Hembree.mike

The NASA Project Budget Process2011 PM ChallengeFebruary 9-10, 2011

Mike HembreeJohnson Space Center

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The NASA Budget

Our system is perfectly and purposely designed to not be efficient

As a result, finding and holding on to a credible budget is tougher than

Rocket Science

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NASA Budget Stakeholders

It is important as a project manager to understand all the stakeholders that care about your project

Congressional Members

Congressional Staffers

Congressional Budget Office

Congressional Research Service

Government Accountability Office

White House

Contractors

International Partners

Space Advocacy Groups

NASA Centers

General Public

NASA Headquarters

Office of Science and Technology Policy

Media

Office of Management and Budget

NASA Office of Legislative Affairs

What is the bottom line? Our system is perfectly designed to not be efficient. To protect Freedom and liberty is it’s purpose. No one player holds the key to power.

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Basis of our Budget Authority

• Vested Congress with control over the fiscal matters of the Federal Government.

• Article 1, Section 8: Gives Congress the power to levy and collect taxes, to borrow money on the credit of the United States, and to coin money.

• Article 1, Section 9, Clause 7: “No money shall be drawn from the Treasury, but in consequence of appropriations made by law; and a regular statement and account of receipts and expenditures of all public money shall be published from time to time.”

The U.S. Constitution

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Where’s the Money?

NASA is in here4% of “Other Discretionary”

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NASA Budget as a Percentage of the Federal Budget

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,0001959

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

Years

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

NASA Budget % of Federal Budget

In 2011, the NASA budget fell to .49% of the Federal Budget

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Creating the President’s Budget

Congress• Authorize, Modify or Deny Appropriations

Executive Officeof the President

Mid-tier & ProjectManagement

Agency Leadership(CPIC Process / Policy)

• Assess Business Value of Agency Budget Requests• Develop President’s Budget

• Review Funding Requests• Develop Portfolio of Investments

• Business Case Analysis• Capital Plan

Agency Strategic /Performance Plan

President’s Management

Agenda

Gov. Wide StrategicMission & Goals

Gov. & Agency-wideStrategic Vision

& Goals

CommunicateValue of Proposed

Investment(s)

CommunicateValue of Proposed

Investment

Source: NASA Cost Estimating Handbook - page 8 9

Authorization and Appropriation Bills

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• Authorization is writing the law– Authorization is policy guidance. It establishes a framework including

what should a program do, where should it be located, etc.

– NASA Authorization bills often cover multiple years. NASA Authorization Act of 2010 authorizes appropriations for FY11-13

– These bills authorize the federal government to do something, such as start a new NASA Program or amend the tax code, etc.

– The authorization bill merely says the government CAN spend the money on this purpose if it so chooses.

• Appropriation is cutting the check– Any agency or program needs language in an appropriation bill to

actually get the money

– Appropriations bills are key to making things happen because federal actions require money. Even though most policy guidance is contained in authorization bills, policy can also be modified through

the appropriations process.

Legislative Process – Appropriations Bill

HOUSE SENATE

Hearings/Markup before Space and Aeronautics Subcommittee

Hearings/Markup before Science and Space Subcommittee

Markup by Appropriations Committee

Markup byAppropriations Committee

Report Report

FLOOR FLOORConference

President Signs or Vetoes Appropriations Bill

Rules

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NASA Budget Horizon

2011

Actual Year

2011

2012

2013

2014

Budget Year (Fiscal Year)

2012 2013 2014 2015 2016 2017 2018 2019 2020

AdjustmentYear

BudgetYear

BudgetYear +1

BudgetYear+2

BudgetYear+3

BudgetYear+4

AdjustmentYear

BudgetYear

BudgetYear +1

BudgetYear+2

BudgetYear+3

BudgetYear+4

AdjustmentYear

BudgetYear

BudgetYear +1

BudgetYear+2

BudgetYear+3

BudgetYear+4

AdjustmentYear

BudgetYear

BudgetYear +1

BudgetYear+2

BudgetYear+3

BudgetYear+4

FY13 Budget

FY14 Budget

FY15 Budget

FY16 Budget

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From Project submit to Appropriations takes a minimum of 18 months – Change Happens !

M A M J J A S O N D J F M A M J/J A S

18 MONTHS

PRESIDENT

CONGRESS • Budget Resolution • Authorization Acts • Appropriation Acts

OMB

OMB

AGENCIES

AGENCIES

• Internal determination of requirements and authorities - Formation of budget recommendations

• Midyear update / sequester report • Apportionment of appropriated funds

• Operating Plans • Implementation of

program • Obligations • Costs • Outlays

• Final budget approval

• Budget message to Congress

• Review and

integrate agency recommendations - Markup and reclama process (President’s Pass back)

• Secure final determinations by President

O

Guidelines PPBE 12 12 Appropriation

We are herefor FY12 Approp.

