Contingency Management Plan
LPM-61
Latest Revision 6/4/2015
Large Synoptic Survey Telescope (LSST)
Contingency Management Plan
Victor Krabbendam
LPM-61
Latest Revision: June 4, 2015
This LSST document has been approved as a Content-Controlled Document. Its contents are subject to
configuration control and may not be changed, altered, or their provisions waived without prior
approval. If this document is changed or superseded, the new document will retain the Handle
designation shown above. The control is on the most recent digital document with this Handle in the
LSST digital archive and not printed versions.
The contents of this document are subject to configuration control and may not be changed, altered, or their provisions
waived without prior approval.
i
Contingency Management Plan
LPM-61
Latest Revision 6/4/2015
Change Record
Version
Date
Description
Owner name
1.0
8/14/2008
Initial release as Document5874
C. Claver et al.
1.0
7/25/2011
Revision to LPM-61, title and content change
D. Sweeney
1.1
8/10/2011
Updated tables
D. Sweeney
9/10/2013
Significant update and rewrite to reflect LSSTPO as
an AURA center, new authority levels, pre-FDR
updates to cost and schedule, and post-JIM Review
recommendations.
V. Krabbendam
3
11/10/2014
Document refresh to incorporate 2014 updates to
the Large Facilities manual and the conditions of V. Krabbendam
the CSA for the LSST MREFC Project.
3.1
3/20/2015
Update to reflect updated contingency calculations V. Krabbendam
and for consistency with the CEP
6/4/2015
Proofread and edit for consistency with Cost
Estimating Plan, Risk & Opportunity Management R. McKercher
Plan, and Scope Options
2
3.2
The contents of this document are subject to configuration control and may not be changed, altered, or their provisions
waived without prior approval.
i
Contingency Management Plan
LPM-61
Latest Revision 6/4/2015
Table of Contents
Change Record ............................................................................................................................................... i
Table of Contents .......................................................................................................................................... ii
Purpose ........................................................................................................................................................ iii
Applicable Documents ................................................................................................................................. iii
Acronyms and Definitions ............................................................................................................................ iii
Contingency Definitions ............................................................................................................................... iii
1
Introduction .......................................................................................................................................... 1
2
Contingency Elements .......................................................................................................................... 2
3
4
5
2.1
Budget Contingency ...................................................................................................................... 2
2.2
Schedule Contingency ................................................................................................................... 2
2.3
Scope Contingency ........................................................................................................................ 2
Cost and Schedule Contingency Estimation.......................................................................................... 3
3.1
Assessment Tool ........................................................................................................................... 3
3.2
Uncertainty Determination ........................................................................................................... 4
3.3
Risk Elements ................................................................................................................................ 5
3.4
Correlations................................................................................................................................... 6
Contingency Management .................................................................................................................... 7
4.1
Approval Authority........................................................................................................................ 7
4.2
Scope Changes .............................................................................................................................. 9
4.3
Opportunity Management .......................................................................................................... 10
4.4
Contingency Assessment ............................................................................................................ 10
Reporting............................................................................................................................................. 11
Appendix A: Activity Based Uncertainty Assessment (Excerpt from LPM-81 Section 10) ......................... 13
Appendix B: LSST Change Request Approval Form .................................................................................... 16
The contents of this document are subject to configuration control and may not be changed, altered, or their provisions
waived without prior approval.
ii
Contingency Management Plan
LPM-61
Latest Revision 6/4/2015
The LSST Contingency Management Plan
Purpose
The LSST project plan includes contingencies for budget, schedule and scope. This document describes
the management processes for development and allocation of those contingency resources. This plan
covers the approach for addressing the overall LSST scope (performance margins, deliverable scope, and
technical approach), the integrated project schedule contingency (schedule float), and the NSF MREFC
portion of the funding. NSF has a “No Cost Overrun” policy originally codified in the FY 2009 budget
request to Congress that reads: “NSF is implementing a ‘no cost overrun’ policy, which will require that
the cost estimate developed at the Preliminary Design Stage have adequate contingency to cover all
foreseeable risks, and that any cost increases not covered by contingency be accommodated by
reductions in scope." This Contingency Management plan addresses this policy and is the key approach
to the successful completion of the Project, on time and on budget.
Applicable Documents
The following documents are applicable to the development or implementation of this CMP. They are
available in the LSST document archive.









Change Control Process (LPM-19)
Cost Estimating Plan (LPM-81)
Document Management Plan (LPM-51)
Project Execution Plan (LPM-54)
Risk & Opportunity Management Plan (LPM-20)
Science Requirements Document (LPM-17)
Scope Options (LPM-72)
Spare Parts and Consumables Policy (LSE-170)
System Engineering Management Plan (LSE-17)
Acronyms and Definitions


Glossary of Abbreviations (Document-11921)
Glossary of Definitions (Document-14412)
Contingency Definitions
Project Baseline – The approved version of the Project plan, its costs, schedule, and deliverables, that
can be changed only through formal change control procedures and is used as a basis of comparison.
