Cost Engineering Terminology

AACEInternationalRecommendedPracticeNo.
10S90
COSTENGINEERINGTERMINOLOGY
TCMFramework:GeneralReference
(AllSections)
Rev.November14,2014
Note:AsAACEInternationalRecommendedPracticesevolveovertime,pleaserefertowww.aacei.orgforthelatestrevisions.
CopyrightAACEInternational
AACEInternationalRecommendedPractices
AACEInternationalRecommendedPracticeNo.10S90
COSTENGINEERINGTERMINOLOGY
TCMFramework: GeneralReference
(AllSections)
November 14,2014
Unlessotherwisenoted,alltermscontainedinthisdocumenthavebeendevelopedbyvariousAACEInternational
technical subcommittees, special interest groups, or project teams. All terms have been subject to a thorough
reviewprocess,followedbyapprovalbytheAACEInternationalTechnicalBoard.Portionsofthisdocumenthave
beenincorporatedintotheAmericanNationalStandardsInstitutes(ANSI)StandardNo.Z94.x.
The(mm/yy)attheendofeachdefinition,indicatesthedateadopted/revised.
ChangesinNovember14,2014revision:
ACTUALTIME(AT)(new)
PLANNEDDURATION(PD)(new)
APPORTIONEDEFFORT(revised)
PLANNEDDURATIONOFWORKREMAINING(PDWR)
EARNEDSCHEDULE(ES)(new)
(new)
ESTIMATEATCOMPLETION[EAC(t)](new)
SCHEDULEPERFORMANCEINDEX[SPI(t)](new)
INDEPENDENTESTIMATEATCOMPLETION[IEAC(t)]
SCHEDULEVARIANCE[SV(t)](new)
(new)
VARIANCEATCOMPLETION[VAC(t)](new)
LEVELOFEFFORT(LOE)(revised)
ChangesinJanuary14,2014revision:
CREW(new)
LOGICSTATIC(FIXED)(new)
DAILYCREWOUTPUT(new)
ORGANIZATIONBREAKDOWNSTRUCTURE(OBS)
LABORNORM(new)
(revised)
LABORNORMPREAMBLE(new)
RESPONSIBILITYASSIGNMENTMATRIX(RAM)
LABORPRODUCTIVITYNORM(new)
(revised)
LEVELOFEFFORT(LOE)(revised)
LOGICDYNAMIC(CONDITIONAL)(new)
ChangesinOctober23,2013revision:
50/50TECHNIQUE(new)
(revised)
ACCRUAL(new)
EQUIVALENTUNITSTECHNIQUE(new)
ACTUALCOSTS(deleted)
ESTIMATETOCOMPLETE(ETC)(revised)
ACTUALCOST(AC)(new)
ESTIMATEDACTUALCOSTS(new)
ACTUALCOSTOFWORKPERFORMED(ACWP)
FORMALREPROGRAMMING(new)
(revised)
INCREMENTALMILESTONETECHNIQUE(new)
INDIRECTCOSTS(revised)
APPORTIONEDEFFORT(revised)
INTEGRATEDPRODUCTTEAMS(IPT)(new)
BASELINE(revised)
LABOREFFICIENCYVARIANCE(new)
BUDGETATCOMPLETION(BAC)(new)
LABORRATEVARIANCE(new)
BUDGETEDCOSTOFWORKPERFORMED(BCWP)
MANAGEMENTRESERVE(revised)
(revised)
NEARCRITICALACTIVITY(revised)
BUDGETEDCOSTOFWORKSCHEDULED(BCWS)
NEGATIVELAG(new)
(revised)
ORGANIZATIONBREAKDOWNSTRUCTURE(OBS)
BURDEN(revised)
(revised)
CHANGENOTICE(revised)
CONTRACTBUDGETBASE(CBB)(new)
OVERTARGETBASELINE(OTB)(new)
CONTROLACCOUNT(CA)(revised)
OVERTARGETSCHEDULE(OTS)(new)
CONTROLACCOUNTMANAGER(CAM)(new)
PERCENTCOMPLETE(new)
COSTELEMENT(new)
PERFORMANCEMEASUREMENTBASELINE(revised)
PHYSICALPERCENTAGECOMPLETE
COSTPERFORMANCEREPORT(CPR)(new)
PLANNEDVALUE(PV)(revised)
EARNEDVALUE(EV)(revised)
REPLANNING
EARNEDVALUEMANAGEMENT[SYSTEM](EVM[S])
10S90:CostEngineeringTerminology
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REPROGRAMMING(revised)
RESPONSIBILITYASSIGNMENTMATRIX(RAM)(new)
ROLLINGWAVEPLANNING(revised)
RUBBERBASELINE(new)
SCHEDULEBASELINE(new)
SCHEDULECONTINGENCY(revised)
SCHEDULEMARGIN(SM)(revised)
SCHEDULERESERVE(new)
SCHEDULETRACEABILITY(new)
STATUSDATE(revised)
SUMMARYLEVELPLANNINGPACKAGE(SLPP)(new)
SUMMARYSCHEDULE(revised)
MANAGEMENTSCHEDULERESERVE(MSR)(new)
SCHEDULEBUFFER(new)
CONTINGENCY(revised)
DESCOPE(new)
ChangesinApril25,2013revision:
RISKMANAGEMENTTEAM(new)
ChangesinNovember3,2012revision:
COSTESTIMATING(revised)
ChangesinAugust24,2012revision:
RISKSAFEGUARD(new)
November 14,2014
SUMMARYTASK(revised)
TARGET(new)
TECHNICALPERFORMANCEMEASUREMENT(new)
TOCOMPLETEPERFORMANCEINDEX(TCPI)(new)
TOTALALLOCATEDBUDGET(TAB)(new)
TRACEABILITY(new)
UNDISTRIBUTEDBUDGET(UB)(new)
VARIANCEATCOMPLETION(VAC)(revised)
VARIANCETHRESHOLD(new)
WORKBREAKDOWNSTRUCTURE(WBS)(revised)
WORKPACKAGE(revised)
SCHEDULECONTINGENCY(revised)
SCHEDULEMARGIN(new)
MANAGEMENTRESERVE(MR)(revised)
ENTERPRISERISKMANAGEMENT(new)
COSTESTIMATOR(PROJECT)(new)
RISKCONTAINMENT(new)
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50/50TECHNIQUEInearnedvalue,atechniquetoearnbudgetbasedonassignmentofbudgetequallyacross
twoaccountingmonths.Budgetisearnedat50%whenstarted,andtheremainderatcompletion.Thistechniqueis
limitedtoworkpackagelessthantwomonthsinduration.(11/13)
ACCELERATION Conduct by the owner or its agent (either in a directed or constructive manner) in which a
contractorisrequiredtocompleteperformanceofacontractedscopeofworkearlierthanscheduled.Adirected
acceleration occurs when the owner formally directs such acceleration completion. A constructive acceleration
generallyoccurswhenacontractorisentitledtoanexcusabledelay;thecontractorrequestsatimeextensionfrom
theowner;theownerdeclinestograntatimeextensionorgrantsoneinanuntimelymanner;theownerorits
agenteitherexpresslyorderscompletionwithintheoriginalperformanceperiodorimpliesinaclearmannerthat
timely completion within the original performance period is expected; and the contractor gives notice to the
owneroritsagentthatthecontractorconsidersthisactionanaccelerationorder.(6/07)
ACCEPT/ACCEPTANCE
(1)Theformalprocessofacceptingdeliveryofaproductoradeliverable.
(2)Theactoftakingcustodybasedonsatisfactoryverification.
(3) The act of an authorized representative, for itself or as agent for another, assumes ownership of existing
identified supplies tendered or approves specific services rendered as partial or complete performance of the
contract.
(4)InTCMriskmanagement,aresponsestrategyforboththreatsandopportunities.
Seealso:RISKRESPONSE.(12/11)
ACCEPTANCE,FINAL(PARTIAL)Theformalactionbytheowneracceptingthework(oraspecifiedpartthereof),
following written notice from the engineer that the work (or specified part thereof) has been completed and is
acceptablesubjecttotheprovisionsofthecontractregardingacceptance.(11/90)
ACCEPTANCE CRITERIA Implicit or explicit specifications that must be achieved for a product or service to be
acceptablewithinthetermsofthecontractoragreementseekingitsdelivery.(8/07)
ACCEPTED RISK Risks that are identified, but for which no other risk response is taken in the risk treatment
process(e.g.,avoid,reduce,transfer).Seealso:RESIDUALRISK;RISKRESPONSE.(12/11)
ACCESSTOTHEWORKTherightofthecontractortoingressandegress,andtooccupytheworksiteasrequired
toreasonablyperformtheworkdescribedinthecontractdocuments.Anexampleofdenialofaccesstothework
wouldbeonthesegmentofasewerinstallationprojectwherenoeasementsorworklimitsareindicated,butthe
contractor is ordered, after contract award, to conduct operations within a narrow work corridor necessitating
differentorunanticipatedconstructionmethods(e.g.,useofsheeting).(11/90)
ACCOUNTABILITYAnswerable,butnotnecessarilychargedpersonallywithdoingthework.Accountabilitycannot
bedelegatedbutitcanbeshared.(11/90)
ACCOUNTCODESTRUCTURESystemusedtoassignsummarynumberstoelementsoftheworkbreakdownand
accountnumberstoindividualworkpackages.(11/90)
ACCOUNTNUMBERAnalphanumericidentificationofaworkpackage.Anaccountnumbermaybeassignedto
oneormoreactivities.(6/07)
ACCOUNTSPAYABLEThevalueofgoodsandservicesrenderedonwhichpaymenthasnotyetbeenmade.See
also:TAXESPAYABLE.(11/90)
ACCOUNTSRECEIVABLEThevalueofgoodsshippedorservicesrenderedtoacustomeronwhichpaymenthas
notyetbeenreceived.Usuallyincludesanallowanceforbaddebts.(11/90)
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ACCRUALInearnedvaluemanagement,theactualcoststhatarerecordedforgoodsand/ormaterialreceivedor
servicesrenderedbeforepayment.Forexample,subcontractorserviceforasafetyinspectionforaspecificpieceof
equipmentinthemonthofJanuarywhichwasvalidatedascompletedmayberecordedbyaccrualbasedonan
estimatedcost.However,theaccrualsoriginallyrecordedinJanuaryforthecostofthisactivityareadjustedaftera
finalcostisdetermined.Seealso:ACTUALCOST(AC)(10/13)
ACCURACY RANGE An expression of an estimates predicted closeness to final actual costs or time. Typically
expressed as high/low percentages by which actual results will be over and under the estimate along with the
confidenceintervalthesepercentagesrepresent.Seealso:CONFIDENCEINTERVAL;RANGE.(12/11)
ACTIONAmeasuretakenorimplementedthatisintendedtoinfluencethecourseoftheproject.(6/07)
ACTION ITEM Something agreed to be done as a meeting outcome and usually recorded in meeting minutes.
