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Mission Oriented, Customer Focused

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1 Mission Oriented, Customer Focused
Project Management The world from the perspective of the Project/Program Manager Mission Oriented, Customer Focused

2 Corporate Mission Information Security and Training maintains a mission oriented team of talented professionals providing world class, customer focused support to the U.S. Government Interagency Team. IST is Mission Oriented and Customer Focused. Our talented employees enable our customers by focusing on top support and solutions 2

3 What is a PM The Manager of a Program or Project
Responsible for Project Performance Primary Customer Interface for effort Leader of personnel Accountable for ultimate success Responsible for Resources, Risks, Schedule, cost, process and quality Establishes and achieves performance metric Owner of the business IST Business represents an aggregate of individual projects Without Project revenue, there is no company. The Project is the center to our universe The basic project life cycle includes business development, execution and closeout Multiple Projects make a Program and more than 1 Program constitutes a business area The role of a Project Manager includes: 1. The Manager of a Program or Project 2. Responsibility for Project Performance 3. Primary Customer interface 4. Leader of personnel 5. Accountable for Success 6. Responsible for resourcing, risks, schedule, cost, process and quality 7. Key interface for establishment and achievement of metrics 8. Ultimate owner of the business 3

4 Roles and Responsibilities
Responsibility Project Managers Maintain Burn Plans Stay Abreast of Growth Ops Coordinate New Business Manages Contract Performance Business Area Managers Bid Opportunities Properly Manage O/H effectively Audit Burn Plans Monitors/Audits Contract Performance Business Developers Maintain valid strategic BD Plans Identifies and Captures New Business Coordinates directly with all Managers Maintain Corporate Growth Plans Business Management Actively Participate in Bids Compile and Maintains Data – Status Plan Advise/Counsel Managers on O/H Provides independent Contract Review Executive Management Manages to established Division/Group Metrics Directs overall strategy for growth Maintains Profit and Loss Ultimate Responsible for overall Performance Annual Budget Plan Manage To Metrics Accurate Burn Plans Keep Contracts Sold Labor Rates Growth #’s - Existing Clients Provide O/H Inputs New Customer Numbers Opportunity ROI Combined B&P Estimates From a global perspective within the business, you can see the basic construct of levels from project to executive management. Responsibilities and roles move from support to ownership as the level of management increases Although not all functions are progressive in responsibility, each area has a contribution to the big picture and annual plan As examples: Business Developers – sell performance, support customers and coordinate with other functions Business Managers – Provide support to PMs in coordinating cost, resources, affordability, analysis, project visibility Business Area Managers – Provide direct leadership and resource support across multiple projects and supports the PM Executive Managers – Forecast the annual year and beyond, estimating needs, customers, budgets and support tools and needs All roles are from the perspective of the business and assume quality assurance has a global responsibility. Organize/Validate All Budgets Prepare then Status Plans O/H, Profit, Revenue History Validate Approve Budgets Application of Strategic Hires Overall Accountability Quality