FY11 Approp. approval

13• Center Task Agreements

PPBE

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(PDM)

Internal/ExternalStudies and

Analysis

AnnualPerformance

Goals

NASA Strategic Plan

Implementation Planning

Strategic Planning Guidance

Program andResource Guidance

ProgramAnalysis and

Alignment

InstitutionalInfrastructure

Analysis

Program Review/Issues

Book

Program DecisionMemorandum

(PDM)

Programmaticand Institutional

Guidance

OMB Budget

President’sBudget(IBPD)

Appropriation

Operating Planand

Reprogramming

MonthlyPhasing Plans

Analysis of Performance/Expenditures

Close-out

Performance andAccountability

Report

PLANNING PROGRAMMING BUDGETING EXECUTION

ANNUAL PPBE PHASES AND STEPS

Facts of a Budget Life

• All major issues revolve around money. In the Federal government, the budget drives the debate

• Timing is everything. Stakeholders at all levels have different products and expectations relating to different phases of the budget cycle

• Change happens…..constantly• It’s not “your” budget. How you see the budget depends

on where you sit and what stage you are looking at …. one person’s requirement is seen by the next level as only the request….

• It is never complete. Federal government requires nearly two year’s to settle on a set of one-year estimate … and even then Congress rarely approves the budget before the year in question begins. Plan accordingly

• It is political! You never know when lightning will strike … facts can have little relevance if you are caught in the middle of a big political battle 15

Continuing Resolutions

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What happens when Congress can’t get an Appropriations Bill passed before the Fiscal Year begins?

• Continuing Resolutions provide stop-gap funding for agencies that have not received a regular appropriation by the start of the FY

• Omnibus continuing resolutions incorporate many or all regular appropriations bills into a single bill to finance agencies for an entire fiscal year

• Continuing resolutions are enacted in the form of a joint resolution. • Have the same legal effect as a regular appropriation• Limited in duration, scope and financing; no two CRs are alike:

– Funding period specified; available until appropriation passed or time expired– Existing and ongoing work only; no new initiatives or program accelerations allowed– Funded by formula; lesser of House, Senate or ongoing rate

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Types of Project Budgets

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• Formulation– High level by major systems– Based on parametric, top down or similarity– No contractor historical performance financial information available

• Implementation– Detailed budget to subsystem or lower level– Based on grassroots data including staffing levels, rates, contracts– Historical performance plays a major role- schedule slips, overruns and technical

problems help project future cost

• In-house– Particular attention must be paid to facility rates and policies since Civil Service

labor makes up a large portion of the budget– Support service contract labor may consist of many different contracts– Very detailed budget to keep track of all of the sources of labor and materials

• Out of house– Focus on major contract requirements – Contractor historical performance and change control are key drivers– Type of contract/risk profile impacts reserve levels– Integration is more complicated

A Project Manager’s Responsibilities

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• Develop the Project’s budget requirements for labor, travel, and procurement to support technical requirements and schedule milestones

• Pay close attention to budgetary guidelines from Headquarters. Make sure staffing guidelines are adequate and match the civil service labor dollar guidelines

• Monitor closely all labor and travel charges by employee charged against the project’s programmatic fund center

• Monitor monthly actual cost against the phasing plan to control variances and still meet technical requirements within approved budget

• Present Project cost, schedule and requirements to management as requested

• In preparing budget data for the Planning, Programming, Budgeting, and Execution (PPBE), solicit as much input from your center’s institutional organizations as possible. You don’t want to show up at the beginning of the FY and didn’t budget enough for the work required

Analysis Clarifies Budget Requirements

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• If EVM data is available, what are the CPI and SPI trends?

• Has the cost to date been consistent with the cost plan?

• How does the technical percent of complete of the project compare with the percent of funds spent?

• Is the project on schedule?• Have required staffing skills and resources been

available when needed?• Has there been a large number of changes to the

scope of the project?• Have all changes been directed in writing rather

than verbally?

• Based on past experience, what adjustments should be made to the budget?

• Do configuration changes impact the schedule or cost?

• Are all risk factors identified and accounted for in the reserve strategy?

• Will the integration or delivery schedules change?

• Will staffing levels, skill mix or source change?

• Are anticipated contract scope changes covered?

• Have assumptions changed?

Examine Past Performance Forecast the Future

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Bottom line for Project Managers

Requirements need to be credible, responsible and focused on results with clearly defined milestones and a baseline against which progress can be measured

Credibility counts. A successful track record makes the job of convincing people of the need for resources much easier

Tell reviewers about the project’s accomplishments and the milestones it has met to date.

Show evidence of program control techniques and produce earned value reports (if applicable) that lend credibility to projections, accompanied by plans to resolve any problems

Help the stakeholders understand relationship of resources to outcomes Be ready to trace the requirements from the project to the agency

goals and objectives. This will enable the stakeholders to know why this project matters and how it contributes to the larger policy goals. It answers the “so what” factor and enables the reviewers up the line to translate an issue to their own bosses.

Be responsive to any questions that come back; deadlines are looming and lack of responsiveness could lead to the wrong information going forward.

Awareness of operating plan, commitments, obligations and costing rates. Don’t give anyone an excuse to take project funds away so careful and realistic planning is important.

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