The contents of this document are subject to configuration control and may not be changed, altered, or their provisions
waived without prior approval.
iii
Contingency Management Plan
LPM-61
Latest Revision 6/4/2015
Contingency – The project’s overall reserves in excess of the documented baselines for budget,
schedule, and technical scope. Contingency is defined as the total estimate uncertainty associated with
cost, schedule and technical performance.
Contingency Management – The formal process that provides the project the ability and flexibility to
solve unforeseen issues that may impact the project’s budget, schedule, and technical performance.
The process incorporates activity-based uncertainties and high impact event-based uncertainties.
Issue – A risk that has been realized, i.e. the undesired outcome has materialized.
Event – A specific incident/item that occurs at unique points in time (specific time, distributed time
period, or random) on the project. Events are defined in terms of something happening and are
independent of activities. Events with negative consequences, when coupled with their probability of
occurrence, impact to the project, and handling approach, are the basis for defined entries in the Risk
Register.
Activity – A specific task or set of tasks that are required by the project, use up resources, and take time
to complete (Project Management, pg. 338)
Opportunity – The probability of a non-baselined desirable event occurring and the significance of the
occurrence. An opportunity is the opposite of a risk.
Opportunity Management – The proactive effort to identify and return resources to the contingency
pool.
Scope Contingency – Scope in the Project Baseline that can be removed without affecting the overall
project objectives, but that may still have undesirable effects on the facility performance.
The contents of this document are subject to configuration control and may not be changed, altered, or their provisions
waived without prior approval.
iv
Contingency Management Plan
LPM-61
Latest Revision 6/4/2015
LSST Contingency Management Plan
1 Introduction
The LSST project plan includes contingencies for budget, schedule and scope. This document describes
the management processes for the development, review and allocation of the contingency resources.
This plan addresses the approach for managing the overall LSST scope (performance margins,
deliverable scope, and technical approach), the integrated project schedule contingency (schedule
float), and the NSF MREFC portion of the funding. The NSF and DOE have separate budgets, budget
contingencies and management processes, but the LSST Director is the single LSST Programmatic
authority responsible to both agencies for LSST funds. SLAC National Accelerator Laboratory has detailed
plans for the use of DOE contingency. The LSST Project Office (LSSTPO) coordinates the schedule and
scope contingencies as a project-wide integrated process in order to ensure broad communication and
involvement with both funding agencies.
The use of contingency is managed by the LSST Project Manager in conjunction with the LSST Director,
Change Control Board (CCB), the AURA Management Council for LSST (AMCL), SLAC where appropriate,
and the funding agencies. The processes and approval thresholds for each type of contingency allocation
are described in Section 3.
The baseline levels of budget, schedule, and scope contingency are set to cover the uncertainties
associated with construction, deployment of the observatory and data management systems, and all
other project uncertainties. The budget contingency and schedule float were determined using a
probabilistic approach to evaluate cost and schedule uncertainties, along with potential risk events in
order to provide an integrated Monte Carlo simulation of the resources that may be necessary to
address these uncertainties and issues. In the event that contingency funds, schedule float and technical
performance margin in the system are expended, or if a descope is a recommended management
response to a realized risk, the LSSTPO will negotiate with the Joint Oversight Group (JOG), to identify an
appropriate descope option. LSST maintains a Scope Options document (LPM-72) to maintain descope
and opportunity options.
The use of contingency is controlled by established approval authorities to the baseline project plan and
accomplished through a defined change control process. All changes pass through the Change Control
Process (LPM-19) regardless of magnitude, and all are reported in the monthly report through the
Contingency Report Table and the project earned value data. Unspent contingency funds remaining at
the end of the project are returned to the NSF.
The LSST Contingency Management Plan is one plan in a group of LSST Project plans that collectively
defines a comprehensive approach to managing risk, opportunity, and contingency, which are
collectively known as approaches to decision making under conditions of uncertainty. The other two
plans are the Cost Estimating Plan (LPM-81) and the Risk & Opportunity Management Plan (LPM-20).
The contents of this document are subject to configuration control and may not be changed, altered, or their provisions
waived without prior approval.
1
Contingency Management Plan
LPM-61
Latest Revision 6/4/2015
2 Contingency Elements
The following subsections provide brief descriptions of the three contingency elements included in the
Project baseline – budget contingency, schedule contingency, and scope contingency. All contingency
requests are analysed to determine the appropriate project response and the type of contingency to use
for resolution – cost, schedule, requirements, scope, approach or any combination thereof.
2.1 Budget Contingency
The NSF contingency funding is the amount of money between the project Performance Measurement
Baseline budget and the approved Total Project Cost. The amount is intended to address future costs for
items in the approved plan that are associated with possible events or conditions arising from causes
the precise outcome of which is indeterminable at the time of the budget development and that
experience shows will likely result, in aggregate, in additional costs for the approved activity.