5 Acquisition Life Cycle
Feedback Lessons Learned Acquisition Life Cycle Selection Market Develop RFP Award Execution Close Marketing Mgr BD Mgr Capture Mgr Project Manager Resources ROM Budget ROM BOE Refined Budget Tentative BOE Initial Burn Plan EPR Package Budget BOE Baseline Burn Plan EPR Pckg Budget Finalize WBS Verify BOE Validate Baseline Final Burn Plan Create IWA Monitor Budget Monitor WBS Validate BOE Status Baseline Maintain Burn Update IWA Planning is the key to success *As a project manager, it’s important to understand the total business life cycle, not just project execution. *60-70% of the acquisition life cycle often occurs prior to the actual project award with intensive strategy and planning *By using experience, past performance and strategies, we enable our Marketing and BD team to target opportunities that fit, well in advance Marketing Who are we really. A simple question but sometimes difficult to answer. The majority of business is captured based on who we are, what we do and how we perform. Literature, websites, PR and marketing materials should evolve and reflect our business today coupled with a a vision for the future, funding and the marketplace. PM’s must feed Marketing to validate the approaches and clarify the intended market, products and technologies for business pursuits. Business Development creates long range plans with support of technical personnel, business managers and executive management - ROM estimates are created from existing successful projects, PM inputs and technical approaches/complexities - BD engages the customer to identify the “problem statement” and interface between user and the company for solutions - BD provides initial concepts, estimates, competition, technologies, risks and issues to the operations and technical teams - BD identifies budgets, key customer personnel, stakeholders, obstacles, timelines, teammates and strategies Capture Management begins the process of transferring a BD engagement to become a proposal and response. Often capture managers are future project owners and assist the business development team in selling the opportunity to executive management for investment to win. - CM translates BD items to project management and provides customer perspective - CM supports BD in establishing a “bid/no-bid” decision based on objective facts and data to support corporate investment - CM facilitates during the proposal providing interface between proposal stakeholders, proposal managers and executives Project Management assists in basis of estimates, technical approach and project viability. During initial marketing and BD phases, the project manager provides past performance, knowledge of the environment, metrics, ROM Cost, timelines and relevant data in support. Information is typically broad and non-binding to assist the shaping of a future project. As opportunities mature towards capture, involvement increases from the PM ultimately assisting in Basis of Estimates, work breakdown, budgeting, return on investment reviews and risk. During Capture and Proposal PM’s provide direct proposal support facilitating solutions, alternatives, options, costing, scheduling, risks, teaming decision support, lessons learned and technical approach. Often PMs coordinate the writing of proposals and author the Program Management Plan tailoring existing processes and procedures to the specific project work. During Execution, the Program Manager takes on the responsibilities as prescribed earlier and documents, reports, manages and controls to achieve the project objectives in concert with the technical team (depending on projectized or functional organizations). During Closeout, the PM documents all project areas and produces both a lessons learned and past performance while interfacing with all key personnel to insure completeness and unbiased data. The information is used by BD for future efforts, Capture Managers for Proposals and ongoing project managers and technical personnel on existing contracts. Business Area Mgr Administration Finance Business Developer Operations Manager Contracts Subcontracts

6 Typical Company Organization
CEO/President Business Operations Program Management Business Management Human Resources Administration Recruiting Benefits Compensation Employee Relations Public Relations Corporate Legal Performance Reviews Finance/CPA Cost Accounting Accounts Receivable Accounts Payable Time Collection Report Generation Contracts Subcontracts Business Development

7 Company Resource Associations
Human Resources Compliance Compensation/Benefits Performance Reviews Recruiting/Sourcing Relations Contracts Finance Primary Contract Interface Legal representative Monitors Compliance Administers Contract Processes Time Cards Provides Actuals Monitors the money Produces independent data Program Manager Represents Company to Customer Plans and Executes Project Identifies Resource Needs Manages Requirements Gathers and provides true status Documents and Manages Risk Communicates progress and status If a PM is the center of the universe, they need support to be effective The company provides resources to support the primary functions outside of the project to enable the PM to perform The list of Corporate Functions is not intended to exclude Subject Matter Expertise (SME) or Technical Management Each Corporate Function supports the PM and is an Enabler to the ultimate success Business Area Manager Program Control Provides Qualified Resources Enforces Metrics Achievement Receives and reviews timely Ensures compliance to policies Monitors Baselines Tracks Earned Value Provides objective status Models alternatives

