The top 10 ways to game the C/SCSC system

Part 1

 

The Variance Threshold

by Michael Hatfield, PMP, and Alice Skehan

THE ONEROUS IMAGE that we government contractors have (that of being conniving philistines) was hard-won, and we ought not to allow it to be redeemed easily. After all, think of the scapegoat vacuum that would be created if the phrase “$500 toilet seat” had never entered the national lexicon. To this end, The Variance Threshold presents the top 10 ways of gaming the U.S. government's Cost/Schedule Control System Criterion, or C/SCSC. This will be a two-parter, with the first five reasons provided this month and the last five next month. Here, then, are the top 10 ways to game C/SCSC:

1. Try to convince the customer that project management is not applicable to this work. Yes, we know your proposal claimed that everyone in your organization was fluent in project management theory, but that was the proposal and this is the actual contract. Since this is your first line of defense, be prepared with extensive arguments for your position. If you are not required to do project management, you can win this race at the starting gate.

■ Explain that your firm is too small, the work is not risky, the project management requirements do not apply.

■ If the requirements say that C/SCSC reporting is required for all defense projects your size, claim that you are running an environmental program, or vice versa. Argue that your project is really a process, not a project.

■ At the kickoff meeting, stare blankly when you come to reporting requirements. Ask your customer to explain every acronym. Insist that they define work breakdown structure, earned value, and critical path in excruciating detail, and immediately take exception to any departure from official definitions.

2. If you find that you must establish a baseline and actually report against it, you should know how to get around Variance Analysis Thresholds, or VATs. VATs are usually expressed as a dollar figure and a percentage (as in 10 percent and $100K). First, make sure you negotiate a percentage and a dollar figure, not a percentage or a dollar figure. In the first instance, your variance must exceed two different standards, but in the latter case it only has to cross one threshold before you must write a Variance Analysis Report. Second, try to negotiate for variance analysis to be performed only on cumulative numbers, and allow a low percentage while aiming for a high dollar figure. The reason for this is that when a project is young, a given amount of variance in dollars provides large percentage variances. However, these are easily explained in the start-up phase of a project. Down the stretch this same dollar variance quickly shrinks as a percentage, and variances toward the end of a project are more difficult to explain away.

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3. If you are not working a firm-fixed-price contract, work scope “adjustments” can be very beneficial to you. This is known as scope creep—it occurs when the precise nature of the work being performed is poorly documented, or not documented at all. If your customer asks you to do anything that is not precisely described in the approved project plan, go ahead and do it, and bill him for it using full cost recovery, including fee. If he objects, simply remind him of his request, and elaborate on the first-rate job you did in fulfilling the request. Set up a budget after the fact, and claim earned value against it. If the customer continues to object, subtly remind him of the trouble you would both need to go through to get an approved scope change through the “system.” Feel free to use the cliché, “It's easier to get forgiveness than permission.”

4. Try to expand the duration of the reporting period. Because accounting cycles tend to be monthly, it is a rare government contractor that is required to report more often than once a month. However, if you can negotiate, say, quarterly reporting, then you have cut the number of potentially embarrassing explanations by 300 percent!

5. If you are involved in a large, multiyear project, always reset your budget and earned value figures to match cumulative actuals whenever a funding change occurs. This essentially eliminates your variances and allows you to start over. If your customer directs you to avoid doing this, complain long and loud about how the baseline will no longer reflect reality, and that the entire system would become suspect. If you have implemented any of the previous tactics, assert this with a straight face.

YOU HAVE ONE MONTH to try these tactics before the next set of five are published (assuming PMI doesn't receive any phone calls from DCAA or others at the Justice Department). ■

Michael Hatfield, PMP, is a senior project controls engineer for Los Alamos Technical Associates. He welcomes all project horror stories for this feature. Please e-mail yours to [email protected] for possible inclusion in future editions.

Alice Skehan is a project controls analyst for the Environmental Restoration Program at the Los Alamos National Laboratory. She has over 12 years experience managing DoD and DoE contracts, and is an active member of PMI. In her defense, she will not define which of the 10 ways were her contributions.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

PM Network • November 1997

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