(6/07)
ACTIONOWNERInTCMriskmanagement,thepartychargedwithimplementingariskresponse.Seealso:RISK
OWNER.(12/11)
ACTIONPLANAplanthatdescribeswhatneedstobedoneandbywhen.Projectplansareactionplans.(6/07)
ACTIVITY An operation or process consuming time and possibly resources (with the exception of dummy
activities). Anactivity is an element of work that mustbe performed in order tocomplete aproject.Anactivity
consumes time, and may have resources associated with it. Activities must be measurable and controllable. An
activitymayincludeoneormoretasks.Seealso:TASK.(6/07)
ACTIVITY ATTRIBUTES Schedulerelated characteristics and designations that uniquely describe a network
activity. Attributes can include early and late start and finish dates; identification codes; resource assignments;
predecessorandsuccessoractivities;andanyotherinformationthatplacestheactivityintoaccuratecontextofits
placeintheactivitynetwork.(8/07)
ACTIVITY BAR A rectangle representing an activity on the bar chart. Its length is scaled according to the time
scale.Seealso:EARLYBAR.(6/07)
ACTIVITY CALENDAR In computer scheduling, calendar that defines the working and nonworking patterns
applicabletoanactivity.Theactivitycalendarisnormallyoverriddenbytheprojectcalendar.Seealso:RESOURCE
CALENDAR.(6/07)
ACTIVITYCODEAlphanumericdesignationsystem,withcode(s)assignedtoanactivitytogrouporcategorizeits
properties. Coding is used for detail and summary reporting purposes. Syn.: ACTIVITY IDENTIFIER. See also:
CODING;WORKBREAKDOWNSTRUCTURE(WBS).(6/07)
ACTIVITYCOSTThemonetaryamountexpendedtocompleteanactivity.Dependinguponthecostmodelandjob
costsystemused,Activitycostmayormaynotincludeindirectcosts(jobsiteandhomeoffice)aswellasdirect
costs.(6/07)
ACTIVITY DESCRIPTION A unique activity name and word description, which generally defines the work to be
accomplishedwhicheasilyidentifiesanactivitytoanyrecipientoftheschedule.(6/07)
ACTIVITY DEFINITION Process of identifying specific activities that must be performed to produce project
deliverables.[8](6/07)
ACTIVITYDURATION
(1)Lengthoftimefromstarttofinishofanactivity,estimatedoractual,inworkingorcalendartimeunits.
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(2)Bestestimateofcontinuoustime(hours,days,weeks,andmonths)neededtocompletetheworkinvolvedin
anactivity.Thistakesintoconsiderationthenatureofthework,andtheresourcesneededtocompletethetask.
Baseline activity duration development can become very complex when productivity impacts and nonstandard
productionratesmustbeutilizedtomeettheconstraintsoftheproject.
Seealso:DURATION.(6/07)
ACTIVITYDURATIONESTIMATINGEstimationofthenumberofworkperiodsthatwillbeneededtocompletethe
activity.(6/07)
ACTIVITYIDENTIFIERSeealso:ACTIVITYCODE.(11/90)
ACTIVITY LIST A table of scheduled activities listing their respective descriptions, unique identification codes,
sufficientlydetailedscopes,andpredecessorandsuccessoractivities,sothattheprojectteamcanreadilydiscern
theworkofeachactivityandtheprojectasawhole.(8/07)
ACTIVITYNUMBERSeealso:ACTIVITYCODE.(6/07)
ACTIVITYONARROW(AOA)Anactivitynetworkformat.Scheduleactivitiesarerepresentedbyarrowsandnodes
are represented by circles. AOA networks require the use of dummy activities to properly model work flow.
(6/07)
ACTIVITYONNODE(AON)Anactivitynetworkformat.Scheduleactivitiesarerepresentedbyboxesorbarsand
relationshipsarerepresentedbyarrows.PureAONnetworksrelysolelyonfinishtostartrelationshipsanddonot
employtheuseofactivitylagstomodelworkflow.(6/07)
ACTIVITY RELATIONSHIP Activity relationships determine how activities relate to one another and establish
schedulelogic.Seealso:LOGIC.(6/07)
ACTIVITY SEQUENCING The process of identifying and documenting dependencies among schedule activities.
(6/07)
ACTIVITYSPLITTINGDividing(i.e.,splitting)anactivityofstatedscope,descriptionandscheduleintotwoormore
activitieswhicharerescopedandrescheduled.Thesumofthesplitactivitiesisnormallythetotaloftheoriginal.
Seealso:HARDLOGIC;SOFTLOGIC.(11/90)
ACTIVITY STATUS Information about the performance of an activity that is used to update schedule progress.
Typicalstatusinformationincludesactualstartandfinishdates,percentcomplete,andremainingduration.Thisis
informationusedtoupdatethecriticalpathmethodcalculationsperiodically.(6/07)
ACTIVITYTIMESTimeinformationgeneratedthroughthecriticalpathmethodcalculationthatidentifiesthestart
andfinishtimesforeachactivityinthenetwork.(11/90)
ACTIVITYTYPEDictatescalendarusedinschedulingsoftwareforschedulecalculations.Typicalactivitytypesare:
independent,task,hammock,WBS,andmilestone.(6/07)
ACTIVITY TOTAL SLACK The latest allowable end time minus earliest allowable end time. The activity slack is
alwaysgreaterthanorequaltotheslackoftheactivityendingevent.(11/90)
ACTSOFGOD
(1)Anextraordinaryinterruptionbyanaturalcause,asafloodorearthquake,ortheusualcourseofeventsthat
experience,foresightorcarecannotreasonablyforeseeorprevent.
(2)Aneventinnatureoverwhichneithertheownernorthecontractorhasanycontrol.(11/90)
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ACTUAL[DURATION,START,FINISH,LOGIC,ETC.]Scheduleinformationthatshowswhathasactuallyoccurred.
Forexample,theactualstartdateforataskisthedayonwhichthetaskactuallystarted,anditsactualcostisthe
expendituresincurredspentuptothepresent.(6/07)
ACTUALANDSCHEDULEDPROGRESSAcomparisonoftheobservableworkdoneatagiventimewiththework
planneduptothattime.(6/07)
ACTUAL COMPLETION DATE The calendar date on which an activity was completed. See also: ACTUAL FINISH
DATE.(11/90)
ACTUALCOST(AC).Syn.:ACTUALCOSTOFWORKPERFORMED(ACWP).(10/13)
ACTUALCOSTOFWORKPERFORMED(ACWP)
(1)Theactualexpendituresincurredbyaprogramorproject.
(2)Thedirectcostsactuallyincurredandthedirectcostsactuallyrecordedandassignedinaccomplishingthework
performed.Thesecostsshouldreconcilewiththecontractor'sincurredcostledgerswhentheyareauditedbythe
client.
(3) In earned value management, a measure of the actual cost of the work performed as of a data date.
Syn.:ACTUALCOST(AC).Seealso:PLANNEDVALUE(PV);BUDGETEDCOSTOFWORKSCHEDULED(BCWS);EARNED
VALUE(EV);BUDGETEDCOSTOFWORKPERFORMED(BCWP).(10/13)
ACTUALFINISHDATEDatewhenworkonanactivityissubstantiallycomplete.Activitysubstantialcompletionis
when only minor or remedial work remains and successor activities may proceed without hindrance from the
predecessors remaining work. It is not necessarily the last day work will be performed on that activity. The
remainingdurationofthisactivityiszero.(6/07)
ACTUALSTARTDATEDatewhenworkonanactivityactuallystartedwithintentionofcompletingactivitywithin
theplannedduration.Theactualstartdateisnotnecessarilythefirstdateworkwasperformedonthatactivity.
Interimstartsandstopsforanactivitymayshowtheneedforsplittingtheactivityintocomponentparts.(6/07)
ACTUALTIME(AT)Thenumberofwholeprojecttimeincrementsfromprojectinceptionthroughtimenow(data
date).(11/14)
ADDENDA Written or graphic instruments issued prior to the date for opening of bids which may interpret or
modifythebiddingdocumentsbyadditions,deletions,clarification,orcorrections.(11/90)
ADJUSTED INTERNAL RATEOFRETURN(AIRR) The compound rate of interest that,when used to discount the
terminalvaluesofcostsandbenefitsofaprojectoveragivenstudyperiod,willmakethecostsequalthebenefits
whencashflowsarereinvestedataspecifiedrate.[1](11/90)
ADMSeealso:ARROWDIAGRAMMINGMETHOD(ADM).(11/90)
ADMINISTRATIVECOSTSeealso:GENERAL&ADMINISTRATIVECOSTS(G&A).(6/07)
AGENTApersonauthorizedtorepresentanother(theprincipal)insomecapacity.Theagentcanonlyactwithin
thiscapacityor"scopeofauthority"tobindtheprincipal.Agencyagreementscanbeoralorinwriting.(11/90)
AGGREGATE A collection of items arbitrarily brought together as associated variables for analytical or
comparativepurposes.(11/90)
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AGREEMENTThewrittenagreementbetweentheownerandthecontractorcoveringtheworktobeperformed;
othercontractdocumentsareattachedtotheagreementandmadeapartthereofasprovidedtherein.(11/90)
ALLOCATED BASELINE Requirements allocated to lower level system elements controlled by formal change
control.(6/07)
ALLOCATED REQUIREMENTS Requirements apportioned to the elements of a system by applying applicable

knowledge and experience. Determination of allocated requirements is not as scientifically rigorous as
determinationofderivedrequirements.(6/07)
ALLOCATION
(1)Inplanningandscheduling,theprocessofdistributingorassigningworkonanactivitytospecificresources.
(2)Incostestimatingandbudgeting,theprocessofdistributingorassigningcostofanitemoractivity(oftenan
overheadorindirectcost)tospecificcostorbudgetaccounts.
Seealso:COSTDISTRIBUTION.(6/07)
ALLOWANCES
(1)Forestimating,resourcesincludedinestimatestocoverthecostofknownbutundefinedrequirementsforan
individualactivity,workitem,accountorsubaccount.
(2)Forscheduling,dummyactivitiesand/ortimeincludedinexistingactivitiesinascheduletocoverthetimefor
known,butundefinedrequirementsforaparticularworktask,activity,accountorsubaccount.(12/11)
ALTERNATIVEDISPUTERESOLUTION(ADR)Anyprocedureorcombinationofproceduresusedtoresolveissuesin
controversy without the need to resort to litigation. ADR typically includes assisted settlement negotiations,
conciliation,facilitation,mediation,factfinding,minitrials,andarbitration.(6/07)
AMBIGUITY An uncertainty in the meaning of provisions of a contract, document or specification. Mere

disagreement about the meaning of a provision does not indicate an ambiguity. There must be genuine
uncertaintyofmeaningbasedonlogicalinterpretationofthelanguageusedinthecontract.Generally,ambiguities
incontractsareconstruedagainstthedrafteroftheagreement.(11/90)
AMENDMENT A modification of the contract by a subsequent agreement. This does not change the entire
existingcontractbutdoesalterthetermsoftheaffectedprovisionsorrequirements.(11/90)
AMORTIZATION
(1) As applied to a capitalized asset, the distribution of the initial cost by periodic charges to operations as in
depreciation.Mostproperlyappliestoassetswithindefinitelife.
(2)Thereductionofadebtbyeitherperiodicorirregularpayments.