2.2 Schedule Contingency
Schedule contingency seeks to address uncertainties in task durations and external deliveries like
funding. The Project Plan is completely captured in an Integrated Project Schedule (IPS) where activities
are defined by duration, predecessors, and successors to form a logic network for the project that will
indicate early delivery if no schedule contingency is used. It also provides an accurate float assessment
for each activity or path of activities to support management of the plan and resolution of issues as they
arise.
In some cases, schedule contingency may be insufficient to address changes or issues in the schedule,
and re-planning of schedule tasks (possibly including overlapping or parallelization of tasks, increased
use of resources – e.g. overtime, outsourcing and alternative strategies) may be required. Requests to
change the dates of activities and milestones in the IPS will be made via standard Project Change
Requests as described in Section 4.
2.3 Scope Contingency
This section describes allocation of the technical margin and implementation of descope options. The
Systems Engineering Management Plan (LSE-17) describes the requirement flowdown process and
performance assessments of the designs, prototypes, and actual hardware that yield a performance
margin against the Science Requirements Document (SRD, LPM-17) design requirements. The Systems
Engineering Manager is responsible for monitoring the status of the design performance predictions and
works with the Systems Scientist to evaluate the relationship with the SRD. When circumstances allow
this margin to be allocated as a response to a realized risk, the Project Manager will evaluate such an
option against budget or schedule contingency allocation.
In the event that budget, schedule, and margins are fully allocated or insufficient for a realized issue, the
project has identified a number of descope options that result in cost savings but also impact the
scientific capability of the LSST. These descopes are identified in the LSST Scope Options (LPM-72)
document. These reductions would be made only with the approval of the NSF if the LSST project is
faced with substantial shortfall from the allocation of planned funding, or if total project costs exceed
The contents of this document are subject to configuration control and may not be changed, altered, or their provisions
waived without prior approval.
2
Contingency Management Plan
LPM-61
Latest Revision 6/4/2015
the ability of the project to deal with unexpected costs and schedule delays using budget and schedule
contingency.
3 Cost and Schedule Contingency Estimation
The amount of Budget and Schedule contingency necessary to complete the Project with a high
likelihood of success within the established TPC is determined from a Risk Management Module in the
Project Management Control System (PMCS). The methodology described below is a consistent and
uniform approach to defining uncertainty distributions at the activity level of the plan using well defined
factors and multipliers for specific technical, cost, and schedule assessments similar to Technical
Readiness Levels. They are applied to each individual activity in the plan. It is a comprehensive approach
specific to the work package scope and conditions. The approach combines technical and cost
uncertainty evaluations for a best case cost estimate and combines these and the schedule uncertainty
assessment to develop the worst case cost estimate. This +/- range around the baseline "most likely"
value provides a reasonable distribution for this costing analysis and yields cost distributions that match
expert judgment and historical tendencies to underestimate costs and schedule. The methodology also
integrates event based risks into the analysis to model the impact of known conditions with unknown
results. These risk events are ported from the LSST Risk Register and applied to any applicable tasks.
These Risk Factors also provide the mechanism to correlate the events to multiple activities for one
integrated analysis.
Ultimately all assessments of uncertainty and risk are subjective, but the NSF panels for the LSST
Preliminary Design Review, Cost Baseline Review, and Final Design Review consistently agreed with
Project evaluations of the budget and schedule uncertainties. A historical look at 60 NASA projects by T.
Amar (Amar 2011) indicates that the cost and schedule contingencies developed by the LSST approach is
consistent with a Moderate Risk Project with Semi-Aggressive uncertainty.
The uncertainty and risk-based contingency estimation methodology described below provides a
standard approach for continued evaluations that can be generated periodically over the duration of the
Project to track progress and trends and to evaluate the existing contingency levels with respect to the
remaining effort and budgets.
3.1 Assessment Tool
The Risk Management Module is a part of the PMCS that is specifically integrated with Primavera P6, the
commercial enterprise level cost and schedule planning tool LSST has customized to allow the system to
maintain such details as base and burdened costs in base- and then-year values, activity and resource
attributes that help sort EVMS and FastLane data, and scope of work descriptions down to the activity
level. The full suite of data attributes collected to resource and plan each activity is described in the Cost
Estimating Plan (CEP; LPM-81). The data collected that is specifically relevant to budget and schedule
contingency is the baseline resource loads and uncertainty assessment associated with technical, cost,
and schedule for each activity. The uncertainty assessment is done uniformly and consistently through a
set of defined factors, as well as defined risk multipliers, that are based on a standard rubric for resource
loaded activities. For convenience, the uncertainty factors from the CEP are included in Appendix A of
The contents of this document are subject to configuration control and may not be changed, altered, or their provisions
waived without prior approval.
