How changes are controlled can be a risk to a project.  Changes can be non-disruptive or disruptive to a project.

An authorized change is not disruptive to a project. It is initiated by the customer and does not represent a risk because the contractor prepares and submits a proposal to incorporate the change into the baseline plan.  It is a contract change that comes with budget and schedule for the change.  Unauthorized changes constitute a risk to a project because they do not include a budget or schedule. They are disruptive to a project. The key to change control management risk reduction is to minimize the number of unauthorized changes.

This paper discusses project change control. It defines what are the types of changes including examples that explain how avoid non-baseline changes to mitigate the risk to a project.

CHANGE CONTROL

There are two basic types of project changes:

• Baseline changes.
• Non-Baseline changes.

The following explains the differences:

• Baseline changes have the following characteristics:
  • Change is authorized and funded by the Customer via contractual change.
  • Authorized change is incorporated into the Performance Measurement Baseline (PMB) in a timely manner and includes budgets and schedules.
  • The change control process is used to establish, analyze, communicate, and record approved changes to the program baseline.
  • Baseline changes are not disruptive to the project.

• Non-Baseline changes have the following characteristics:
  • Change not authorized or funded by Customer.
  • Change that does not modify the PMB
  • Least desirable and most damaging type of change.
  • No budget or schedule time associated with change.
  • Can go undetected a long time resulting in significant costant schedule
  • No opportunity to control change-only react to it.
  • Result in unhappy customer.
  • Non-baseline changes are disruptive to the project.

• Change Control is required to:
• Maintain the Integrity of the PMB.
• Incorporate authorized changes in a timely manner.
• Reconcile the authorized work and internal re-planning in the detail needed by management for effective control.
• Prevent revisions to the program budget except for authorized changes.
• Document changes to the PMB.
• Mitigate the risk to a project.

BASELINE CHANGES

How is a PMB established? An Integrated Master Schedule (IMS) typically is included in the proposal that goes to the customer.  After contract award, the IMS is updated to reflect negotiations with the customer and then baselined. The schedule tool (such as Microsoft Project) has the feature necessary to baseline the IMS. At this point it becomes the PMB.

The PMB is the time phased budget plan against which contract performance is measured. Meaningful performance measurement data require a documented PMB. Once the PMB is approved, cost and schedule changes to it must be approved by the customer and processed through formal Change Control procedures. Authorized changes must be incorporated into the PMB in a timely manner and reflected in both budgets and schedules.

TYPES OF BASELINE CHANGES  

There are several types of PMB changes some of which are shown below:

• Contractual changes/ modifications – These are customer generated changes that come with budget and schedule
• Use of Management Reserve (MR) – The Project Manager (PM)holds MR to fund unplanned scope that may arise. This change will require a new Work Package (WP) added to the PMB. The customer must approve this change to the PMB.
• Formal reprogramming- This type of change applies to a PMB that is so far out of alignment with the current schedule that tracking performance is not practical. In this case, the customer authorizes the contractor to reprogram (re-plan) the baseline to align with the current outlook.

NON-BASELINE CHANGES

All types of Non-Baseline Changes are disruptive and costly to a project. There are two basic types: undetected; and chaotic. Both are bad to the project. The way to mitigate this risk is for the PM to frequently remind the team and department managers of what these non-baseline changes are and how to avoid them.

Undetected

• Least desirable, most damaging type of change.
• No plan or processes.
• Goes undetected for long periods of time.
• No opportunity to control the changes. Examples are:
• Hallway conversation leads to design, drawing and other unauthorized changes. When detected later, it impacts cost and schedule to incorporate changes per change process.
• At final assembly components do not fit/work together as intended and rework of parts and drawings is needed. Changes are marked up on drawing but do not get into change process. Impacts cost and schedule later once change is detected and incorporated into the drawings per the change process.

Chaotic

• Chaotic changes are when plans are updated or changed frequently with no formal change control. An example is:
• Systems requests a change.
• An Investigation Report (IR) gets approved to add a new requirement with scope
• Budget Change Requests (BCRs), formal method of requesting and getting approval of a change, are submitted for funding for change and rejected by ProjectManager.
• The change control board (CCB) does not have funding authority which means the change does not happen but takes manpower and costto process the request.

How do non-baseline changes happen?