8 Contracts/PM Interaction
• Everything associated with / affecting contractual instrument is worked by Contracts Dept. • Contracts Dept. supports formal procurement contracts • Contracts Dept. responsible for subcontract issuance and mods • PM is responsible for execution & subcontract management. PM must support the Contracts Department As a Program Manager, Business and Project Execution is definitely a focus however, the formal obligation of the corporation is a contracts function The PM supports contracts in identifying procurement needs, modifications and other contractual transactions Contracts and Subcontracts are ultimately responsible to executive management to legally obligate the corporation to both customers and subcontractors. Some items that traditionally run through Contracts/Subcontracts are: Teaming Agreements Request for Quotes Request for Proposal Contract Award Subcontract Awards Official Notifications and Communications Contract or Subcontract Modifications Official Pricing * Program Managers cannot contractually obligate the company

9 Company<–>Government Interfaces
ACO (Administrating Contract Officer) PCO (Procuring Contract Officer) COTR (Contracting Officers’ Technical Representative) • Post award administration • Administer changes • Compliance Delegates duties after award • Negotiates • Obligates the Government (signs) • Technical direction • Technical directives - Inspection - Acceptance The focal contractual contact for the PM in executing contracts is the contracting officers technical representative or (COTR) The COTR is a counterpart to your role as a PM and may also be known as a Government Program Manager Day to day contact, communication and interface for the PM would occur with the COTR to drive the Project All required transactions of an official nature would be coordinated with the COTR but executed via the Contracting Interface with the govt. Company accounting / contracts Company PM

10 Typical Product Project Relationships
Project Manager Delivery Order 2 Delivery Order 1 ID ID Technical Manager Graphics Graphics CORE CORE Production Programmers Programmers Organizational Structures can be Functional, Project, or Mixed Traditionally IST has a Mixed Structure Project Managers coordinate with the customer and work with technical managers to accomplish the task Technical Managers and Leads orient resources and personnel to accomplish the task with the project schedule and time It is not uncommon to have more than 1 project or task/delivery order under one project manager PMs and TMs work closely together to define the requirements, needs, risks, schedule and costs for work Quality SME SME Editing “To succeed we must view contracts from the world of the Project Manager”

11 PM Performance Expectations
Know what was bid Read and understand the SOW Understand the risk Know the contract value and basis of estimate Know where you are (Operational Awareness) Prepare and follow a baseline and project plan Manage the risks Know the cost and schedule Establish Milestones Identify and Manage resources Represent the company Communicate with the customer Establish and manage expectations Provide timely and objective status Know your limitations Know when to escalate to management Lead personnel As the Manager for a work effort you are the authority and ultimately responsible for successful execution.

12 How to ”fail” as a PM Do not plan the work before you start or allow charges Fail to record & communicate performance milestones Do not read and understand SOW/Requirements Believe your customer knows what’s right Do not document your concerns early --“risk” Do not establish status meetings and PMRs Believe the problem will go away with time Do not manage and communicate metrics Neglect to provide regimented status Do not properly document acceptance Do not track action items and closure Make excuses for productivity

13 Financial Performance Measures
Metrics Profit After G&A Tax After Costs Removed Overhead Cost of Labor Fringe Benefits Lease Other: Travel, Materials Revenue Growth Stability Backlog 10% Minimum 80% Site* 50% Customer* * O/H Rates are Examples Only A program manager is ultimately responsible for the performance of the work. In concert with the business area manager, goals for O/H, Revenue and Profit are typically shared. The theory is that if contracts are bid properly and the PM is involved, the project and the business area can operate within the established metrics. To the PM, G&A is typically seen as a tax and can not likely be influenced greatly during planning or execution other than to request R&D funding or procurement of Corporate Level tools that might globally benefit the company and your project. Profit and Loss Responsibility: As work is bid, the PM takes an active part in determining overall cost of performance and works with technical personnel, executives and business management to establish pricing. Estimates combine established G&A tax with estimates of indirect expense and costs associated with the direct contract Some items within O/H cost can be adjusted while others (fringe for instance) are % based estimates By being involved in the proposal price, the contract is set to achieve established O/H, G&A and Profit goals from the beginning Growth and New Business: By maximizing the contract and work, it is the goal to keep sold existing business with existing customers In addition, identifying ways to grow with that customer or similar customers is also anticipated By selling “performance” and relating it to ongoing successful contracts, expansion and growth is possible By setting, measuring and delivering within established metrics, the project and business will be afforded better visibility and awareness as well as increase the likelihood of overall success. 20% Growth

