Slide 1
Acceptance and FlowdownA formal acceptance is signed by an
authorized representative (usually the project manager or
contracts)this must be flowed down internally in order to authorize
project work via an internal purchase, sales or work order
comprising:Statement of Work for authorized amount = Contract SOW
(CSOW)Contract Price which forms the Contract Price used to derive
the eventual budget (Week 4)Eventually, these contractual
requirements will be reflected in the project planning documents
through to the lowest levelControl Accounts will be set up to
contain the budgetted Contract price (Cost Planning)Issues project
work orders to flow down the authorized scope (Scope Planning)
#3PM3_T_B Planning TimeThe Contract drives the ProjectProject
work is driven by some form of ContractFormal contracts are usually
established with external customersInformal contracts are/should be
established with internal customers, and may simply be memos, work
orders, or an e-mailThese Contracts evolve into the top level
program instructions through a process that involves:Reviewing the
proposed contract requirementsPreparing a responseNegotiating and
accepting the final contractFlowing down the final contract into
the projectAt each step, the contract contains two distinct
elements:The work to be performed, or ScopeThe resources (funds,
equipment, staff) to be provided to pay for performance and
profit
674-2435
NContract Negotiations
ContractContractReview/ProposalCostEstimateContractSOWContractPrice/ProgramBudgetControlAccountsProgramWorkOrder
ScopeFlowdownFundingFlowdown
Scope Planning
#3PM3_T_B Planning TimeThe Contract drives the ProjectProject
work is driven by some form of ContractFormal contracts are usually
established with external customersInformal contracts are/should be
established with internal customers, and may simply be memos, work
orders, or an e-mailThese Contracts evolve into the top level
program instructions through a process that involves:Reviewing the
proposed contract requirementsPreparing a responseNegotiating and
accepting the final contractFlowing down the final contract into
the projectAt each step, the contract contains two distinct
elements:The work to be performed, or ScopeThe resources (funds,
equipment, staff) to be provided to pay for performance and
profit
674-2435
NContract Negotiations
ContractContractReview/ProposalCostEstimateContractSOWContractPrice/ProgramBudgetControlAccountsProgramWorkOrder
ScopeFlowdownFundingFlowdown
Cost Planning
#3PM3_T_B Planning Time?
Scope PlanningCost Planning
#3PM3_T_B Planning Time?
Scope PlanningCost PlanningCost Planning = Matching authorized
funds with authorized work to make things happen$
#3PM3_T_B Planning Time
Distributed Budget
Basis ofEstimate(BOE)
Work Order
Control Accounts
WorkBreakdownStructure
#3PM3_T_B Planning Time
Distributed Budget
Basis ofEstimate(BOE)
Control Accounts
A cost estimate is prepared.The estimate is converted into a
project budget, usually through contract negotiation.The budget is
divided into control accounts.The control account budgets are
distributed to fund the scope which has been assigned to Work
Packages to create the distributed budget
ProjectBudget
Cost Estimating
#3PM3_T_B Planning Time
Distributed Budget
Basis ofEstimate(BOE)
Control Accounts
A cost estimate is prepared.The estimate is converted into a
project budget, usually through contract negotiation.The budget is
divided into control accounts.The control account budgets are
distributed to Work Packages to create the distributed budget
ProjectBudget
Cost EstimatingCost BudgettingHow do we know which Work Packages
to distribute the budgets to?
#3PM3_T_B Planning Time
Closing the Loop between Work and Funding 5.The WBS is used to
define both the Control Accounts and the Work Packages being
authorized.
Because of this common link, funds in the distributed budget
line up with Work Packages, so that
Budget and Work Packages may be connected and used to authorize
work through a Work Order form
Work Authorization
Cost EstimationCost Budgetting
#3PM3_T_B Planning Time