Schedule Margin

The term schedule margin is well-known in project management. What needs to be better known outside the US Government (USG) contracting world is how schedule margin is treated in the Performance Measurement Baseline (PMB). The PMB is the program record document subject to the Defense Contract Management Agency (DCMA) oversight. This oversight starts and ends with Earned Value Management (EVM), defined in ANSI-748-B.

This may seem irrelevant to those outside the USG program, but it should not. EVM is a powerful tool for project and program management, no matter the domain or the context within that domain.

Schedule Margin and the PMB

Schedule margin is a project management tool for dealing with schedule contingencies. Schedule margin provides a separately designated "buffer" to "protect" the delivery dates.

There are two approaches to schedule margin.

In the first, the final task is baselined to be finished ten days before an End-of-contract (EOC) milestone is aligned with the contract need date. The calculated difference between the final task completion and the contract need date is the schedule margin to the contract need date.

In the second, the EOC milestone is baselined to finish immediately after the final task – which is still baselined to finish before the contract needs a date. The calculated difference is the schedule margin to the contract need date.

The margin is the same in both examples, but the method used to calculate the margin is different. In the first case, the margin is implicit if the Contract Completion Date is usually not included in the Integrated Master Schedule as an activity. The second is explicit since the Finish Milestone is in the Integrated Master Schedule.

The second example is preferred simply because a visible activity connects the last task with the "need" date. In both cases, the "Planned Finish" is the same - the end of the Last Task. Or any Task if there is a margin for intermediate deliverables.

No matter which approach is used, a Schedule Margin is needed. No schedule margin means you're late.

How To Calculate Schedule Margin

Now comes the question of calculating the schedule margin. Yes, the schedule margin is calculated. It can be "stated." However, the schedule margin is like the "stated end date" many blogs, white papers, and voices complain about. If you have a stated end date and need to know the schedule required margin, your project is late before it starts.

Here's how we calculate the space and defense business schedule margin - Monte Carlo Simulation. It's that simple, and it's that hard.

The schedule itself must be credible. There are no hard constraints. No weird dependencies - only Finish to Start. No bogus durations. The Most Likely duration, for the starting point of the calculation, must be "most likely." That is not the average. The duration would appear most often if you performed this work repeatedly and did not learn anything from it. This is a common mistake when first learning about probabilistic risk analysis.

Sizing Schedule Margin using Monte Carlo Simulation

The Monte Carlo approach is discussed as well. Both are needed for a credible plan in our domain. Here's how you do it:

1. Build the plan (Integrated Master Schedule - IMS) from the top down. It starts with the Program Events (PE) - maturity assessment points. The Significant Accomplishments identified as "entry criteria" for the PE. Define the Accomplishment Criteria (AC) for the tasks that perform the work that delivers the SAs in support of the PEs. This results in a vertically integrated plan. A plan that defines all the work needed to have the project arrive at a known point along its maturity path to completion.
2. Make the horizontal connections between ACs and other ACs or ACs and Tasks. These connections define the program "flow" for work completion, while the vertical connections define the "flow" of product maturity.
3. Next, could you identify the risk buy-down activities? This is work done to reduce risk in the technical or programmatic aspects of the project. These tasks are explicitly identified.
4. Using a Monte Carlo Simulation (MCS) tool - Risk+, @Risk for Project, PERTMaster - construct a probabilistic estimate of the completion of the maturity assessment points. Confirm that the 80% confidence points on the CDF - "there is an 80% chance that the task will be completed on or before this date" - meet the project's needs.
5. Add buffer(s) before high to moderate-risk tasks, collection points, or milestones that bring the deterministic schedule to the customer's desired date. This deterministic date then includes the "buffer" or margin.
6. Set these buffer or margin tasks to zero (0) duration and rerun the Monte Carlo Simulation to confirm the 80% confidence date still matches.

The probabilistic duration needs to be discussed a bit more. There are several approaches here.

1. Get three point estimates from historical data or subject matter experts.
2. Get variance values from historical data or subject matter experts.
3. In both cases, confirm that the three-point estimates match some probability distribution - Triangle or BetaPERT are useful ones.
4. Confirm that the three-point estimates are either 0/100 estimates - that is, they are the 0% or the 100% points in the PDF, or they are the 10/90 points - the 10% or 90% points. The 10/90 is better because it represents a better narrative of the estimate. 10% say - when repeated 10 times under the same conditions, this task is completed 1 out of 10 times on or before this duration or date. 90% says - when repeated ten times under the same conditions, this task is completed 9 out of 10 times on or before this date or duration

With this three-point information, the MSC can be run (Risk+ assumes 0/100, @Risk can be used with 10/90).

It is important to remember that the probabilistic and deterministic completion dates are two very different things. The buffers must be set to zero for the deterministic date to match the probabilistic date. When the schedule is being executed, they are set to the forecasted duration needed to "protect" the assigned dates.

Finally, the MSC is usually run weekly after the status meeting when the Estimates to Complete are from the project team. This run forecasts any changes in the probabilistic complete dates and any margin erosion. Tracking margin erosion is a critical indicator of project health.

Here's an example of an MSC tool pointed at a task with a symmetric distribution - which rarely happens in real life (the symmetric part).

The 80% confidence value is shown in the table to the right. The Cumulative Distribution Function (CDF) shows the likelihood of each specific date occurring during the simulation. The symmetric form of the distribution is suspect since, in practice, tasks hardly ever finish early in the same number of times. They finish late by randomly sampling all the durations in the distribution, describing the task's duration.