14 Typical PM Profitability
Project <10% Profit on notice Project Mgr documents return to green plan Weekly meetings with key personnel to status Public presentation to executive management Team placed under close observation Projects <7% Profit on probation Project Mgr documents “crash plan” to recover Project Mgr presents critical path, risks & mitigations Weekly meetings with ALL team personnel Mandatory Overtime Instituted Projects <5% Profit unacceptable Program Manager provides accountable leadership to project Executive Mgmt/Program Management rebaselines project Critical path documented and options analyzed for efficiency R-examination of all Team Resources, Utilization, Metrics, Progress Mandatory Overtime

15 Functional Philosophy
Business Development Strategic Plans Customer Liaison Past Performance Capture Mgmt Market Approach Teaming/Partners Technology Trends Strategic Hires Planning Bids WBS BOEs -Budgeting Forecasting Lessons Learned Execution Mgmt Requirements Mgmt -Customer Mgmt Earned Value Mgmt Resource Planning Schedule Mgmt Subcontracts Status and reporting Production Process Control Adherence to Schedules Quality Assurance Systems Approach to Mgmt Configuration Management Adherence to budgets Forecasting of resources Productivity/Utilization Operations Mgmt Pricing/Bids - Financial Status Budgets - Profit Realization Planning - Financial Baselines Maintaining annual and strategic plans Subcontracts Complete Working Now

16 Operational Goals Deliver!!!
Milestones and Metrics established and tracked Improve Communication at all levels Enforce Operational Process Continue to refine Technical Approach Clearly define all roles/responsibilities Customer Satisfaction Compliance

17 Earned Value Measurement The Basics

18 Managing Cost 101 Plan and Propose Work Effectively
Establish Productive Work Plan Document and Manage Risk Manage requirements early in the project Manage performance with Earned Value Enhance Hiring Practices – Productive People Outsource where Sensible (CLOCs) Leverage full depth IST Resources Perform Make-Buy to reduce risk Monitor and Manage Dept. Resource Plans “No-Bid” High Risk Opportunities Overhead Conscious – Quality FY Budget Inputs

19 Establishing Labor Pools
Bid & Proposals Corporate Level BD R&D Investments BU Focus New Business Program Management Administrative Recruiting IT Support 5% 3% Quality, Production, Technical Management Project Mgr Project Mgr Project Mgr Dept. Focus 80% Planned Direct Labor Against Contract DO 01 DO 07 DO 02 DO 06 DO 03 DO 05 DO 04

20 Cost Pools & Colors of Money
15% General & Admin Direct Contract G&A salaries G&A Facility Cost G&A benefits B&P IR&D Salaries of Employees Charging to a Contract 60% 3% 90% OH Contractor Site Material Handling OH Customer site Facility Cost Benefits Computer Management Buyer Salaries Sub-contract Management Benefits Computers Facilities Management * All % above are examples only

21 Contract Performers Paid through accounts payable
Consultant • Treated as subcontractor • Consultant Agreement Contract Labor (On-Call) • No Benefits Full Time Employee • Full Benefits Must be 32 hours Per week or more Subcontractor • Subcontract Paid through accounts payable [No Burdenable Labor] Paid through payroll system [Burdenable Labor]

22 Typical Site O/H Cost Pool
Example Company Site Rate 80% Fringe Benefits % Bonus % Overhead Managerial Labor 8.5% Benefits on OH Labor 1.5% Rent % Depreciation 4.8% Travel % Communications/Telecom 3.6% Computer Expense 2.9% Other (misc) 7.6% 80.0% 36.5% * O/H % rates are examples only