(3)Aplantopayoffafinancialobligationaccordingtosomeprearrangedschedule.(11/90)
ANALOGOUS CRITICAL PATH The logic path determined by transferring the calculated critical path of the
collapsed asbuilt onto the analogous logic path on the asbuilt schedule. The analogous critical path allows the
analysttoreconcilethetotaldifferenceincompletiondatebetweenthecollapsedstateandtheasbuiltstatewith
thesumoftheextracteddelays,wholeorinpart,lyingontheanalogouspath.(6/07)
ANALYSISTheexaminationofacomplexwholeandtheseparationandidentificationofitsconstituentpartsand
theirrelationships.(11/90)
ANALYSIS (SCHEDULE VARIANCE) Comparison of actual cost/schedule performance to that planned. This
comparisonincludesidentificationofpotentialchangenoticesandtheircause.Derivesfromthemonitoringof
projectexpenditures,progressandperformance.Requiresapplicationofindependentreviewandcreativethought
processestocomeupwithacomprehensiveunderstandingofhow,why,andwhereprojectaccountsareheaded.
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Analysisshouldresultincorrectiveactiontooffset/minimizeanypotentialoverrunsandmaximizeanypotential
underruns.Seealso:SCHEDULEVARIANCE.(6/07)
ANALYSTCAUSEDRISKSyn.:IATROGENICRISK;ANALYSTINDUCEDRISK.(12/11)
ANALYSTINDUCEDRISKSyn.:IATROGENICRISK;ANALYSTCAUSEDRISK.(12/11)
ANDRELATIONSHIPLogicalrelationshipbetweentwoormoreactivitiesthatconvergesonordivergesfroman
event.Theandrelationshipindicatesthateveryoneoftheactivitieshastobeundertaken.(6/07)
ANNUALVALUEAuniformannualamountequivalenttotheprojectcostsorbenefitstakingintoaccountthetime
valueofmoneythroughoutthestudyperiod.Syn.:ANNUALWORTH;EQUIVALENTUNIFORMANNUALVALUE.See
also:AVERAGEANNUALCOST.[1](11/90)
ANNUALWORTHSeealso:ANNUALVALUE.[1](11/90)
ANNUALLYRECURRINGCOSTSThosecoststhatareincurredinaregularpatterneachyear.(6/07)
ANNUITY
(1)Anamountofmoneypayabletoabeneficiaryatregularintervalsforaprescribedperiodoftimeoutofafund
reservedforthatpurpose.
(2)Aseriesofequalpaymentsoccurringatequalperiodsoftime.(11/90)
ANTICIPATORY BREACH A specific refusal by the contractor to perform within the terms of the contract
documentsbeforeperformanceisdue;oraclearindicationthatthecontractorisunableorunwillingtoperform.
(11/90)
APPLICATION AREA Projects sharing specialized components that logically segregate work by product or
productiontechnologyorbyuser.(8/07)
APPLICATION FOR PAYMENT The form furnished by the owner or the engineer which is to be used by the
contractorinrequestingprogressorfinalpaymentsandwhichshallcontainanaffidavit,ifrequired,inthegeneral
orsupplementaryconditions.Theapplicationforpaymentincludesallsupportingdocumentationasrequiredby
thecontractdocuments.(11/90)
APPORTIONEDEFFORT
(1) An earned value technique that status is assessed consistent with a base task(s). The earned value percent
completeofthebaseeffortisusedtostatustheapportionedeffortworkpackage.Apportionedeffortistechnically
relatedandtimephasedproportionallytothebaseuntildesignated.
(2) Effort that cannot be readily measured or divided into discrete work packages, but its performance can be
measuredinproportiontoothermeasureableefforts.(11/14)
APPROVEToacceptastechnicallysatisfactorybypersonorpersonsinauthority.Theapprovalmaystillrequire
confirmationbysomeoneelseatahigherlevelofauthorityforlegalorcommercialconsiderations.(11/90)
ARBITRATION A method for the resolution of disputes by an informal tribunal in which a neutral person or
personswithspecializedknowledgeinthefieldinquestionrendersadecisiononthedispute.Anarbitratormay
grant any award which is deemed to be just and equitable after having afforded each party full and equal
opportunity for the presentation of the case. Arbitration does not strictly follow the rules of evidence and
discoveryproceduresfoundinlitigation.Arbitrationmaybeconductedundertheauspicesofanorganization(e.g.,
theAmericanArbitrationAssociation)whichisavailableasavehicleforconductingarbitration.(11/90)
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ARROWThegraphicrepresentationofactivitiesinADMnetwork.Onearrowrepresentsoneactivity.Thetailof
thearrowrepresentsthestartoftheactivity.Theheadofarrowrepresentsthefinish.Thearrowisnotavector
quantity and is not drawn to scale. A solid line is used for actual activities and a dashed line for dummies. It is
uniquelydefinedbytwoevents.(6/07)
ARROWDIAGRAMAnetwork(logicdiagram)onwhichtheactivitiesarerepresentedbyarrowsbetweenevent
nodes.(11/90)
ARROWDIAGRAMMINGMETHOD(ADM)Amethodofconstructingalogicalnetworkofactivitiesusingarrowsto
represent the activities and connecting those headtotail. This diagramming method shows the sequence,
predecessorandsuccessorrelationshipsoftheactivities.(11/90)
ARTIFACT(PLANNING)Apieceofinformationthatisproduced,modified,orusedbyaprocess,definesanareaof
responsibility,andissubjecttoversioncontrol.Anartifactcanbeamodel,amodelelement,oradocument.A
documentcanencloseotherdocuments.(6/07)
ASBUILT SCHEDULE Historical project record showing actual start and finish dates for work performed.
Generally,showslogicusedinthesequenceofconstruction,alongwithactualstartandfinishdates.(6/07)
ASPLANNED SCHEDULE The plan or baseline schedule the contractor developed to estimate/bid/contract to
perform the work. The asplanned schedule incorporates planned production rates, work calendars, resource
availability, logic ties, constraints and activity durations to meet contract requirements and contractor needs or
desires.(6/07)
ASLATEASPOSSIBLE (ALAP) An activity for which the scheduling application sets the early dates as late as
possiblewithoutdelayingtheearlydatesofanysuccessor.(6/07)
ASOFDATESeealso:DATADATE.(6/07)
ASSOONASPOSSIBLE(ASAP)Anactivityforwhichtheschedulingapplicationsetstheearlydatestobeassoon
aspossible.Thisisthedefaultactivitytypeinmostprojectmanagementsystems.(6/07)
ASSETS Anything owned that has a monetary value, e.g., property, both real and personal, including notes,
accountsandaccruedearningsorrevenuesreceivableandcashoritsequivalent.Assetsmaybesubdividedinto
current, fixed, etc. Property: real, i.e. physical; or intangible, i.e. knowledge, systems, or practices. Assets are
createdthroughtheinvestmentofresourcesinprojects.(6/07)
ASSETLIFECYCLESyn.:ECONOMICLIFE(CYCLE).(6/07)
ASSESSEDVALUEThatvalueenteredontheofficialassessor'srecordsasthevalueofthepropertyapplicablein
determiningtheamountoftaxestobeassessedagainstthatproperty.(11/90)
ATTRIBUTEInthecontextofassetorprojectplanning,acharacteristicorpropertywhichisappraisedintermsof
whetheritdoesordoesnotexist,(e.g.,goornotgo)withrespecttoagivenrequirement.(6/07)
AUDITInthecontextofassetorprojectperformanceassessment,aformal,independentexaminationwithintent
to verify conformance with established requirements through surveillance and inspection. They may be either
internalorexternal.(6/07)
AUTHORITY
(1) Power of influence, either granted to or developed by individuals, that leads to others doing what those
individualsdirect.
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(2)Formalconfermentofsuchinfluencethroughaninstrumentsuchasaprojectcharter.[8](6/07)
AUTHORIZE Give final approval; a person who can authorize something is vested with authority to give final
endorsementandwhichrequiresnofurtherapprovaloragreement.[8](6/07)
AUTHORIZED WORK An effort that has been approved by higher authority and may or may not be definitive.
(6/07)
AVERAGE ANNUAL COST The conversion, by an interest rate and present worth technique, of all capital and
operatingcoststoaseriesofequivalentequalannualcosts.Asasystemforcomparingproposalinvestments,it
requiresassumptionofaspecificminimumacceptableinterestrate.(11/90)
AVERAGEINTERESTMETHODAmethodofcomputingrequiredreturnoninvestmentbasedontheaveragebook
valueoftheassetduringitslifeorduringaspecifiedstudyperiod.(11/90)
AVOIDInTCMriskmanagement,aresponsestrategyforthreatsthatinvolveseliminatingeithertheprobability
orimpact.Seealso:RISKRESPONSE.(12/11)
AVOIDANCE (RISK) Risk response strategy that eliminates the threat or opportunity of a specific risk event,
usuallybyeliminatingitspotentialcause.Seealso:ACCEPT/ACCEPTANCE;MITIGATION.[8](6/07)
BACKCHARGECostofcorrectiveactiontakenbythepurchaser,chargeabletosupplierbycontractterms.(6/07)
BACKUPSupportingdocumentsforanestimateorscheduleincludingdetailedcalculations,descriptionsofdata
sources,andcommentsonthequalityofthedata.(11/90)
BACKWARDPASSNetworkschedulecalculationthatdeterminesthelatesteachactivityinthenetworkmaystart
(LS)andfinish(LF)andstillmaintaintheminimumoveralldurationoftheprojectascalculatedbytheforwardpass.
Itcountsbackwardtowardthebeginningofthescheduletodeterminethelastpossiblestartandfinishdatesfor
eachactivitythatwillnotdelayprojectcompletion.Seealso:FORWARDPASS.(6/07)
BARCHARTGraphicrepresentationofaprojectthatincludestheactivitiesthatmakesuptheprojectandplaced
onatimescale.Barchartsaretimescaled,showactivitynumber,description,duration,startandfinishdates,and
an overall sequencing of the flow of work. Bar charts do not generally include the logic ties between activities.
Syn.:GANTTCHART.(6/07)
BASESeealso:BASEESTIMATE;BASESCHEDULE.(12/11)
BASEDATESyn.:BASETIME.[1](11/90)
BASE ESTIMATE Estimate excluding escalation, foreign currency exchange, contingency and management
reserves;Seealso:POINTESTIMATE,SINGLEPOINTESTIMATE;DETERMINISTICESTIMATE.(12/11)
BASEPERIOD(OFAGIVENPRICEINDEX)Periodforwhichpricesserveasareferenceforcurrentperiodprices;in
otherwords,theperiodforwhichanindexisdefinedas100(ifexpressedinpercentageform)oras1(ifexpressed
inratioform).(11/90)
BASEPOINTFORESCALATIONCostindexvalueforaspecificmonthoranaverageofseveralmonthsthatisused
asabasisforcalculatingescalation.(11/90)
BASESCHEDULEScheduleexcludingrisks(i.e.,excludingcontingency).(12/11)
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BASETIMEThedatetowhichallfutureandpastbenefitsandcostsareconvertedwhenapresentvaluemethod
isused(usuallythebeginningofthestudyperiod).Syn.:BASEDATE.[1](11/90)
BASELINE
(1)Inprojectcontrol,thereferenceplansinwhichcost,schedule,scopeandotherprojectperformancecriteriaare
documentedandagainstwhichperformancemeasuresareassessedandchangesnoted.
(2)Thebudgetandschedulethatrepresentapprovedscopeofworkandworkplan.Identifiableplans,definedby
databases approved by project management and client management, to achieve selected project objectives. It
becomes basis for measuring progress and performance and is baseline for identifying cost and schedule
deviations.Syn.:CONTROLBASELINE.