3
Contingency Management Plan
LPM-61
Latest Revision 6/4/2015
this plan and described in Table 3.1-1.
Table 3.1-1: A description of the uncertainty factors and risk modifiers used in LSST's cost estimating process.
Parameter
Abbreviation
Definition
Technical Uncertainty Factor
TU
Valued 1-15 based on the technical readiness of the element
from existing and off-the-shelf to beyond the state-of-the-art.
Cost Uncertainty Factor
CU
Valued 1-15 based on the basis of estimate from an existing
catalog item, or some related previous experience to an
engineering judgement.
Schedule Uncertainty Factor
SU
Valued 2, 4, and 8 based on the schedule impact from no
impact to other scheduled activities to Critical Path impact.
Technical Risk Multiplier
TM
Value is based on Design and/or Manufacturing concerns.
Cost Risk Multiplier
CM
Value is based on Material cost and/or Labor rate concerns.
Schedule Risk Multiplier
SM
Value is based on schedule concern.
The risk management module in PMCS runs a Monte Carlo simulation to model these estimate
uncertainties, schedule uncertainties, and potential risk events using a triangular distribution of best
case, most likely, and worst case to provide the distribution of possible cost and schedule outcomes. A
key aspect of this cost assessment is the integration of cost, schedule and risk factors modelled together
with activity correlations to provide the cost and duration outcome distribution.
3.2 Uncertainty Determination
The risk management tool uses a three point probability distribution for the Monte Carlo simulation.
These points are the best case, most likely, and worst case data for cost and schedule associated with
each activity in the plan. The Baseline cost and schedule data provided by the subject matter
experienced estimator is defined as the "most likely" for both cost and schedule duration. To ensure a
methodical and uniform approach to developing "best" and "worst" case values, LSST uses well defined
uncertainty factors and Risk multipliers to derive default values. Table 3.2-1 below identifies how the
factors and multipliers, identified previously in Table 3.1-1 and described in Appendix A, are used to
develop the end points for the distribution. The uncertainty factors and multipliers are captured through
a customized interactive portal that calculates the best and worst case values for immediate review and
also offers the Cost Account Manager and Estimator the ability to manually override the values. All
overrides are documented with a basis for the custom values.
The formulas provided have been characterized and evaluated by the subject matter experts to yield
reasonable values. Since the original estimate of the factors was done together, the combination of the
technical factor and multiplier to augment the cost and schedule assessment yields appropriate
distributions. The basic rubric is also applicable to the definitions used for the software development
tasks that have custom characterizations (as defined in the CEP) and is extensible to other ranges should
the process require a different gain to address uncertainties in later phases of the program.
The contents of this document are subject to configuration control and may not be changed, altered, or their provisions
waived without prior approval.
4
Contingency Management Plan
LPM-61
Latest Revision 6/4/2015
Table 3.2-1: How LSST uses uncertainty factors and risk multipliers to develop the Best Case, Most Likely, and Worst Case
probability distribution
3-Point
Distribution
Value Formula
Value Range
Most Likely Cost
This is 100% of the Baseline Activity Cost.
Baseline Activity Cost
Best Case Cost
100% -[(TU +CU)*CM] * Baseline Cost
40% - 100% of Baseline Cost
Worst Case Cost
100% + [(TU*TM)+(CU*CM)+(SU*SM)] * Baseline Cost
100% - 198% of Baseline Cost
Most Likely
Schedule
100% of the Baseline Activity Duration
Baseline Activity Duration
Best Case
Schedule
100% -[(TU +SU)*SM] * Baseline Duration
77% - 100% of Baseline Duration
Worst Case
Schedule
100% + [(TU*TM)+ (SU*SM)] * Baseline Duration
100% - 168% of Baseline Duration
3.3 Risk Elements
The Risk Management Module is populated with event-based risks that can impact both cost and
schedule. Risks imported into the PMCS have the same three-point distribution for schedule duration
and cost impact, as well as a probability that defines how often the risk is invoked in a simulation. The
risk is assigned to each applicable activity so each time the risk is active its impact is correlated to all its
assigned activities.
Risks are imported from the LSST Risk
Register – a key tool in LSST's continuous
process to identify, assess, and track
events that may occur in the future that
can have negative impact on the project.
The Risk & Opportunity Management
Plan (LPM-20) fully describes the process
and describes the full complement of
assessments made for each risk. Figure
3.3-1 shows the data form for a
particular Risk item. The key parameters
used to characterize the risk in the PMCS
database have been circled. The key data
are the WBS areas to which the risk
should be applied, probability of
occurrence, the expected cost impact
(labor and non-labor) and the schedule
impact.
Figure 3.3-1: The data form for a particular Risk item in the LSST Risk
Register with key parameters circled
The contents of this document are subject to configuration control and may not be changed, altered, or their provisions
waived without prior approval.