Theses types of changes are initiated from internal and external sources.

Internal

These changes are common on a project. Frequent communications to the team and department managers must be made by the PM to make them aware of the issue and how to mitigate it. Some examples of this type of changes are listed below:

• Ignorance of requirements and scope.
• Hallway conversations vs. written direction.
• Ineffective peer and design reviews.
• Poorly managed Change Configuration Board (CCB).
• Drawings released before designs are mature.
• Hand-offs not clean or poorly managed.
• Working level individuals operating without management knowledge.

External

Many companies outsource the majority of their work scope to subcontractors to be competitive. As a result, subcontractors constitute risk to a project.  It is essential that changes to the subcontract be managed well for project success.

Baseline changes

There are contractual (or formal) changes that go through the project Subcontractor Manager (SM). These types of changes come with additional budget and schedule time and are not disruptive to a project.

Non-baseline changes

Non-baseline changes are made informally and not authorized. Some examples are shown below:

• Engineering make requests and give direction to subcontractors that are not within their scope
• Unclear subcontractorsStatement of Work (SOW) that leads to additional scope that was not intended
• Late requirement definition that leads to incorrect assumptions that results in false starts

To mitigate these risks, always have the SM present at the meeting. He/she should state at the beginning of the meeting that only written direction from the SC is authorized. Verbal discussions in the meeting are not authorized. Also, review each paragraph of the SOW with the subcontractor to ensure the scope is clear.  Expedite clear definitions of requirements and communicate frequently with the subcontractor regarding to be determined (TBD) requirements so each party is on same page.

SUMMARY

The key to reducing the change management risk on a project is to minimize the non-baseline changes. Do not be concerned about baseline changes because they are initiated and authorized by the customer. They are contract changes and come with budget and schedule.

Non-baseline changes are a risk to a project. They are initiated from unauthorized internal sources (team members and department members) and external sources (subcontractors). They are disruptive to a project.  They do not come with a budget or schedule time. The budget shortfall caused by these types of changes must be covered by the project managers MR. The schedule delay must be recovered by reducing some slack in the IMS. Both of these actions jeopardize project success.

To mitigate the internal risk, the PM must frequently remind the team and department members as to what the non-baseline changes are and how to avoid them.  For external non-baseline changes (subcontractors for example) the following mitigation suggestions will help:

• The SM needs to be in every meeting and announce that only decisions and changes from the meeting in writing from him/her are authorized. Verbal changes or decisions are not authorized
• Review every paragraph in the SOW with the subcontractor to ensure the understanding and intent of the work scope is clear
• Review with the subcontractor at the first meeting (typically 1 week after contract award) paragraph by paragraph of the specification not any TBDs or unclear requirement. Provide direction to the subcontractor as to how to handle the TBDs. Communicate with the subcontractor frequently until all requirements have been defined. 

Remember, you have control over the internal work but little or no control over your subcontractors. Carefully select and frequently visit your subcontractors to mitigate the external changes from your subcontractor.  

Bio:

Currently John is an author, writer and consultant. He authored a book entitled ‘Project Risk Management. It went on sale on Amazon in August 2019. He has presented several Webinars on project risk management to PMI. He writes a weekly column on project risk management for CERN. John also writes monthly blogs for APM. He has conducted a podcast on project risk management.  John has published numerous papers about project risk management on LinkedIn.

John earned a BS in Mechanical Engineering and MS in Engineering Management from Northeastern University. He has extensive experience with commercial and DOD companies. He is a member of PMI (Project Management Institute). John has managed numerous large high technical development programs worth in excessive of $100M. He has extensive subcontract management experience domestically and foreign.  John has held a number of positions over his career including: Director of Programs; Director of Operations; Program Manager; Project Engineer; Engineering Manager; and Design Engineer.  He has experience with: design; manufacturing; test; integration; subcontract management; contracts; project management; risk management; and quality control.  John is a certified six sigma specialist, and certified to level 2 EVM (earned value management).https://projectriskmanagement.info/

If you want to be a successful project manager, you may want to review the framework and cornerstones in my book. The book is innovative and includes unique knowledge, explanations and examples of the four cornerstones of project risk management. It explains how the four cornerstones are integrated together to effectively manage the known and unknown risks on your project.