(3) In earned value management systems, the general term to refer to the contractual baseline. See contract
budget baseline and performance measurement baseline for the typical earned value management (EVM)
definitions of the different baseline levels within the EVM baseline plan. See: CONTRACT BUDGET BASELINE;
PERFORMANCEMEASUREMENTBASELINE.(10/13)
BASELINESCHEDULE
(1)Afixedprojectschedulethatisthestandardbywhichprojectperformanceismeasured.Thecurrentscheduleis
copied into the baseline schedule that remains frozen until it is reset. Resetting the baseline is done when the
scope of the project has been changed significantly, for example after a negotiated change. At that point, the
original or current baseline becomes invalid and should not be compared with the current schedule.
(2)Versionofschedulethatreflectsallformallyauthorizedscopeandschedulechanges.[9](6/07)
BASIS Written documentation that describes how an estimate, schedule, or other plan component was
developedanddefinestheinformationusedinsupportofdevelopment.Abasisdocumentcommonlyincludes,but
is not limited to, a description of the scope included, methodologies used, references and defining deliverables
used, assumptions and exclusions made, clarifications, adjustments, and some indication of the level of
uncertainty.(6/07)
BATTERYLIMITComprisesoneormoregeographicboundaries,imaginaryorreal,enclosingaplantorunitbeing
engineered and/or erected, established for the purpose of providing a means of specifically identifying certain
portions of the plant, related groups of equipment, or associated facilities. It generally refers to the processing
areaandincludesalltheprocessequipment,andexcludessuchotherfacilitiesasstorage,utilities,administration
buildings,orauxiliaryfacilities.Thescopeincludedwithinabatterylimitmustbewelldefinedsothatallpersonnel
will clearly understand it. On drawings, this is often referred to in the phrase: inside/outside battery limits or
ISBL/OSBL.Seealso:OFFSITES.(6/07)
BEGINNINGEVENTAneventthatsignifiesthebeginningofanactivity.Syn.:PREDECESSOREVENT;PRECEDING
EVENT;STARTINGEVENT.(11/90)
BEGINNINGNETWORKEVENTTheeventthatsignifiesthebeginningofanetwork(orsubnet).(11/90)
BEGINNING (START) NODE OF NETWORK (ADM) A node at which no activities end, but one or more activities
begin.(11/90)
BENCHMARKING A measurement and analysis process that compares practices, processes, and relevant
measurestothoseofaselectedbasisofcomparison(i.e.,thebenchmark)withthegoalofimprovingperformance.
Thecomparisonbasisincludesinternalorexternalcompetitiveorbestpractices,processesormeasures.Examples
ofmeasuresincludeestimatedcosts,actualcosts,scheduledurations,resourcequantities,etc.(1/03)
BENEFICIAL OCCUPANCY Use of a building, structure, or facility by the owner for its intended purpose
(functionally complete), although other contract work, nonessential to the function of the occupied section,
remainstobecompleted.Seealso:SUBSTANTIALCOMPLETION.(11/90)
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BENEFIT COST ANALYSIS A method of evaluating projects or investments by comparing the present value or
annualvalueofexpectedbenefitstothepresentvalueorannualvalueofexpectedcosts.[1](11/90)
BENEFITTOCOST RATIO (BCR) Benefits divided by costs, where both are discounted to a present value or
equivalentuniformannualvalue.[1](11/90)
BEST PRACTICES Practical techniques gained from experience that have been shown to produce best results.
(6/07)
BIASES Lack of objectivity based on the enterprises or individual's position or perspective. Systematic and
predictable relationships between a person's opinion or statement and his/her underlying knowledge or
circumstances.Note:Theremaybe"systembiases"aswellas"individualbiases".(6/07)
BID To submit a price for services; a proposition either verbal or written, for doing work and for supplying
materialsand/orequipment.(11/90)
BIDBONDSeealso:BOND,BID.(6/07)
BIDDER The individual, partnership, or corporation, or combination thereof, acting directly or through an
authorized representative, formally submitting a bid directly to the owner, as distinct from a subbidder, who
submitsabidtoabidder.(11/90)
BID SECURITY Security is provided in connection with the submittal of a bid to guarantee that the bidder, if
awarded oroffered the contract, will execute the contract andperform the work. The requirements for the bid
securityareusuallydesignatedinaspecificsectionofthebiddingdocuments.Thebidsecurityispayabletothe
owner(usuallyaround5%ofthetotalbidprice)intheformofeitheracertifiedorbankcheckorabidbondissued
byasuretysatisfactorytotheowner.Thebidsecurityofthesuccessfulbidderisusuallyretaineduntilthebidder
hasexecutedtheagreementandfurnishedtherequiredcontractsecurity,whereuponthebidsecurityisreturned.
Bidsecurityoftheotherbiddersisreturnedafterthebidopening.(11/90)
BIDSHOPPINGAneffortbyaprimecontractortoreducethepricesquotedbysubcontractorsand/orsuppliers,
byprovidingthebidpricetoothersubcontractorsorsuppliersinanattempttogettheothersubcontractorsor
supplierstounderbidtheoriginalpricequoted.Thereverseofthissituationiswhensubcontractorstrytogeta
betterpriceoutofaprimecontractor.Thisisknownasbidpeddling.(11/90)
BIDDINGDOCUMENTSTheadvertisementforbids,instructionstobidders,informationavailabletobidders,bid
form with all attachments, and proposed contract documents (including all addenda issued prior to receipt of
bids).(11/90)
BIDDINGREQUIREMENTSTheadvertisementforbids,instructionstobidders,supplementaryinstructionsandall
attachments therein, information to bidders and all attachments therein, and bid form and all attachments
therein.(11/90)
BILLOFMATERIALS(BOM)
(1)Setofphysicalelementsrequiredtobuildaproject.
(2) Hierarchical view of the physical assemblies, subassemblies, and components needed to fabricate a
manufacturingproduct.
(3)Descriptiveandquantitativelistofmaterials,supplies,parts,andcomponentsrequiredtoproduceadesignated
completeenditemofmaterials,assembly,orsubassembly.
Seealso:BILLOFQUANTITITES(BOQ)[8](6/07)
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BILL OF QUANTITIES (BOQ) Descrip ve and quan ta ve list of materials, supplies, parts, and components
requiredtoproduceadesignatedcompleteenditemofmaterials,assembly,orsubassembly.Typicallyincludesa
description of the associated method of measurement. See also: BILL OF MATERIALS (BOM); METHOD OF
MEASUREMENT.(6/07)
BLANKETBONDAbondcoveringagroupofpersons,articles,orproperties.(11/90)
BOND,BIDAbondthatguaranteesthebidderwillenterintoacontractonthebasisofthebid.(6/07)
BOND,PAYMENTAbondthatisexecutedinconnectionwithacontractandwhichsecuresthepaymentofall
personssupplyinglaborandmaterialintheprosecutionoftheworkprovidedforinthecontract.(11/90)
BOND,PERFORMANCEAbondthatisexecutedinconnectionwithacontractandwhichsecuresorguarantees
the completion, performance and fulfillment of all the work, undertakings, covenants, terms, conditions, and
agreementscontainedinthecontract.(6/07)
BONDS Instruments of security furnished by the contractor and/or surety in accordance with the contract
documents. The term contract security refers to the payment bond, performance bond and those other
instrumentsofsecurityrequiredinthecontractdocuments.(11/90)
BONUSPENALTY A contractual arrangement between a client and a contractor wherein the contractor is
provided a bonus, usually a fixed sum of money, for each day the project is completed ahead of a specified
scheduleand/orbelowaspecifiedcost,andagreestopayasimilarpenaltyforeachdayofcompletionafterthe
scheduledateoroveraspecifiedcostuptoaspecifiedmaximumeitherway.Thepenaltysituationissometimes
referredtoasliquidateddamages.(11/90)
BOOKVALUE(NET)
(1) Current investment value on the books calculated as original value less depreciated accruals.
(2)Newassetvalueforaccountinguse.
(3) The value of an outstanding share of stock of a corporation at any one time, determined by the number of
sharesofthatclassoutstanding.(11/90)
BOTTOMLINE Ambiguous term that in TCM cost estimating or risk management typically refers to the total
overallcostorprofitofaprojectorprogram.InTCMdecisionanalysis,mayrefertoastakeholdersthresholdor
decisionmakingcriterionbeyondwhichadecisionnottoproceed,approve,oracceptwillbemade.(12/11)
BRAINSTORMINGProcessinwhichagroupofpeople,selectedfortheircreativityandknowledge,arebrought
togethertoseeksolutionstoparticularproblemsorsimplytofindbetterwaysofmeetingobjectives.Suggestions,
howeveroutlandish,areencouragedandpursuedduringacreativitysession.Fromthis,manyideas,someentirely
new,arebroughtforwardforanalysisandranking.(6/07)
BREACHOFCONTRACTFailure,byeithertheownerorthecontractor,withoutlegalexcuse,toperformanywork
ordutyowedtotheotherperson.(11/90)
BREAKDOWNSTRUCTUREAhierarchicalstructurebywhichprojectelementsarebrokendown,ordecomposed.
See also: ORGANIZATIONAL BREAKDOWN STRUCTURE (OBS); WORK BREAKDOWN STRUCTURE (WBS); COST
BREAKDOWNSTRUCTURE(CBS).(6/07)
BREAKEVEN CHART A graphic representation of the relation between total income and total costs for various
levelsofproductionandsalesindicatingareasofprofitandloss.(11/90)
BREAKEVENPOINT
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(1)Inbusinessoperations,therateofoperationsoutput,orsalesatwhichincomeissufficienttoequaloperating
costsoroperatingcostplusadditionalobligationsthatmaybespecified.
(2)Theoperatingcondition,suchasoutput,atwhichtwoalternativesareequalineconomy.
(3) The percentage of capacity operation of a manufacturing plant at which income will just cover expenses.
(11/90)
BREAKOUTSCHEDULEJobsiteschedule,generallyinbarchartform,usedtocommunicatedaytodayactivitiesto
allworkinglevelsontheprojectasdirectedbyconstructionmanager.Detailinformationwithregardtoequipment
use,bulkmaterialrequirements,andcraftskillsdistribution,aswellastheworktobeaccomplished,formscontent
ofschedule.Issuedonaweeklybasiswithatwotothreeweeklookaheadfromtheissuedate.(6/07)
BUDGET A planned allocation of resources. The planned cost of needed materials is usually subdivided into
quantityrequiredandunitcost.Theplannedcostoflaborisusuallysubdividedintotheworkhoursrequiredand
thewagerate(plusfringebenefitsandtaxes).(11/90)
BUDGETATCOMPLETION(BAC)Thesummationoftimephasedcostsatanyworkbreakdownstructure(WBS)
level. In earned value management according to the ANSI EIA 748 standard, all levels have BAC including work
packages, planning packages, summary planning packages, performance management baseline (PMB),
managementreserve(MR),undistributedbudget(UB),andcontractbudgetbaseline(CBB).(10/13)
BUDGETESTIMATEAnestimategenerallypreparedtoformthebasisforauthorizationand/orappropriationof
funds.Seealso:COSTESTIMATECLASSIFICATIONSYSTEM,CLASS3ESTIMATE.(5/12)
BUDGETEDCOSTOFWORKPERFORMED(BCWP).Syn.:EARNEDVALUE.(10/13)
BUDGETEDCOSTOFWORKSCHEDULED(BCWS).Syn.:PLANNEDVALUE(PV).(10/13)
BUDGETINGAprocessusedtoallocatetheestimatedcostofresourcesintocostaccounts(i.e.,thecostbudget)
againstwhichcostperformancewillbemeasuredandassessed.Budgetingoftenconsiderstimephasinginrelation
toascheduleand/ortimebasedfinancialrequirementsandconstraints.(1/03)
BULKMATERIALMaterialboughtinlots.Theseitemscanbepurchasedfromastandardcatalogdescriptionand
are bought in quantity for distribution as required. Examples are pipe (nonspooled), conduit, fittings, and wire.