23 Typical Customer O/H Cost Pool
Example Customer Site Rate 50% Fringe Benefits % Bonus % Overhead Managerial Labor 8.5% Benefits on OH Labor 1.5% Travel % Other % 50.0% 36.5%

24 EVM Terminology Contract Value (C/V) – Total Contract Worth (Labor+Travel+Material) Estimate to Complete (ETC) – Cost to complete the work effort Inception to Date (ITD) – How much is spent to date on the effort Estimate At Complete (EAC) – Total cost of effort when done Budget at Complete (BAC) – Funding left when finished (profit) Variance – How much you are ahead or behind the budgeted plan or baseline Burn Rate – The monthly amount that the project is accumulating cost

25 How a Basic Labor Rate is Built
Employee Salary = $50,000 Hourly Equivalent = $24.04 Contractor O/H (80%) = $19.23 G&A (15% of Cum) = $ 6.49 Total Burdened = $49.76 Profit (10%) = $4.97 Total Customer HR Sell = $54.73 $43.27

26 Creating Productive Labor Bids
Scenario 1: Full Time Employee has 2 Weeks Vacation is 5 days sick Annual Hours Holiday Hours Vacation Hours Sick Time Productive Hours Scenario 2: Full Time Employee has 3 Weeks Vacation takes no sick Annual Hours 2080 Holiday Hours Vacation Hours Sick Time Productive Hours Paid Time Off (PTO) Work Effort Value: $ x = $102,892.40 Paid Time Off (PTO) Work Effort Value: $ x = $101,797.80

27 Overhead Components Contract Revenue Overhead Labor Non-Labor Costs
Direct Labor On Contractor Site Overhead Labor Indirect Labor Fringe Benefits on Indirect Labor Non-Labor Costs Rent Fringe on Direct Labor Company Allocation Telecom Recruiting Computers Relocation Sign on Bonus Combined OH / Direct Labor = Overhead Rate 80% is an Example O/H Target

28 Profit and Contract Type
T&M FFP Labor Hours Fixed Price Cost Plus Can’t affect profit much! Goal = 10% on Contract Decisions: Hire to maximize profit? Hire to maximize customer satisfaction? Hire a key employee at a loss? Lose money on small T.O. to get foot in the door? Bid some labor categories at a loss? Goal = 15% Decisions: Minimize execution risk Management reserve Use Divisions OH rate Plan for follow on Not Typical Culture! Yes, but must stay profitable! Yes, Sometimes! Yes, Sometimes! Yes, if necessary to win but must obtain overall profit.

29 Project Controls

30 Project Planning Phase
Define the Project Consultant Plan the Project Personnel office Subcontractor Schedule the Project PM System Subsystem System Subsystem Integrate Cost/Schedule System Subsystem $ LOAD Labor = O/H+G&A+Fee Travel = G&A + Fee Material = MH + Fee Subcontracts = MH + Fee

31 Know What We Bid Break Work Down (WBS) into logical segments
Validate IMI Hours against analysis Enforce Technical Personnel Involvement If Sub Work, Request Plans and Basis Burn Plans created w/ “Like” Resources Unique resources clearly identified Risks Documented with Mitigations Formal Bid Sign-Off Accomplished Maintain artifacts in a project folder

32 Work Breakdown Structures
Segmented & severable items of work when linked together create steps to completing a project. Each work section has a measurable item and artifact that proves the effort has been performed and completed. When associating a budget to an item of work within a WBS you can determine performance against the plan. WBS elements are loaded into the cost system and become the financial baseline for the project. Separate Work Packages are established for each segment of work to accumulate costs and understand progress. Project X Labor Artifacts Resources Scope Schedule WA Burn Plan Mgmt Plan Subcontract Plans Risk Plan Deliverables Communication PM = 80 Hours TM = 80 Hours QA = 20 Hours Lead = 20 Hours 2 Weeks 200 Hours $13,000 Max. Complexity = 3 Subordinate Work Package 1 Planning Front End Analysis Subordinate Work Package 2 (Example) Subordinate Work Package 3 Design Subordinate Work Package 4 Production