5
Contingency Management Plan
LPM-61
Latest Revision 6/4/2015
Several steps are required to characterize the risk in PMCS with appropriate best and worst case cost
and schedule values:
1. Cost impact is evaluated against the sum of the applicable WBS item baseline costs to determine
the worst case value as a percentage.
2. The identified schedule impact is evaluated against the applicable WBS activity durations to
establish the worst case schedule impact as a percentage.
3. The probability of occurrence in PMCS defaults to the top of the expected probability range.
4. Each risk is assigned a best case percentage based on three types of risks as described in Table
3.3-2.
Table 3.3-2: Definitions of the best case for the three types of LSST risks
Risk Type
Definition
Best Case Assignment
1) Negative impact Event
The risk identifies an event that can only
have negative impact. There is no better
case than the baseline most likely.
100%
2) Positive or Negative Event
This risk is for an event that can have a
positive or negative impact. For example
a large shift in currency rates can go both
negative and positive.
Best Case = -1*Worst Case
3) Uncertain outcome event
This risk type identifies an event that will
cause a delay or higher cost. The
outcome of these risks can be positive,
but since the main deliverable is still
necessary, the best case is set at 10% of
the worst case.
Best Case = -10% * Worst Case
This method takes a conservative approach by assigning the high end of the range for the default
probability of occurrence. This approach also uses subjective judgement on the third risk type in
assigning the best case at 10% of the worst case. This was based on an evaluation of seven such risks in
the top 50 in the Risk Register and an assessment of how those risk events could occur.
The defined approach for determining a "best case" introduces opportunity into the evaluation. Going
forward, LSST has extended the Scope Options (LPM-72) document to include opportunities, and LSST is
committed to enhancing the Risk Register, currently focused on negative events, to accept opportunities
as a type of event.
3.4 Correlations
An important element for a probabilistic analysis of the baseline program plan is to identify correlations
that should be considered in the Monte Carlo simulation of the integrated program plan. The Risk
Management Module uses a Risk Factor Matrix with WBS assignments that serves to integrate specific
risk elements as discussed in Section 3.3. When these elements are applied to multiple activities, they
The contents of this document are subject to configuration control and may not be changed, altered, or their provisions
waived without prior approval.
6
Contingency Management Plan
LPM-61
Latest Revision 6/4/2015
are correlated to have the same event-based impact in the simulation. Therefore the risk factors have an
implicit correlation of all WBS elements that are assigned the same risk factor. Development of the LSST
contingency includes a determination of correlations that exist in the program, an evaluation to
determine if they have already been covered through existing Risk Factors, and then the entry of any
customized correlations that are appropriate.
4 Contingency Management
The Project Manager has direct responsibility for management (allocation, tracking and reporting) of the
contingency budget and schedule, and for the re-planning of approved scope modifications. All such
changes are coordinated with the Director. The LSST Change Control Process (LPM-19) is the primary
process to manage changes, as it will consider and recommend disposition of requests for changes to
system-level designs and interfaces, system scope, as well as proposed draw-downs on project
contingency, schedule float, and/or technical reserves. All such changes, even those within the authority
of the Director and Project Manager, are administered through the Change Control Board (CCB) webbased workflow (https://www.lsstcorp.org/groups/ccb) to involve the senior managers and scientists in
the re-working of the plan. The change control process is used to establish the work flow and gates for
proposed changes, impact analyses, review, approvals, implementation and reporting.
Tracking and reporting the use of budget and schedule contingencies is a key part of management. The
Project Manager maintains a log of changes to the baseline PMCS plan to keep a constant record of the
budget reserves, and the Earned Value Management System (EVMS) reporting provides a monthly upto-date accounting as described in the Project Controls System Management Plan (LPM-98).
Although the total contingency was developed from individual activities and subsystem-defined risk
items, contingency is NOT associated with a particular subsystem or WBS line item. No part of the
project “owns contingency.”
Contingency is reserved to deal with risks identified in the Risk & Opportunity Management Plan (LPM20) and Risk & Opportunity Registries (including the execution of risk mitigation activities) and events
with unexpected outcomes during the project. Contingency is NOT used to expand the scientific or
technical scope of the project beyond the baseline definition. All uses of contingency are recorded in a
contingency log, which will be summarized in the LSST Monthly Earned Value Reports.
4.1 Approval Authority
The approval to make changes in the LSST Approved Baseline, including project scope, scientific
performance, cost and schedule is governed first by the terms and conditions of the Cooperative Service
Agreement (CSA), which states:
"..prior approval of the cognizant NSF Program Officer is required for:
i.
ii.
Configuration changes increasing the overall program baselines for cost or schedule.
Reallocation of funds among subawardees exceeding $250,000 at the Level 2 Work Breakdown
Structure.
The contents of this document are subject to configuration control and may not be changed, altered, or their provisions
waived without prior approval.