(11/90)
BURDEN
(1) In construction, the cost of maintaining an office with staff other than operating personnel. Also includes
federal, state and local taxes, fringe benefits and other union contract obligations. In manufacturing, burden
sometimesdenotesoverhead.
(2) In earned value, this is a broad term that refers to all nondirect costs including overheads, general &
administrative,andcostofmoneyasapplicable.Thecommoncharacteristicofaburdenisthecostisexpressedas
arateontopofthedirectcosts.(10/13)
BURDENOFPROOFThenecessityofprovingthefactsinadisputeonanissueraisedbetweentheownerandthe
contractor.Inaclaimsituation,theburdenofproofisalwaysonthepersonfilingtheclaim.Thisistruewhether
thecontractorisclaimingagainsttheowner,ortheownerismakingaclaimagainstthecontractor.(11/90)
BURNRATERateatwhichresourcessuchasfundsormanhoursareorwerebeingexpendedonaproject.(6/07)
BUSINESSPLANNINGThedeterminationoffinancial,productionandsalesgoalsofabusinessorganization;and
the identification of resources, methods, and procedures required to achieve the established objectives within
specifiedbudgetsandtimetables.(11/90)
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BUSINESS CASE Defines a projects or other investments justification for business decision making purposes.
Dependinguponthebusinessdecisionmakingcriteria,ittypicallyincludesanoutlineofobjectives,deliverables,
time,cost,technical,safety,qualityandotherattributesinrespecttohowtheprojectorinvestmentaddressesthe
objectives and requirements of the business. May include information on project risks (either threats or
opportunities), competitive impact, resource requirements, organizational impacts, key performance indicators
(particularlyprofitability)andcriticalsuccessfactors.(6/07)
CALCULATE SCHEDULE A modeling process that defines all critical activities and individual activity scheduling
data. The process applied in most scheduling software calculates the start and finish dates of activities in two
passes.Thefirstpasscalculatesearlystartandfinishdatesfromtheearlieststartdateforward.Thesecondpass
calculates the late start and finish activities from the latest finish date backwards. The difference between the
pairsofstartandfinishdatesforeachtaskisthefloatorslacktimeforthetask.Seealso:FLOAT.(6/07)
CALENDARDefinedworkperiodsandholidaysthatdeterminewhenprojectactivitiesmaybescheduled.Multiple
calendarsmaybeusedfordifferentactivities,whichallowsformoreaccuratemodelingoftheprojectworkplan.
E.g.,5dayworkweekcalendarvs.7dayworkweek.Seealso:GLOBALCALENDAR;CALENDARUNIT.(6/07)
CALENDAR RANGE Span of the calendar from calendar start through end date. The calendar start date is unit
numberone.Thecalendarrangeisusuallyexpressedinyears.(11/90)
CALENDAR UNIT The smallest common/standard unit of time used in a particular calendar for scheduling an
activityoraproject.Calendarunitsaregenerallyinhours,days,orweeks,butcanalsobeshiftsorevenminutes.
Seealso:CALENDAR;TIMEUNIT.(6/07)
CALENDARSTARTDATEThedateassignedtothefirstunitofthedefinedcalendar;thefirstdayoftheschedule.
(11/90)
CAPACITY UTILIZATION FACTOR In manufacturing or production practice, 1) The ratio of average load to
maximumcapacity.2)Theratiobetweenaverageloadandtheratedcapacityoftheapparatus.3)Theratioofthe
averageactualusetotheratedavailablecapacity.(5/12)
CAPACITYFACTORIncostestimating,anexponentialfactorusedinthecapacityfactorestimatingmethod.Syn.:
SCALINGFACTOR.Seealso:CAPACITYFACTORMETHOD.
CAPACITYFACTORMETHODAcostes ma ngmethodinwhichthecostofanewfacilityisderivedfromthecost
ofasimilaritemorfacilityofaknown,butusuallydifferentcapacity.Inthismethod,theratioofcostsbetween
two similar facilities is equal to the ratio of their capacities taken to an exponential factor (i.e., the scaling, or
capacityfactor).Seealso:SCALINGFACTOR.(6/07)
CAPACITYUTILIZATIONFACTORSyn.:CAPACITYFACTOR.(6/07)
CAPITAL,DIRECTSeealso:DIRECTCOSTS.(11/90)
CAPITAL,FIXEDThetotaloriginalvalueofphysicalfacilitieswhicharenotcarriedasacurrentexpenseonthe
booksofaccountandforwhichdepreciationisallowedbytheFederalGovernment.Itincludesplantequipment,
building, furniture and fixtures, and transportation equipment used directly in the production of a product or
service. It includes all costs incident to getting the property in place and in operating condition, including legal
costs,purchasedpatents,andpaiduplicenses.Land,whichisnotdepreciable,isoftenincluded.Characteristically
itcannotbeconvertedreadilyintocash.(11/90)
CAPITAL,INDIRECTSeealso:INDIRECTCOSTS.[1](11/90)
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CAPITAL,OPERATINGCapitalassociatedwithprocessfacilitiesinsidebatterylimits.(11/90)
CAPITAL BUDGETING A systematic procedure for classifying, evaluating, and ranking proposed capital
expenditures for the purpose of comparison and selection, combined with the analysis of the financing
requirements.(11/90)
CAPITAL PROJECT A project in which the cost of the end result or product is capitalized (i.e., cost will be
depreciated).Theproductisusuallyaphysicalassetsuchasproperty,realestateorinfrastructure,butmayinclude
otherassetsthataredepreciable.(6/07)
CAPITALRECOVERY
(1) Charging periodically to operations amounts that will ultimately equal the amount of capital expenditure.
(2)Thereplacementoftheoriginalcostofanassetplusinterest.
(3)Theprocessofregainingthenetinvestmentinaprojectbymeansofrevenueinexcessofthecostsfromthe
project.(Usuallyimpliesamortizationofprincipalplusinterestonthediminishing,unrecoveredbalance.)
Seealso:AMORTIZATION;DEPLETION;DEPRECIATION.(11/90)
CAPITALRECOVERYFACTORAfactorusedtocalculatethesumofmoneyrequiredattheendofeachofaseries
ofperiodstoregainthenetinvestmentofaprojectplusthecompoundedinterestontheunrecoveredbalance.
(11/90)
CAPITAL, SUSTAINING The fixed capital requirements to: 1) Maintain the competitive position of a project
throughoutitscommerciallifebyimprovingproductquality,relatedservices,safety,oreconomy;or,2)Required
toreplacefacilitieswhichwearoutbeforetheendoftheprojectlife.(11/90)
CAPITAL,TOTALSumoffixedandworkingcapital.(11/90)
CAPITAL,VENTURECapitalinvestedintechnologyormarketsnewatleasttotheparticularorganization.(11/90)
CAPITAL,WORKINGThefundsinadditiontofixedcapitalandlandinvestmentwhichacompanymustcontribute
to the project (excluding startup expense) to get the project started and meet subsequent obligations as they
come due. Working capital includes inventories, cash and accounts receivable minus accounts payable.
Characteristically,thesefundscanbeconvertedreadilyintocash.Workingcapitalisnormallyassumedrecovered
attheendoftheproject.(11/90)
CAPITALIZEDCOST
(1) The present worth of a uniform series of periodic costs that continue for an indefinitely long time
(hypotheticallyinfinite).
(2)Thevalueatthepurchasedateoftheassetofallexpenditurestobemadeinreferencetothisassetoveran
indefiniteperiodoftime.Thiscostcanalsoberegardedasthesumofcapitalwhich,ifinvestedinafundearninga
stipulatedinterestrate,willbesufficienttoprovideforallpaymentsrequiredtomaintaintheassetinperpetual
service.(11/90)
CARDSONTHEWALL PLANNING A planning technique in which team members interact to create a project
strategy, tactical approach, and resulting network by locating and interconnecting task cards using walls as the
work space. The wall data are transferred into a computer model for scheduling, critical path analysis and
iteration.(6/07)
CASHCOSTSTotalcostexcludingcapitalanddepreciationspentonaregularbasisoveraperiodoftime,usually
oneyear.Cashcostsconsistofmanufacturingcostandotherexpensessuchastransportationcost,sellingexpense,
researchanddevelopmentcostorcorporateadministrativeexpense.(11/90)
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CASHFLOWInflowandoutflowoffundswithinaproject.Atimebasedrecordofincomeandexpenditures,often
presentedgraphically.(6/07)
CASHFLOW(NET)Thenetflowoffundsintooroutofaproject.Thesum,inanytimeperiod,ofallcashreceipts,
expenses,andinvestments.Alsocalledcashproceedsorcashgenerated.Thestreamofmonetaryvaluescosts
andbenefitsresultingfromaprojectinvestment.[1](6/07)
CASH FLOW MANAGEMENT The planning of project expenditures relative to income or authorized funding in
such a way as to minimize the carrying cost of the financing for the project or keep within the constraints of a
timephasedbudget.Thismaybeachievedbyacceleratingordelayingsomeactivities,butattheriskofineffective
performance,latecompletionandconsequentincreasedcost.(6/07)
CASHRETURN,PERCENTOFTOTALCAPITALRatioofaveragedepreciationplusaverageprofit,tototalfixedand
workingcapital,forayearofcapacitysales.Undercertainlimitedconditions,thisfigurecloselyapproximatesthat
calculated by profitability index techniques where it is defined as the difference, in any time period, between
revenuesandallcashexpenses,includingtaxes.(11/90)
CAUSATIONAnexplanationordescriptionofthefactsandcircumstancesthatproducearesult,thecauseand
effectforwhichthecontractorclaimsentitlementtocompensationfromtheownerunderthecontract.(11/90)
CAUSEOFRISKSEEALSO:RISKDRIVERS.(12/11)
CERTAINTYUnquestionable.Freeofdoubt.Noriskinvolved.(6/07)
CHAIN A series of elements joined together in sequence, such as a logical series of activities or occurrences.
(6/07)
CHANGEAlterationorvariationtoascopeofworkand/orthescheduleforcompletingthework.(11/90)
CHANGE, CARDINAL Work that is beyond the scope of that specified in the contract and consequently
unauthorized.Thebasictestsforacardinalchangearewhetherthetypeofworkwaswithinthecontemplationof
thepartieswhentheyenteredintothecontractandwhetherthejobasmodifiedisstillthesamebasicjob.(11/90)
CHANGE,CONSTRUCTIVEAnactorfailuretoactbytheownerortheengineerthatisnotadirectedchange,but
whichhastheeffectofrequiringthecontractortoaccomplishworkdifferentfromthatrequiredbytheexisting
contractdocuments.(11/90)
CHANGE,UNILATERALSeealso:MODIFICATION,UNILATERAL.(11/90)
CHANGECONTROL
(1)Processofacceptingorrejectingchangestotheproject'sbaselines.Lackofchangecontrolisoneofthemost
commoncausesofscopecreep.