33 Cost Accounting We Won! - REQUIRING approved budget baselines prior to opening work package: Final Burn Plan w/ staffing & accurate rates Work Authorization updated/complete WBS and BOE’s validated & archived Financial Baseline reviewed & approved Project Mgr Program Mgr Operations Mgr Contracting Finance Budget Turn-on Process Prepare Package PM Approvals Ops Validation Open Budgets * This process provides a control by requiring completed planning documentation.

34 What’s a Work Authorization (WA)
Authorization for someone to work your project. Must be Maintained by the Project Manager. Is communicated to the Time Card System Is auditable and MANDATORY. Utilized for every cost account whether direct or indirect to identify personnel authorized to work the project. Feeds the Burn Plans and is used by Program Administration to validate resources on projects.

35 Project Burn Plans What they are: What they are not:
A baseline resource plan with hours and rates An estimate and projection of work in financial view A model to understand “what ifs?” A tool for understanding profitability vs. cost A way to assist business area managers with staffing What they are not: A system for performance measurement (no metrics) A guarantee of success An event driven view of your project

36 Project/Job Status Reports (JSR)
What they are: Generated by Corporate Finance Monthly Actuals generated on each cost account Used to validate burn plans and verify costs Provides objective evidence of financial position Doesn’t currently articulate “performance”

37 Internal Monthly Status
4 Review 1 Week 3 Owner: BM/VP Action: Cost Review Action: PM Review Action: O/H Review Input: Final Burn Plans Input: Status Charts Output: Action Plans Output: CFO Data Output: Status to Plan Summary 2 Owner: BM Action: Summary Status Action: Issues/Resolutions Action: Incorporate O/H Input: Validated Burn Plans Input: Recovery Plan Words Output: SBU Status Report Output: Recovery Approaches Validate Owner: PM Action: Update Projections Action: Validate Baseline Input: Updated Burn Plan Output: Validated Burn Plan Output: Recovery Plans 1 To understand our independent status, it’s important that we review cost, schedule and performance regularly The trigger for cost is the official close of cost reporting month including all direct and indirect labor, subcontractors, purchases and travel 1. Upon closure of the month, Business Management produces Final Invoices, Status Reports and Cost Data for the program manager Program Managers examine and validate cost information against financial baselines and performance to determine true status Update Projections Against with Actuals vs. Predicted Determine schedule and performance to schedule Define actions for future and update risks 3. Upon update, PM’s Meet with the Business Manager to discuss, document true status Assess Red Yellow Green Status Discuss alternatives to make plan and options Update budget projections, schedule and performance plan Corporate Area Review with BM, PMs and Executives A monthly cost review is held by Business Management Each program manager discusses EVM, Risks and status As required each PM discusses action plans if a key metric is not being achieved CUSTOMER: Upon completion of the basic steps, validated data and information is provided either synchronously or asynchronously to the customer in a few possible ways: Monthly or Quarterly IPR or other customer required Reviews Generation of a monthly report Data provided via a wide are work flow system, portal or integrated data environment Update Goal: Provide Validated Status All stakeholders w/ same story Controlled Awareness Progress against the FY plan Owner: BM Action: Create Status Input: JSRs Input: Modifications Input: Sub Invoices Output: Updated Burn Plan Output: Potential Problems

38 Example Business Unit Summary
2010 2011 D001 $1,345,592 behind sched 70% Spent 95% Complete J A S O N D J F M A M J J A S O N D 28 Feb D001 $639,046 Revised Plan 10% Spent 10% Complete 31 Dec D003 $1,892,223 $267K Subs 11 Feb 23 Feb 22 Jun 17 Aug 12 Oct New Sub Added 50% Spent CAI/TMI CAI TMI 30 May D004 $848,044 % Complete 45% Spent 60% Complete 19 Nov D005 $826,607 Slow Start 15% Spent 10% Complete 19 May Jul 10/06 D006 $1,386,000 New Project 0% Complete Just Started

