The American National Standards Institute/Electronic Industries Alliance Standard 748 (ANSI/EIA-748), Earned Value Management Systems (EVMS), defines Over Target Baseline (OTB) as “a new baseline for management when the original objectives cannot be met and new goals are needed for management purposes.”
In other words an over target baseline is an agreement between the customer and the contractor to allow additional budget be added to the project baseline that is not part of the original contract budget base (CBB). Quite literally the customer has agreed to fund an increased scope that is an amount over and above the negotiated cost.
Or to put it in even simpler terms, OTB is an overrun to the CBB which is formally incorporated into the PMB for management purposed.
Needless to say, an OTB is a seriously big deal in the project management world: an event not to be taken lightly.
Over Target Schedule (OTS)
An over target schedule (OTS) often accompanies an over target baseline. The OTS describes the revised schedule that has resulted in the time-phased activities and milestones being scheduled beyond contractual milestones. Most commonly when you are performing an OTS it will also involve an increase in budget (OTB).
The OTS and OTB are never done in a vacuum. Rather they are only ever performed with the prior agreement of, and close collaboration with, the customer. Even then, this process is a last resort, a silver bullet, only to be used once when it has become clear to both parties that the project simply cannot meet its contractual objective in its current state.
Formal Replanning vs. Reprogramming
Before I continue, it’s important to clarify the difference between replanning and reprogramming for the purposes of this article. Replanning is simply rearranging the existing work while staying within the original CBB.
Reprogramming on the other hand, is much more involved whereby you are formally changing the project in such a way that the original CBB is exceeded. The amount by which you exceed the CBB is the over target baseline (OTB). The following figure highlights this difference.
Notice how the Total Allocated Budget (TAB) has increased for the project after the OTB has been performed. Whereas the CBB remains at its original value and the OTB is a distinct amount over the CBB.
When do I know I need an OTB/OTS?
Assuming that your original baseline was created in a rational and logical way, then performance data generated during the project’s execution will be your first indicator of the need for an OTB/OTS. Heaven forbid your EV metrics start to shift significantly away from your baseline: i.e. your Cost Performance Index (CPI) and/or your Schedule Performance Index (SPI) are trending well below 1.00, that your schedule has shifted significantly to the right indicated you will miss contractual milestones, and/or you have burned through your MR with significant potential risk still left in the project, then you may be looking at a need to consider an OTB/OTS.
Here are some indicators that may help you identify that you are entering OTB territory. These are taken directly from the DoD’s OTB-OTS 121205 Guide:
- Significant difference between the estimate of cost to complete and the budgeted cost for work remaining (BCWR).
- Significant difference between the cumulative cost performance index (CPI) and the to-complete performance index (TCPI)EAC.
- Early, significant, and frequent allocation of the MR pool to the PMB for newly identified in-scope work.
- Insufficient MR for the remaining scope of the contract.
- Control account budgets for work remaining that do not represent a reasonable chance of success.
- The existence of zero-budget work packages.
- Inability to explain the basis for the ETC relative to the current baseline.
- EACs and budgets not taking into account adequate risk.
- High level of concurrency in the remaining integrated schedule.
- Negative float or significant slips in the critical path of the IMS.
- Incomplete or inaccurate critical path for the technical completion of the contract.
- Unrealistic activity durations.
- Unrealistic or missing relationship logic between tasks.
- Significant number of constraints in the schedule.
- Insufficient schedule margin/float for the remaining scope of the contract.
- Schedule not horizontally or vertically integrated.
- Logic sequence and durations for forecasted work vary significantly from the baseline plan.
Data Accuracy Indicators
- EAC less than actual incurred costs for WBS elements.
- Evidence of a front-loaded PMB.
- Lack of corrective action planning/lack of evidence of implementation.
- Management challenges (unrealistic cost/schedule projections).
- Frequent or recurring data errors.
These are just some of the indicators that you may need to consider an OTB on your project. Keep in mind however that an OTB represents a significant overrun on the project and send a serious message to all levels of management for both the contractor and the customer. As I mentioned before, you really don’t want to do this unless you are convinced that the project cannot be completed within the current TAB.
For more details on this process, download the DoD’s Over Target Baseline and Over Target Schedule Guide. This is an excellent publication that gives details about the process, when it’s necessary, and how to execute and OTB/OTS if you are faced with this possibility.