(2) Process of implementing procedures that ensure that proposed changes are properly assessed and, if
approved,incorporatedintotheprojectplan.Uncontrolledchangesareoneofthemostcommoncausesofdelay
andfailure.
(3)Riskabatementprocessofacceptingorrejectingchangestotheproject'sbaselines,basedonpredetermined
criteriaor"triggerpoints.
Seealso:CHANGEMANAGEMENT.(6/07)
CHANGEDOCUMENTATION/LOGRecordsofchangesproposed,acceptedandrejected.(6/07)
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CHANGEINSCOPEAchangeinthedefineddeliverablesorresourcesusedtoprovidethem.(6/07)
CHANGE IN SEQUENCE A change in the order of work initially specified or planned by the contractor. If this
changeisorderedbytheownerandresultsinadditionalcosttothecontractor,thecontractormaybeentitledto
recoveryunderthechangesclause.(11/90)
CHANGEMANAGEMENTTheformalprocessthroughwhichchangestotheprojectplanareidentified,assessed,
reviewed,approvedandintroduced.(6/07)
CHANGE NOTICE The form that is used by the owner to communicate a change in scope or baseline to the
contract.Seealso:CHANGEORDER.(10/13)
CHANGE ORDER A document requesting and/or authorizing a scope and/or baseline change or correction. 1)
From the owners perspective, it is an agreement between the project team and higher authority approving a
changeintheprojectcontrolbaseline.2)Fromacontractorsperspective,itisanagreementbetweentheowner
andthecontractortocompensateforachangeinscopeorotherconditionsofacontract.Itmustbeapprovedby
boththeclientandthecontractorbeforeitbecomesalegalchangetothecontract.(6/07)
CHANGEDCONDITIONSSeealso:DIFFERINGSITECONDITIONS.(11/90)
CHARTOFACCOUNTSSyn.:CODEOFACCOUNTS(COA).(11/90)
CHILDAlowerlevelelementinahierarchicalstructure.Seealso:PARENT.(6/07)
CHILDACTIVITYSubordinatetaskbelongingtoa'parent'taskexistingatahigherlevelintheworkbreakdown
structure.(6/07)
CLAIMAdemandorassertionofrightsbyonepartyagainstanotherfordamagessustainedunderthetermsofa
legallybindingcontract.Damagesmightincludemoney,time,orothercompensationtomaketheclaimantwhole.
(8/07)
CLIENT
(1)Partytoacontractwhocommissionsthework.Oncapitalprojects,mayalsobereferredtoastheowner.
(2)Customer,principal,owner,promoter,buyer,orenduseroftheproductorservicecreatedbytheproject. [8]
(6/07)
CLOSEOUTThecompletionofprojectwork.Thephaseattheendofaprojectlifecyclejustbeforetheoperations
begins.(6/07)
CODEAreferencingsystemtypicallyappliedtotheelementsofworkandcostbreakdownstructures.(6/07)
CODE OF ACCOUNTS (COA) A systematic coding structure for organizing and managing scope, asset, cost,
resource, work, and schedule activity information. A COA is essentially an index to facilitate finding, sorting,
compiling,summarizing,orotherwisemanaginginformationthatthecodeistiedto.Acompletecodeofaccounts
includesdefinitionsofthecontentofeachaccount.Syn.:CHARTOFACCOUNTS.Seealso:COSTCODES.(6/07)
CODINGTheprocessofapplyingacode.Seealso:ACTIVITYCODE;CODEOFACCOUNTS(COA).(6/07)
COMMISSIONINGActivitiesperformedtosubstantiatethecapabilitiesofindividualunitsandsystemstofunction
as designed. May include performance tests on mechanical equipment, water washing, flushing and drying of
equipment and piping, control systems operability checks, checking of safety and fire protection devices, and
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operationofsystemsoninertfluids.Commissioningnormallyfollowsmechanicalcompletionandendswithinitial
operationorstartup.Seealso:STARTUP.(6/07)
COMMITTEDCOSTAcostwhichhasnotyetbeenpaid,butanagreement,suchasapurchaseorderorcontract,
hasbeenmadethatthecostwillbeincurred.Seealso:COMMITMENTS.(6/07)
COMMITMENTSThesumofallfinancialobligationsmade,includingincurredcostsandexpendituresaswellas
obligations,whichwillnotbeperformeduntillater.(11/90)
COMMODITYInpriceindexnomenclature,agoodandsometimesaservice.(11/90)
COMPANYTermusedprimarilytorefertoabusinessfirstparty,thepurposeofwhichistosupplyaproductor
service. In a capital project, typically refers to the contractor who is performing services for an owner or client.
(6/07)
COMPLETEDACTIVITYAnactivitywithanactualcompletiondateandremainingdurationofzero.Anactivitythat
isfinished,endedand/orconcludedinaccordancewithrequirements.(6/07)
COMPLETION (CONTRACT) When the entire work has been performed to the requirements of the contract,
exceptforthoseitemsarisingfromtheprovisionsofwarranty,andissocertified.(6/07)
COMPLETION DATE (PLANNED) The calculated date for completion derived from estimating, planning and risk
evaluationtakingintoaccountcontingenciesforidentifiedrisks.(6/07)
COMPOSITEPRICEINDEXAnindexwhichmeasuresthepricechangeofarangeorgroupofcommodities.(5/12)
COMPOUNDAMOUNTThefutureworthofasuminvested(orloaned)atcompoundinterest.(11/90)
COMPOUNDAMOUNTFACTOR
(1)Thefunctionofinterestrateandtimethatdeterminesthecompoundamountfromastatedinitialsum.
(2)Afactorwhichwhenmultipliedbythesinglesumoruniformseriesofpaymentswillgivethefutureworthat
compoundinterestofsuchsinglesumorseries.(11/90)
COMPOUNDINTEREST
(1) The type of interest that is periodically added to the amount of investment (or loan) so that subsequent
interestisbasedonthecumulativeamount.
(2)Theinterestchargesundertheconditionthatinterestischargedonanypreviousinterestearnedinanytime
period,aswellasontheprincipal.(11/90)
COMPOUNDRISKSeealso:RISKCOMPOUNDING(12/11)
COMPOUNDING,CONTINUOUS
(1)Acompoundinterestsituationinwhichthecompoundingperiodiszeroandthenumberofperiodsinfinitely
great. A mathematical concept that is practical for dealing with frequent compounding and small interest rates.
(2)Amathematicalprocedureforevaluatingcompoundinterestfactorsbasedonacontinuousinterestfunction
ratherthandiscreteinterestperiods.(11/90)
COMPOUNDINGPERIODThetimeintervalbetweendatesatwhichinterestispaidandaddedtotheamountof
aninvestmentorloan.Designatesfrequencyofcompounding.(11/90)
CONCEPTDEFINITIONDOCUMENTAdocumentdescribingtheconceptselectedfordevelopmentandtheresults
of investigating alternative system concepts. It is used to derive the system specifications and the statement of
work.Syn.:SYSTEMCONCEPTDOCUMENT.(6/07)
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CONCEPT PHASE First phase of a project in which need is examined, alternatives are assessed, the goals and
objectivesoftheprojectareestablishedandasponsorisidentified.(6/07)
CONCEPTUAL ESTIMATE An estimate generally prepared based on very limited information. See also: COST
ESTIMATECLASSIFICATIONSYSTEM,CLASS5ESTIMATEandCLASS4ESTIMATE.(5/12)
CONCEPTUALSCHEDULESimilartoaproposalscheduleexceptitisusuallytimescaledanddevelopedfromthe
abstractorconceptualdesignoftheproject.Usedprimarilytogivetheclientageneralideaoftheprojectscope
andonoverviewofactivities.(6/07)
CONCERNInTCMriskmanagement,somethingthatworriesstakeholdersbecauseitmaygiverisetoariskevent
orcondition.Seealso:EVENT(RISK);CONDITION(RISK).(12/11)
CONCURRENCY Degree to which independent activities may be, or are performed at the same time (fully or
partially).Degreetowhichphases,stages,oractivitiesmaybeoverlapped.(6/07)
CONCURRENT ACTIVITIES Independent activities that may be, or are performed at the same time (fully or
partially).(6/07)
CONCURRENTDELAY
(1)Twoormoredelaysthattakeplaceoroverlapduringthesameperiod,eitherofwhichoccurringalonewould
have affected the ultimate completion date. In practice, it can be difficult to apportion damages when the
concurrentdelaysareduetotheownerandcontractorrespectively.
(2) Concurrent delays occur when there are two or more independent causes of delay during the same time
period.Thesametimeperiodfromwhichconcurrencyismeasured,however,isnotalwaysliterallywithinthe
exact period of time. For delays to be considered concurrent, most courts do not require that the period of
concurrentdelaypreciselymatch.Theperiodofconcurrencyofthedelayscanberelatedbycircumstances,even
thoughthecircumstancesmaynothaveoccurredduringexactlythesametimeofperiod.[10]
(3)Trueconcurrentdelayistheoccurrenceoftwoormoredelayeventsatthesametime,oneanemployerrisk
event,theotheracontractorriskeventandtheeffectsofwhicharefeltatthesametime.Thetermconcurrent
delay is often used to describe the situation where two or more delay events arise at different times, but the
effectsofthemarefelt(inwholeorinpart)atthesametime.Toavoidconfusion,thisismorecorrectlytermedthe
concurrenteffectofsequentialdelayevents.[12]
(4)Concurrentdelayoccurswhenboththeownerandcontractordelaytheprojectorwheneitherpartydelaysthe
project during an excusable but noncompensable delay (e.g., abnormal weather). The delays need not occur
simultaneouslybutcanbeontwoparallelcriticalpathchains.[13]
(5) The condition where another delayactivity independent of the subject delay is affecting the ultimate
completionofthechainofactivities.(6/07)
CONDITION (RISK CONDITION) Any specific identifiable circumstance that might affect the outcome of the
project.Seealso:RISKEVENT.(12/11)
CONDITIONAL BRANCHING Schedule analysis that allows for changes in schedule logic and/or durations
dependingontheoccurrenceofriskeventsorconditions.Seealso:DYNAMICRISKANALYSIS.(12/11)
CONDITIONALRISKRiskthatoccursundercertainconditionsorisacceptedprovidedthatcertainconditionsare
met.(6/07)
CONFIDENCEINTERVALTheprobabilitythataresultwillbewithinarange.Seealso:ACCURACYRANGE;RANGE.
(12/11)
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CONFIDENCELEVELTheprobability:1)Thatresultswillbeequaltoormorefavorablethantheamountestimated
orquoted;or2)Thatthedecisionmadewillachievethedesiredresults;or3)Thatthestatedconclusionistrue.
