IP2M METRR Maturity Assessment – Budgeting & Work Authorization (Sub-Process C)

Establishing accurate budgets and ensuring proper work authorization are critical to Earned Value Management System (EVMS) success. Without clear processes, organizations risk cost overruns, schedule delays, and inaccurate performance data. This sub-process ensures that budgets are allocated appropriately, work is formally authorized, and financial control is maintained throughout the project lifecycle.

📌 Why Budgeting & Work Authorization Matter in EVMS

✔ Align scope, schedule, and budget to support accurate cost control

✔ Maintain baseline integrity while accommodating authorized changes

✔ Use Management Reserve (MR) to manage risks and Undistributed Budget (UB) to hold budget associated with authorized work scope that has not yet been distributed to specific Control Accounts or Summary Level Planning Packages (SLPPs)

✔ Ensure Control Account Managers (CAMs) have clear accountability

📌 Key Attributes of Budgeting & Work Authorization

C.1. Scope, Schedule, and Budget Alignment – Ensures that project scope, schedule, and budget are consistently aligned to enable accurate tracking and performance measurement.

C.2. Summary Level Planning Packages (SLPPs) – Defines high-level budgets for future work that cannot yet be fully detailed, ensuring baseline integrity while allowing for future planning.

C.3. Work Authorization Documents (WADs) – Formal documents that clearly define the scope, schedule, and budget for specific tasks, ensuring only authorized work is performed.

C.4. Work Authorization Prior to Performance – Requires formal authorization before any work begins, ensuring that all tasks are planned, approved, and aligned with project goals.

C.5. Budgeting by Elements of Cost (EOC) – Breaks down budgets into cost elements such as labor, materials, and subcontractors, ensuring comprehensive financial oversight.

C.6. Work Package Planning, Distinguishability, and Duration – Divides the project into manageable work packages with clear scope, defined durations, and measurable outcomes to enhance performance tracking.

C.7. Measurable Units and Budget Substantiation – Ensures Work Packages have authorized scope with time-phased budgets in quantifiable units, supporting accurate progress tracking and performance measurement. Planning Packages hold scope and budget at a summary level until refined as scope and timing are detailed.

C.8. Appropriate Assignment of Earned Value Techniques (EVTs) – Assigns the correct EVT to each work package, ensuring that performance is measured accurately and consistently.

C.9. Identify and Control Level of Effort (LOE) Work Scope – Manages LOE tasks to prevent them from distorting overall project performance metrics.

C.10. Identify Management Reserve (MR) Budget – Sets aside budget for unforeseen risks within the project’s scope, ensuring budget is available without impacting the baseline.

C.11. Undistributed Budget (UB) – Temporarily holds budget for authorized work scope that is not yet allocated to Control Accounts or Summary Level Planning Packages (SLPPs), ensuring flexibility while maintaining its role within the Performance Measurement Baseline (PMB).

C.12. Reconcile to Target Cost Goal – Ensures that the total budget aligns with the contract target cost, supporting financial accountability and control.

🔍 Key Indicators of EVMS Maturity in Budgeting & Work Authorization

✅ Time-phased budgets aligned with project schedules

✅ Clear WADs that define and authorize work before performance begins

✅ Effective use of MR to manage risks and UB to hold budget for authorized scope until it is assigned to Control Accounts or SLPPs

✅ Control Accounts with clearly defined Work Packages and appropriate EVTs

❌ Indicators of Low Maturity

❌ Misalignment between scope, schedule, and budget resulting in inaccurate data

❌ Unauthorized work performed without formal approval

❌ Poor control over MR leading to unaddressed risks and inadequate contingency, and mismanagement of UB causing delays in budget allocation and baseline instability

❌ Undefined EV techniques that reduce performance measurement accuracy

📊 How to Improve Your EVMS Maturity in Budgeting & Work Authorization

📌 Standardize budgeting processes aligned with the Work Breakdown Structure (WBS)

📌 Ensure that WADs are comprehensive, clear, and consistently applied

📌 Link budgets directly to schedule activities and scope elements for full integration

📌 Maintain strict change control processes to preserve baseline integrity

📌 Provide training for CAMs on budgeting best practices and EVT application

🔜 What’s Next? Next, we will explore Accounting Considerations (Sub-Process D)—ensuring that actual costs are accurately recorded, reported, and aligned with EVMS requirements. Stay tuned! 🚀

📞 Let’s Talk! At Elixir Value Management Systems, Inc., we help organizations enhance their EVMS maturity, ensuring they go beyond compliance to achieve operational excellence.

👉 Need to optimize your budgeting and work authorization processes? Let’s discuss!

📧 karlo.menoscal@elixirvms.com

📞 949-351-8896

🌐 www.elixirvms.com

🔹 Unlock the Alchemy of EVMS Excellence with Elixir Value Management Systems, Inc.! 🔹

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