39 Maintaining Plan Required enforcement measures:
Planning Documents use to measure progress New Hires must be qualified for positions H/R Reqs must include cost accounts Subcontract rates will be continuously validated Baseline Changes require contract modifications Work Authorizations Maintained Changes impacting Corporate established targets require approval by management

40 Example: 4 Part Chart Contract 80000 (Example)
Cost Performance CV $802K CV% 53% Schedule% 36% CPI Future Future SPI Future Future TCPI(EAC) Future ITD (spent) 428K ETC (remaining) 98K EAC (total) 526K VAC (variance) 277K Monthly Burn Rate 33K Goal: Deliver within budget Period of Performance: 6/19/10 – 8/18/11 Owner: Frank Luster STATUS Major Schedule Variances: Issues: Contract Performance – Slow start may push delivery slips. Effort not local Requires local Lead and oversight. Task Lead/Management Changes have diluted history and financial information from past not clear. Action Plans: Aggressive r Mgmt involvement shifting some personnel to optimize performance. Continuous customer communication and involvement on site in Ft. Sill OK Jan 20 Major Cost Variances: Top Risks: Contract Performance and delivery of courseware within current schedule. Cost Control for delivery without unanticipated cost growth Customer expectations managed to avoid schedule/cost growth. Action Plan: PM, TM and BM Involvement on site and with customer to establish new schedules, cost baseline and monitor major milestones on critical path. Jan 31 Period of performance extension implemented need to Complete Remaining Efforts quickly. May 05 Accurate and Independent By-Project Status Reporting is important both internally and externally Key Elements of solid reporting methodology would include: Planned Cost Planned Schedule Planned Deliverables/Measurements Planned Risks Mitigations Actual Cost Actual Schedule Delivered items with proof of measurement Risk Status Analysis of Planned vs. Actual to provide ongoing visibility and variances This visual is one method of assembling and maintaining monthly status It provides a 4 quadrant data package that relays all general information regarding the project Data is assembled from Finance, Scheduling, Customer Communications, Delivery and Program Management Examples of data elements are included to provide a conceptual Quad Chart. The charts are presented by project in a monthly cost review

41 A word on budget planning

42 Why do we need a budget Provides Stability & Focus Key Inputs Raises
Vision and Goals Historical Data Work Backlog BD Pipelines Marketplace Info Competition Investment/Resources Raises The Value of the Company Provides Stability & Focus Successful Companies: Create a Legitimate Plan Maintain/Status the Plan Adapt/Evolve the Plan Project the Plan Forward Budgeting and Planning is important at all levels, it assists in establishing the confidence today and provides key inputs for alignment in the future Successful organizations develop independent status against the current operating plan and additionally look years for to establish a path ahead Key Items that constitute a strategic plan and budget are: Vision and Goals History of customers, resources, performance, and budgets Backlog of existing work and “keep sold” Business Development Pipelines and plans for growth The view of the marketplace including operational environment, funding, needs, climate Competition in the market space Investments and Resources Required * Without input from the bottom up, the plan becomes a corporate level vision only.

43 What’s a Profit Center Measured Business Area/Unit
Has Own Overhead Pool Possesses Direct Bill Contracts Has Revenue and Profit Contributes M/H and G&A May have leases Has Prescribed Corporate Metrics Profit Overhead G&A M/H Revenue For overall business awareness and control, individual centers can be established, depending on a number of factors: Size of the business Location of the business (geographically separated) Unique cost, investments, resources or expenses that relate to the specific area of work Specific Customer Service or Product that can be clearly defined from other business A newly awarded long range contract that has significant impact on the corporate bottom line A merged or acquired business unit that could have incompatible G&A, O/H and Profit metrics In most cases, a business unit has a minimum mass of business to become stable and healthy as a center Analysis is generally performed on the business and a model built to determine viability, minimum mass and variances to achieve corporate goals Typically an owner of a center has Profit and Loss responsibility coupled with annual planning, growth and indirect accountability Profit Center *Generally a business unit is aligned to customer, geographic area, or business line.