Note:Confidencelevelmayalsobeexpressedas"equaltoorlessfavorable".Ifthatisthecase,itshouldsobe
noted.Withoutsuchanote,thedefinitionshownisassumed.(6/07)
CONFIGURATIONAcollectionofanitem'sdescriptiveandgoverningcharacteristics,whichcanbeexpressed:1)
Infunctionalterms,i.e.whatperformancetheitemisexpectedtoachieve;and2)Inphysicalterms,i.e.whatthe
itemshouldlooklikeandconsistofwhenitiscompleted.(6/07)
CONFIGURATION CONTROL A system of procedures that monitors emerging project scope against the scope
baseline.Requiresdocumentationandmanagementapprovalonanychangetothebaseline.(6/07)
CONFIGURATION MANAGEMENT Technical and administrative activities concerned with the creation,
maintenance and controlled change of configuration throughout the life of the product. Configuration
managementisanintegralpartoflifecyclemanagement.(6/07)
CONFLICT Two or more parties having differing interests or perspectives that require resolution to achieve
projectgoals.Thestatethatexistswhentwogroupshavegoalsthatwillaffecteachotherdifferently.(6/07)
CONFLICTINPLANSANDSPECIFICATIONSStatementsormeaningsinthecontractdocuments(includingdrawings
andspecifications)thatcannotbereconciledbyreasonableinterpretationonthepartofthecontractorandwhich
mayrequiretheownertoprovideaninterpretationbetweenalternatives.(11/90)
CONFLICTMANAGEMENTHandlingofconflictsbetweenprojectparticipantsorgroupsinordertocreateoptimal
projectresults.(6/07)
CONSENT OF SURETY An acknowledgement by a surety that its bond, given in connection with a contract,
continuestoapplytothecontractasmodified;or,attheendofacontract,permissionfromthesuretytorelease
allretainagetothecontractor.(11/90)
CONSEQUENCE In risk management, the impact or effect of a risk event or condition. Syn.: EFFECT; IMPACT.
(12/11)
CONSTANTBASKETAsetofgoodsandserviceswithquantitiesfixedinrelationtoagiventimeperiod,usedfor
computingcompositepriceindexes.(11/90)
CONSTANT BASKET PRICE INDEX A price index which measures price changes by comparing the expenditures
necessarytoprovidethesamesetofgoodsandservicesatdifferentpointsintime.(11/90)
CONSTANT DOLLARS Dollars of uniform purchasing power exclusive of general inflation or deflation. Constant
dollarsaretiedtoareferenceyear.[1](11/90)
CONSTANT UTILITY PRICE INDEX A composite price index which measures price changes by comparing the
expendituresnecessarytoprovidesubstantiallyequivalentsetsofgoodsandservicesatdifferentpointsintime.
(11/90)
CONSTRAINT
(1)Inplanningandscheduling,anyexternalfactorthataffectswhenanactivitycanbescheduled.Arestriction
imposedonthestart,finishordurationofanactivity.Theexternalfactormayberesources,suchaslabor,costor
equipment,or,itcanbeaphysicaleventthatmustbecompletedpriortotheactivitybeingrestrained.Constraints
areusedtoreflectprojectrequirementsmoreaccurately.Examplesofdateconstraintsare:Startnoearlierthan,
finishnolaterthan,mandatorystart,andaslateaspossible.
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(2)Indecisionandriskmanagement,somethingthatlimitsthepotentialachievementofobjectives.
Syn.:RESTRAINT.(12/11)
CONSTRAINTDATESeealso:PLUGDATE.(11/90)
CONSTRUCTABILITY
(1)Asystem(process)forachievingoptimumintegrationofconstructionknowledgeintheconstructionprocess,
balancing various project and environmental constraints to achieve maximization of project goals and
performance.[6]
(2)Derivedfromearlydetailedconstructionplanningthatallowsengineeringandprocurementtobescheduledto
supportconstructioninaccordancewiththeoveralloptimizedprojectschedule.[5]
(3)Theextenttowhichthedesignofastructureorsystemfacilitateseaseofconstruction,subjecttotheoverall
requirementsforthecompletedform.Theoptimumuseofconstructionknowledgeandexperienceinplanning,
engineering,procurementandfieldoperationstoachievetheoverallobjective.(6/07)
CONSTRUCTIONCOSTThesumofallcosts,directandindirect,inherentinconvertingadesignplanformaterial
and equipment into a project ready for startup, but not necessarily in production operation; the sum of field
labor,supervision,administration,tools,fieldofficeexpense,materials,equipment,andsubcontracts.(6/07)
CONSTRUCTIONMANAGEMENT
(1)Projectmanagementasappliedtoconstruction.
(2) A professional service that applies to effective management techniques to the planning, design, and
construction of a project from inception to completion for the purpose of controlling time, cost, and quality, as
definedbytheConstructionManagementAssociationofAmerica(CMAA).(6/07)
CONSTRUCTIONPROGRESSConstructionprogressismonitoredandreportedaspercentcomplete.Actualwork
unitscompletedaremeasuredagainsttheplannedworkunitsforeachapplicableaccountinthebillofmaterialsor
quantities. Usually reported against individual accounts by area and total project, and summarized by area and
totalproject.(6/07)
CONSTRUCTIONPROGRESSREPORTAreportthatinformsmanagementofoverallconstructionprogress(physical
percentcomplete),costs,performanceandmanpowerataspecificreportingcutoffdate.Typicallyincludesmajor
accomplishments, objectives for the upcoming report period, areas of concern, and other pertinent information
necessaryformanagementandcontrol.(6/07)
CONSTRUCTIVE ACCELERATION An owners action or inaction, in absence of a specific direction to accelerate,

that results in the contractor accelerating its work to maintain scheduled completion date(s). Case law has
identified five elements normally required to establish a claim for constructive acceleration and include: 1) An
excusabledelaymustexist;2)Timelynoticeofthedelayandaproperrequestforatimeextensionmusthavebeen
given; 3) The time extension must have been postponed or refused; 4) Owner must have ordered (either by
coercion,directionorsome othermanner)theprojectcompletedwithinitsoriginal performanceperiod;and5)
Contractormustactuallyaccelerateitsperformance,therebyincurringexcesscosts.(6/07)
CONSTRUCTIVE CHANGE An owner's action or inaction that impacts the contractor's working conditions and
constitutesanunauthorizedmodificationofcontractintent.(6/07)
CONSTRUCTIVEDELAYAnactoromissionbytheowneroritsagent,whichinfactdelayscompletionofthework.
(6/07)
CONSUMABLE RESOURCE A type of resource that remains available until consumed (for example, a material).
(6/07)
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CONSUMABLES Supplies and materials used up during construction. Includes utilities, fuels and lubricants,
weldingsupplies,worker'ssupplies,medicalsupplies,etc.(11/90)
CONSUMERSPRICEINDEX(CPI)Ameasureoftimetotimefluctuationsinthepriceofaquantitativelyconstant
marketbasketofgoodsandservices,selectedasrepresentativeofaspeciallevelofliving.(11/90)
CONTINGENCY
(1)Anamountaddedtoanestimatetoallowforitems,conditions,oreventsforwhichthestate,occurrence,or
effectisuncertainandthatexperienceshowswilllikelyresult,inaggregate,inadditionalcosts.Typicallyestimated
usingstatisticalanalysisorjudgmentbasedonpastassetorprojectexperience.Contingencyusuallyexcludes:1)
Majorscopechangessuchaschangesinendproductspecification,capacities,buildingsizes,andlocationofthe
assetorproject;2)Extraordinaryeventssuchasmajorstrikesandnaturaldisasters;3)Managementreserves;and
4)Escalationandcurrencyeffects.Someoftheitems,conditions,oreventsforwhichthestate,occurrence,and/or
effect is uncertain include, but are not limited to, planning and estimating errors and omissions, minor price
fluctuations(otherthangeneralescalation),designdevelopmentsandchangeswithinthescope,andvariationsin
marketandenvironmentalconditions.Contingencyisgenerallyincludedinmostestimates,andisexpectedtobe
expended.Seealso:MANAGEMENTRESERVE.
(2) In earned value management (based upon the ANSI EIA 748 Standard), an amount held outside the
performancemeasurementbaselineforownerlevelcostreserveforthemanagementofprojectuncertaintiesis
referredtoascontingency.(10/13)
CONTINGENCYPLANAriskresponseplanmadetoaddressidentifiedresidualrisksiftheyoccur.Syn.:FALLBACK
PLAN.Seealso:RESIDUALRISK;CONTINGENTRISKRESPONSE.(12/11)
CONTINGENT RISK RESPONSE A planned alternative response to a risk that will be taken only in defined
circumstances.Seealso:RISKRESPONSE.(12/11)
CONTRACTLegalagreementbetweentwoormoreparties,whichmaybeofthetypesenumeratedbelow:
1.Incostpluscontractsthecontractoragreestofurnishtotheclientservicesandmaterialatactualcost,plus
an agreed upon fee for these services. This type of contract is employed most often when the scope of
servicestobeprovidedisnotwelldefined.
a.COSTPLUSPERCENTAGEBURDENANDFEEtheclientwillpayallcostsasdefinedinthetermsofthe
contract, plus "burden and fee" at a specified percent of the labor costs which the client is paying for
directly. This type of contract generally is used for engineering services. In contracts with some
governmentalagencies,burdenitemsareincludedinindirectcost.
b. COST PLUS FIXED FEE the client pays costs as defined in the contract document. Burden on
reimbursable technical laborcost is considered in this case as part of cost. In addition to the costsand
burden,theclientalsopaysafixedamountasthecontractor's"fee".
c.COSTPLUSFIXEDSUMtheclientwillpaycostsdefinedbycontractplusafixedsumwhichwillcover
"nonreimbursable"costsandprovideforafee.Thistypeofcontractisusedinlieuofacostplusfixedfee
contractwheretheclientwishestohavethecontractorassumesomeoftheriskforitemswhichwouldbe
reimbursableunderacostplusfixedfeetypeofcontract.
d.COSTPLUSPERCENTAGEFEEtheclientpaysallcosts,plusapercentagefortheuseofthecontractor's
organization.
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2. Fixed price types of contract are ones wherein a contractor agrees to furnish services and material at a
specified price, possibly with a mutually agreed upon escalation clause. This type of contract is most often
employedwhenthescopeofservicestobeprovidediswelldefined.
a.LUMPSUMcontractoragreestoperformallservicesasspecifiedbythecontractforafixedamount.A
variation of this type may include a turnkey arrangement where the contractor guarantees quality,
quantityandyieldonaprocessplantorotherinstallation.
b.UNITPRICEcontractorwillbepaidatanagreeduponunitrateforservicesperformed.Forexample,
technical workhours will be paid for at the unit price agreed upon. Often field work is assigned to a
subcontractorbytheprimecontractoronaunitpricebasis.
c.GUARANTEEDMAXIMUM(TARGETPRICE)acontractoragreestoperformallservicesasdefinedinthe
contractdocumentguaranteeingthat the totalcostto theclient willnot exceed a stipulated maximum
figure. Quite often, these types of contracts will contain special shareofthesaving arrangements to
provideincentivetothecontractortominimizecostsbelowthestipulatedmaximum.