7
Contingency Management Plan
iii.
LPM-61
Latest Revision 6/4/2015
Use of cost contingency exceeding $250,000 and/or use of schedule contingency to increase
milestones for 30 days or more as referenced in the proposal for construction."
All changes requiring the NSF Program Officer’s approval are submitted through the form attached in
Appendix B. This form is derived from the CCB process, providing the description of the change and the
impacts on budget, schedule, and technical performance. The consequences of the change request are
also provided to convey the full nature of the change. The CCB workflow is held pending the positive
response on the NSF approval.
Table 4.1-1 summarizes the levels of authority required to approve each type of project contingency
allocation.
Table 4.1-1: Levels of authority required to approve allocation of contingency resources
Technical/Scope
Budget
Schedule
Notification Level
NSF/JOG/Director
Changes in overall
science deliverables,
Project Scope,
Greater than
$250,000 for
Allocations of
contingency and
re-distribution of
budget between
Level 2 WBS
Changes greater
than 30 days for
Level 1 Milestones
All allocations of any
contingency via the
contingency log
Project Manager
Changes w/out net
impact on science
deliverables,
schedule, or
operations costs
Allocations and
redistribution
budget less than
$250,000
All changes to
Level 2 Milestones
but no effect on
Level 1 Milestones
All changes in
baseline
LSST Subsystem
Managers
Changes not
affecting subsystem
performance or
requirements
Changes to
baseline budget
less than $10K and
less than 25% of
original estimate
Changes that delay
Level 3 Milestones
only without
impacting any
Level 2 Milestones
Changes strictly
internal to
subsystem
Oversight, enforcement, and recording of allocation processes is the responsibility of the Project
Manager but is supported by all LSST team members. In certain cases, responsibility for the
management of contingency is delegated to the level of management that is consistent with the scope
of the requested change.
In the course of normal project execution, changes to the WBS budget items may be required in
response to non-configuration changes, such as revised vendor quotes, changing economic conditions,
commodity price fluctuations, etc. In these cases, the appropriate subsystem project manager(s) will
prepare and submit a budget Change Request (CR) to the LSST Project Office explaining the change and
requesting contingency funding. If the change is less than $25k in a single WBS element in a single
month, the change will be automatically approved and recorded in the contingency log. If the change
exceeds $25k or 25% of the original estimate for the item, the change must be approved according to
The contents of this document are subject to configuration control and may not be changed, altered, or their provisions
waived without prior approval.
8
Contingency Management Plan
LPM-61
Latest Revision 6/4/2015
the authorization procedure presented in Table 4.1-1. The NSF Program Officer will be informed of all
changes in the baseline and contingency allocations via the contingency log reported monthly.
The Level 1 milestones for the Project are provided in Table 4.1-2 with the initial date.
Table 4.1-2: LSST Level 1 Milestones
4.2 Scope Changes
The guiding rationale for proposed scope reductions is to minimize the impact of reductions in light of
the LSST system requirements and also to avoid reductions to the construction budget at the expense of
higher operating budgets. The scope for the construction of the LSST can be reduced in two
The contents of this document are subject to configuration control and may not be changed, altered, or their provisions
waived without prior approval.
9
Contingency Management Plan
LPM-61
Latest Revision 6/4/2015
fundamentally different ways: 1) reductions in the technical and scientific scope or 2) reductions in
engineering implementation.
If large cuts to the construction budget are realized, Scope reduction is the most likely pathway. The
LSST data products provide a metric for evaluation of the impact of scientific scope reductions. Scientific
scope reductions for LSST can either reduce the quantity or quality of data products. Other scope
reductions to the breadth of the program exist, but the primary metric for evaluation is the scientific
impact.
The engineering pathway to scope reduction is to make adjustments to the system implementation that
supports the project scientific and educational scope. Engineering changes may affect risks, data
product quality (e.g. a reduction in resolution, precision, or availability), or they may reduce
construction costs by increasing maintenance complexity (e.g. building cheaper infrastructure that will
require more frequent or more costly maintenance). Other possible engineering scope options include
the supply of spares. LSST has a Spare Parts and Consumables Policy (LSE-170) that provides the
requirements for spare parts, but it is common to consider these requirements in the scope options list.
LSST’s system requirements provide a framework for analysis of reductions in scientific scope that are
specified in the SRD (LPM-17), the LSST System Requirements (LSR, LSE-29) and the Observatory System
Requirements (OSS, LSE-30).
4.3 Opportunity Management
An important element in contingency management is the identification of opportunities that allow cost
and schedule contingencies to be "replenished" or performance levels to be increased. Like risk
management, opportunity management entails early recognition, proactive planning, and aggressive
execution of a plan that allows opportunities to materialize. The primary tool to manage opportunities is
the scope options list in document LPM-72. This time-based list of both reductions in scope and
opportunities to be realized, can be plotted to show evolution as time progresses. Future updates to the
Risk Register will include the tracking of opportunities. The Risk process is already designed to be an
active management tool that can be adapted to serve both positive and negative events equally. When
that capability is in place, the contingency management plan will benefit from an active process to add
to the contingency pools.
