graphically display.— meaningful performance measurement data against the approved ‘vaselines. The charts must address technical performance, schedule, labor, and cost as a minimum c. Chancie Management. This categoy includes management actions necessary to ensure adequate coltrol of project baselines including the performance mea;u ement baseline. (1) Ob.iective, To establish ~nd maintain a timely, formal process for managing and ~dministering changes to the approved technical, cost Ind schedule baselines with rebaselining occurring on y when necessitated by signifi~ ant, unrecoverahl project delays, events, or other impact: (2) Elemenl.j~. (a) (b) (c) (d) (e) (f) Assure the technics , schedule, and cost baselines and established change ontrol thresholds are clearly defined, documented and approved by DOE; Pssure that basel~n changes and thresholds are defined, documented ,indapproved, and authority and ~@sPonsibil ities ‘O )uch approval are documented; Assure that timel,y :ecisions are made at the appropriate managem nt level; Prohibit retroactive changes to cost and schedule performance data ~+xept to correct errors; Designate allowable change processing time frames consistent with the level of change authority requested and urgen y required; and Coordinate baseline replanning actions with the DOE project manager pri r to the occurrence.