44 Composite Overhead Example
Total Company (1M) 01.100 Customer Site Contractor Site Monthly Revenue: $1.02M Monthly Profit (9%): $76.2K FY Projected: $12.3M FY Project Profit: 914K Profit down due to O/H – Virginia Beach – Virginia Beach Direct 8.27K Costs 5.13K Direct 9.96K Costs 9.41K 62.0% 94.50% Arlington Arlington Direct K Costs 5.83K Direct 99.1K Costs K 55.4% 86.50% Direct = K Costs = K Cust Rate % YTD Avg = 54.1% Direct = 263K Costs = K IDSI Rate 80.69% YTD Avg= 80.7% Chesapeake Chesapeake Direct K Costs K Direct 4.54K Costs 3.57K 53.25% 78.60% At the corporate level, a composite view of a larger business could look like this This visual represents a combined Customer and Contractor site business unit/profit center Multiple projects, customers or task orders can be associated with each department The model shows 5 separate department level centers with segmented revenue, overhead and expenses Reports are generated at the department and corporate level for total visibility An annual plan is created starting from project-department-division-group and the financial baseline established and approved corporately Performance against the baseline is measured on a monthly basis – Indiana 110 Personnel 489.88K DL 333.29K O/H 823.17M Total 123.47K G&A 946.64K Burdened – Indiana Direct K Costs K Direct 95.2K Costs K 48.54% 77.82% – Tampa – Tampa Direct K Costs K Direct 54.2K Costs K 53.86% 72.76%

45 ID/IQ Team Formation Assessment Phase Determine Capability Gaps Assess
Our Team Capability Explore Outside Sources Organization Phase Establish Team Assemble Final Team Determine Approach Response Phase Technical Response Best Price Submit Response Team Formation assumes that a business development pipeline and forecast has been established and that some level of Marketing/Outreach has occurred that might provide the ability to “pre-assemble” the team and “pre-qualify” them based on performance, skills customers services or capabilities.

46 Risk RISK RATING High Certainty 5 M H L Highly Likely 4 Likely 3
Unlikely 2 Program Mangers are responsible for identification and ownership of risks in a Program or Project Early risk identification is critical to allow for the maximum opportunity for management - The goal is to identify and document risk prior to award (During BD or RFP Phase) - Risks can be identified at any time during program execution Risks are objectively assessed - Establish a degree of severity or consequence - Determination of the likelihood it could happen Risks should be labeled and a rating established - Ratings can be established by plotted both X and Y axes, - The Resultant Rating determined from the matrix will be a number letter combination (i.e 4c) - Each risk is compared and prioritized and also determined whether interrelationships exist between risks Through a combination of discussions with SMEs, lessons learned, PM Team and customer meetings, mitigations are determined The goal is to mitigate and manage all risks and avoid High Risk items - All Risks are documented, reported and monitored - Individual Action plans are created for each individual risk item - Risks are discussed during internal team meetings and on a monthly basis at Program Management Reviews Upon Project or Program Completion, Risks are documented as part of the closeout phase and added to lessons learned Remote 1 Minimal a Minor b Moderate c Moderate Significant d Severe e Consequence

47 The Way Ahead At IST we pride ourselves on customer satisfaction the first time, every time. When you partner with IST, we mesh your vision and supporting concepts with our innovative approaches to provide world class products and services. You communicate directly with our management team which translates to more customer satisfaction and value returned for your investment. We are ready to team with you now to provide leading edge solutions to your 21st Century challenges.

48 Mission Oriented Customer Focused

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