4.4 Contingency Assessment
The management of contingency requires a decision methodology to allocate resources when risks are
realized and a response must be executed. While there is no single established process to choosing from
budget, schedule or scope contingencies, there are some processes in place to support the decisions.
All contingency requests are handled through the change control process, and every request of
contingency requires the author to indicate if a scope change is possible as a response. This provides the
data to support the decision on allocation of scope, budget, or schedule contingencies if there are
choices.
The allocation of contingency is also based on the overall status of the project, the available authorized
budgets, and the levels of contingency that remain. The Project Manager maintains a model of the
The contents of this document are subject to configuration control and may not be changed, altered, or their provisions
waived without prior approval.
10
Contingency Management Plan
LPM-61
Latest Revision 6/4/2015
anticipated use of the budget contingency and strives to keep to that plan. Figure 4.4-1 is a model from
the final design phase for LSST where the modelled use of contingency over time is directly related to
the activity based development of the estimated contingency. This is shown in the light blue bars. The
green bars show the budgeted availability of funds based on the baseline plan and baseline funding
profile. The red line shows the actual level of budget contingency (in this example plot, everything is
forecast and no contingency had been allocated.) This figure demonstrates the budget contingency
evaluation that will continue based on real time status data and the need to stay above the green line.
When the final contingency is approved, the working version of the chart will be produced and it will
also include a "s" curve that would match a contingency usage profile that recognizes early use to deal
with common issues with bid risks, holds tight to contingency in the middle years, and then recognizes
that the integration, test, and commissioning period at the end of the project is also commonly a heavy
user of contingency.
Figure 4.4-1: Model of projected use of contingency over time for the LSST final design phase.
5 Reporting
All uses of contingency represent a baseline change, and all occurrences, or allocation of contingency, is
tracked and reported monthly. All contingency actions pass through the Change Control Process and
approval steps. Those that are approved and implemented are then logged in Document-14547, and all
activities are reported monthly using the format provided in Table 5-1.
The contents of this document are subject to configuration control and may not be changed, altered, or their provisions
waived without prior approval.
11
Contingency Management Plan
LPM-61
Latest Revision 6/4/2015
Table 5-1: Change Requests with contingency impact chart from LSST's monthly report
Change
Control
ID
Description
NSF
Approval
Date
Risk ID
WBS
Allocation
($)
Balance
($)
Schedule
Impact
Contingency Balance
List LCRs processed with Cost or schedule changes
Pending LCRs with Potential PMCS Impact
List pending LCRs with expected cost or schedule impact
The overall status of remaining contingency, future liens on contingency, and all allocations and
returns of contingency funds (as risks are realized or retired) is also reported monthly. To provide a
monthly assessment of the cost contingency, this summary table will capture the specific
contingency balance, as well as near term risk register items, i.e. known liens on contingency that
are not yet processed through change control.
The contents of this document are subject to configuration control and may not be changed, altered, or their provisions
waived without prior approval.
12
Contingency Management Plan
LPM-61
Latest Revision 6/4/2015
Appendix A: Activity Based Uncertainty Assessment (Excerpt from LPM-81 Section 10)
The uncertainty associated with the plan is assessed for each activity based on technical, cost, and
schedule factors. A complete set of standardized factors is assigned to each activity to support two types
of contingency analysis. One is an algorithmic analysis programmed into the PMCS to provide a separate
estimate for contingency summed from the activity levels. A second analysis uses these factors,
combined with other risk assignments, to support a Monte Carlo assessment of the total Project cost
and schedule risk exposure. This probabilistic assessment is further defined in the Contingency
Management Plan but also uses the same uncertainty factors as some base inputs. The estimator is
responsible for assigning the uncertainty factors and for documenting a summary basis for the scores in
the "Basis of Risk" field of the database. Contingency estimates developed in both the algorithmic and
probabilistic methodologies are never commingled with base costs (direct, indirect).
The method for activity-based estimating of uncertainty is based on standardized scoring of technical,
cost, and schedule factors. The factors lie on a roughly linear, numeric scale that corresponds to the
rubrics defined in Table 10-1. The scale is qualitative and somewhat subjective, but practical; it has been
used in the algorithmic method for contingency estimating in NSF and DOE projects such as LIGO and
the U.S. part of the ATLAS detector for LHC. The same detailed assessment is used to develop the best,
most likely, and worst case values for cost and duration needed for the integrated Monte Carlo
contingency assessment.
Table 10-1: Uncertainty Factors
Factor
Technical Uncertainty
Cost Uncertainty
Schedule Uncertainty
1
Existing design and off-theshelf hardware
Off the shelf or catalog item
Not used
2
Minor modifications to an
existing design
Vendor quote from established
drawings
No schedule impact on
any other item
3
Extensive modifications to an
existing design
Vendor quote with some design
sketches
Not used
4
New design within established
product line
In-house estimate for item within
current production line
Delays completion of
non-critical path
subsystem item
6
New design different from
established product line.
Existing technology
In-house estimate for item with
minimal company experience but
related to existing capabilities
Not used
8
New design. Requires some
R&D development but does
not advance the state-of-the-
In-house estimate for item with
minimal company experience and
minimal in-house capability
Delays completion of
critical path subsystem
item
The contents of this document are subject to configuration control and may not be changed, altered, or their provisions
waived without prior approval.
13
Contingency Management Plan
LPM-61
Latest Revision 6/4/2015
art
10
New design. Development of
new technology which
advances the state-of-the-art
Top down estimate from analogous
programs
Not used
15
New design way beyond the
current state-of-the-art
Engineering judgment
Not used
Standard scoring ranges for these parameters are between 1 and 15 for technical or cost uncertainty,
and between 2 and 8 for schedule uncertainty. For technical uncertainty, the lowest score (1)
corresponds to commercial off-the-shelf items; the highest score (15) corresponds to components
significantly beyond the current state-of-the-art. For cost uncertainty, the lowest score (1) corresponds
to a vendor quote or catalog price; the highest score (15) corresponds to estimates where no data are
available. Schedule uncertainty factors range between 2–8, where the low end corresponds to no
schedule impact and the high end corresponds to delay on the critical path.
Each uncertainty factor is multiplied by a risk-factor multiplier between 1–4 percent, corresponding to
the rubrics in Table 10-2. The choice of multiplier depends on whether the risk is associated with
technical, cost, or schedule concerns, and whether the uncertainty applies to design, manufacturing,
materials cost, or labor rates.
Table 10-2: Risk-Factor Multipliers
Condition
Technical Risk
Cost Risk
Risk-Factor Multiplier
Design or manufacturing concerns only
2%
Design and manufacturing concerns
4%
Material cost or labor rate concern
1%
Material and labor rate concern
2%
Schedule Risk
1%
Due to the high proportion of software in the LSST Data Management System, the above tables have
been supplemented with ones more relevant to software systems and that table applied to the analysis
for the DMS.
The contents of this document are subject to configuration control and may not be changed, altered, or their provisions
waived without prior approval.
14
Contingency Management Plan
LPM-61
Latest Revision 6/4/2015
Table 10-3: Uncertainty Factors for Software-intensive projects
Factor
Technical Uncertainty
Cost Uncertainty
Schedule Uncertainty
1
Copy of existing implementation using offthe-shelf software
Off the shelf or catalog item
NA
2
Minor modifications to an existing
implementation
Prototyped, straightforward
implementation
No schedule impact on
any other item
3
Extensive modifications to an existing
implementation
NA
NA
4
New design similar to existing
implementation
Prototyped, some redesign
required
Delays completion of
non-critical path
subsystem item
6
New design different from existing
implementation. Existing technology
Module-based estimate,
similar to previous work
NA
8
New design. Requires some R&D
development but does not advance the
state-of-the-art
Module-based estimate,
new requirements
Delays completion of
critical path subsystem
item
10
New design. Development of new
technology which advances the state-ofthe-art
Top down estimate from
analogous programs
NA
15
New design way beyond the current stateof-the-art
Engineering judgment
NA
Table 10-4: Risk-Factor Multipliers
Condition
Technical Risk
Cost Risk
Risk-Factor Multiplier
Design or implementation/deployment concerns only
2%
Design and implementation/deployment concerns
4%
Material cost or labor rate concern
1%
Material and labor rate concern
2%
Schedule Risk
1%
The contents of this document are subject to configuration control and may not be changed, altered, or their provisions
waived without prior approval.
15
Contingency Management Plan
LPM-61
Latest Revision 6/4/2015
Appendix B: LSST Change Request Approval Form
Change Title:
ORIGINATOR:
LCRORIGINATING SUBSYSTEM:
CONTINGENCY REQUEST AMOUNT:
DATE:
SUBMITTED TO NSF DATE:
SUMMARY DESCRIPTION
DETAILED DESCRIPTION OF CHANGES
APPROVALS
CCB Action:
Date:
Notes:
Project Approved By:
Date:
Notes:
NSF Approved By:
Date:
Notes:
IMPACT ANALYSIS
TECHNICAL:
WBS
Change Amount
COST:
SCHEDULE:
OTHER:
DOCUMENTS/DESIGNS AFFECTED:
IMPACT IF NOT APPROVED:
NOTIFICATIONS REQUIRED (parties outside the workflow)
The contents of this document are subject to configuration control and may not be changed, altered, or their provisions
waived without prior approval.
16