d. BONUSPENALTY a special contractual arrangement usually between a client and a contractor

whereinthecontractorisguaranteedabonus,usuallyafixedsumofmoney,foreachdaytheprojectis
completed ahead of a specified schedule and/or below a specified cost, and agrees to pay a similar
penalty for each day of completion after the schedule date or over a specified cost up to a specified
maximumeitherway.Thepenaltysituationissometimesreferredtoasliquidateddamages.(11/90)
CONTRACT BUDGET BASE (CBB) In earned value management according to the ANSI EIA 748 standard, the
budget for the project at the total contract level. The CBB reconciles with the project authorization documents
fromtheowner.TheCBBplusfeeisthetotalcontractvalue.CBB=performancemeasurementbaseline(PMB)+
managementreserve(MR)unlessanovertargetbaseline(OTB)hasbeenimplemented.(10/13)
CONTRACTCHANGEAnauthorizedmodificationtotermsofacontract.Mayinvolve,butisnotlimitedto:1)A
changeinthevolumeorconditionsoftheworkinvolved;2)Thenumberofunitstobeproduced;3)Thequalityof
theworkorunits;4)Thetimefordelivery;and/or5)Theconsequentcostinvolved.(6/07)
CONTRACTCOMPLETIONDATEThedateestablishedinthecontractforcompletionofallorspecifiedportionsof
thework.Thisdatemaybeexpressedasacalendardateorasanumberofdaysafterthedateforcommencement
ofthecontracttimeisissued.(11/90)
CONTRACT DATES The start, intermediate, or final dates specified in the contract that impact the project
schedule.Seealso:SCHEDULEDDATES.(6/07)
CONTRACTDOCUMENTSTheagreement,addenda(whichpertaintothecontractdocuments),contractor'sbid
(includingdocumentationaccompanyingthebidandanypostbiddocumentationsubmittedpriortothenoticeof
award) when attached as an exhibit to the agreement, the bonds, the general conditions, the supplementary
conditions, the specifications and the drawings as the same are more specifically identified in the agreement,
together with all amendments, modifications and supplements issued pursuant to the general conditions on or
aftertheeffectivedateoftheagreement.(11/90)
CONTRACT MASTER SCHEDULE The management summary schedule that shows the overall plan for the total
contract.(6/07)
CONTRACT PLAN The conditions, methods, schedule, etc. for carrying out the work of the contract as agreed
betweenthepartiesatthetimeofsigningthecontract.(6/07)
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CONTRACTPRICEThemoniespayablebytheownertothecontractorunderthecontractdocumentsasstatedin
theagreement.(11/90)
CONTRACT "READ AS A WHOLE" Reading an entire contract document, instead of reading each clause in the
contract in isolation. If a clause is ambiguous and can be interpreted in more than one way, the meaning that
conformstotherestofthedocumentisusuallytheacceptedmeaning.(11/90)
CONTRACT TIME The number of days within which, or the dates by which, the work, or any specified part
thereof,istobecompleted.(11/90)
CONTRACTWORKBREAKDOWNSTRUCTURE(CWBS)Aworkbreakdownstructureoftheproductsorservicesto
be furnishedundercontract. It is comprised of selectedPWBS (program/projectWBS) elements specified inthe
contractualdocumentandthecontractorslowerlevelextensionsofthoseelements.[7](10/06)
CONTRACTOR
(1)Abusinessentitythatentersintocontractstoprovidegoodsorservicestoanotherparty.
(2)Apersonororganizationthatundertakesresponsibilityfortheperformanceofacontract.Onethatagreesto
furnishmaterialsorperformservicesataspecifiedprice.(6/07)
CONTROL
(1) Management action, either preplanned to achieve the desired result or taken as a corrective measure
promptedbythemonitoringprocess.
(2) To take timely corrective action. Control occurs only if monitoring and forecasting activities indicate an
undesirablefinalresultislikelytooccurandthatadifferentfinalresultispossible.
(3)Processofcomparingactualperformancewithplannedperformance,analyzingthedifferences,andtakingthe
appropriatecorrectiveaction.(6/07)
CONTROLACCOUNT(CA)Amanagementcontrolpointwhereearnedvaluemeasurementtakesplace.Itisthe
place where scope, schedule and budget, are integrated at the organizational level responsible for day to day
managementofasegmentoftheproject.(10/13)
CONTROL ACCOUNT MANAGER (CAM) The single person responsible for management of the scope, schedule,
andbudgetofthecontrolaccount.TheCAMhascontroleitherthroughdelegationorsupervisoryresponsibilityfor
allofthestaffperformingthecontrolaccountwork.(10/13)
CONTROL AND COORDINATION Control is the process of developing targets and plans; measuring actual
performance and comparing it against planned performance and taking the steps to correct the situation.
Coordination is the act of ensuring that work is being carried out in different organizations and places to fit
togethereffectivelyintime,contentandcostinordertoachievetheprojectobjectiveseffectively.(6/07)
CONTROLBASELINESeealso:BASELINE(6/07)
CONTROLGATEAmajorprojectmilestoneatwhichtheprojectclienthastheopportunitytoexerciseago/no
godecisionuponcontinuationintothesucceedingphase.(6/07)
CONTROLLINGPATHAnalternatetermusedinplaceofasbuiltcriticalpathinordertotechnicallypreservethe
use of the term critical path to denote only to activity paths identified by float calculation using early and late
dates.Bydefinition,asbuiltactivitiesdonothaveearlyandlatedates.(6/07)
CONTROLLING RELATIONSHIP In planning and scheduling, the predecessor activity logic tie to an activity, with
multiplepredecessors,whichcontrolsordrivesthatactivityandestablishesitslatestearlyfinish.(6/07)
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CORRECTIONPERIODTheperiodoftimewithinwhichthecontractorshallpromptly,withoutcosttotheowner
andinaccordancewiththeowner'swritteninstructions,eithercorrectdefectivework,orifithasbeenrejectedby
the owner, remove it from the site and replace it with nondefective work, pursuant to the general conditions.
(11/90)
CORRELATIONThemeasureoftherelationshipbetweentwoormorequantitativeelements.(12/11)
COSTInprojectcontrolandaccounting,itistheamountmeasuredinmoney,cashexpendedorliabilityincurred,
inconsiderationofgoodsand/orservicesreceived.Fromatotalcostmanagementperspective,costmayinclude
anyinvestmentofresourcesinstrategicassetsincludingtime,monetary,human,andphysicalresources.(1/02)
COSTACCOUNTSyn.:CONTROLACCOUNT(CA).(6/07)
COSTACCOUNTINGThehistoricalreportingofactualand/orcommitteddisbursements(costsandexpenditures)
onaproject.Costsaredenotedandsegregatedwithincostcodesthataredefinedinachartofaccounts.Inproject
control practice, cost accounting provides the measure of cost commitment and/or expenditure that can be
comparedtothemeasureofphysicalcompletion(orearnedvalue)ofanaccount.(1/03)
COSTANALYSISAhistoricaland/orpredictivemethodofascertainingforwhatpurposeexpendituresonaproject
weremadeandutilizingthisinformationtoprojectthecostofaprojectaswellascostsoffutureprojects.The
analysismayalsoincludeapplicationofescalation,costdifferentialsbetweenvariouslocalities,typesofbuildings,
typesofprojects,andtimeofyear.(11/90)
COST/SCHEDULECONTROLSYSTEMCRITERIA(C/SCSC)Astandardmethodofearnedvaluemanagementusedon
US Government projects. C/SCSC combined time and cost measures to better measure performance in an
integrated way. This standard was superseded by a government earned value management system (EVMS)
standard.(6/07)
COST APPROACH One of the three approaches in the appraisal process. Underlying the theory of the cost
approachistheprincipleofsubstitution,whichsuggeststhatnorationalpersonwillpaymoreforapropertythan
the amount with which he/she can obtain, by purchase of a site and construction of a building without undue
delay,apropertyofequaldesirabilityandutility.(11/90)
COSTATCOMPLETION(CAC)Theamountanactivityorgroupofactivitieswillcostwhenithasbeencompleted.
Itisthesumofthecostexpendedtodateandtheestimatedcosttocomplete.Seealso:INDICATEDTOTALCOST.
(6/07)
COSTAVOIDANCEAnactiontakeninthepresentdesignedtodecreasecostsinthefuture.(6/07)
COST BASELINE A timephased budget used to measure and monitor cost performance. It is developed by
summingestimatedcostsbyperiodandisusuallydisplayedintheformofanScurve.Seealso:BASELINE.(6/07)
COSTBREAKDOWNSTRUCTURE(CBS)
(1)Ahierarchicalstructurethatdividesbudgetedresourcesintoelementsofcosts,typicallylabor,materialsand
otherdirectcosts.Thelowestlevel,whenassignedresponsibility,typicallydefinesacostcenter.
(2)Hierarchicalbreakdownofaprojectintocostelementsorcostcategories.
Seealso:COSTCENTER;COSTCATEGORY.(6/07)
COST CATEGORY A specifically defined division in a system of classification for estimated and/or expended
moneyforwhichcostsaretobesummarized.(6/07)
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COSTCENTERThesmallestunitofactivityorareaofresponsibilityagainstwhichcostsareaccumulated;defined
sectionsinthecorporatesystem,representingunitsofresponsibilityaswellasaccountingunits.(6/07)
COSTCODESCodesallocatedtoitemsoractivitiesthatallowcoststobeconsolidatedaccordingtotheelements
ofthecodingstructure.Seealso:CODEOFACCOUNTS(COA);CHARTOFACCOUNTS.(6/07)
COST CONTROL The application of procedures to monitor expenditures and performance against progress of
projectsormanufacturingoperations;tomeasurevariancefromauthorizedbudgetsandalloweffectiveactionto
betakentoachieveminimumcosts.(11/90)
COSTCONTROLSYSTEMAnysystemofmanagingcostswithintheboundsofbudgetsorstandardsbasedupon
workactuallyperformed.Costcontrolistypicallyperformedatdesignatedlevelsintheworkbreakdownstructure.
(6/07)
COSTCURVEAgraphthatplotscumulativecost(e.g.,planned,expended,incurred,etc)againstatimescale.See
also:CASHFLOW.(6/07)
COSTDISTRIBUTIONDistributionorallocationofoverhead(indirect)costsonsomelogicalbasis,e.g.,thetimeor
costofallassociateddirectcostactivities.Seealso:ALLOCATION.(6/07)
COSTELEMENTInearnedvalue,abasicuntilofplanningsuchas:labor,travel,material,subcontracts,andother
directcostsasapplicable.(10/13)
COST ENGINEER An engineer whose judgment and experience are utilized in the application of scientific
principles and techniques to problems of estimation; cost control; business planning and management science;
profitabilityanalysis;projectmanagement;andplanningandscheduling.(11/90)
COSTESTIMATEAcompilationofalltheprobablecostsoftheelementsofaprojectoreffortincludedwithinan
agreeduponscope.(5/12)
COST ESTIMATE CLASSIFICATION SYSTEM There are numerous characteristics that can be used to categorize
project cost estimate types. Some of these characteristics are: level of project definition, end usage of the
estimate, estimating methodology, and the effort and time needed to prepare the estimate. AACE recommends
that the primary characteristic used to define the classification category is the level of project. The other
characteristicsareconsideredsecondary.
The level of project definition defines maturity, or the extent and types of input information available to the
estimatingprocess.Suchinputsincludeprojectscopedefinition,requirementsdocuments,specifications,project
plans,drawings,calculations,lessonslearnedfrompastprojects,reconnaissancedata,andotherdeliverablesand
information that must be developed to define the project. Each industry will have a typical set of defining
deliverablesthatareusedtosupportthetypeofestimatesusedinthatindustry.Thesetofdeliverablesbecomes
moredefinitiveandcompleteasthelevelofprojectdefinition(e.g.,projectengineering)progresses.
Forprojects,theestimateclassdesignationsthatfollowbelowarelabeledClass1,2,3,4,and5.AClass5estimate
isbaseduponthelowestlevelofprojectdefinition,andaClass1estimateisclosesttofullprojectdefinitionand
maturity. This countdown approach considers that estimating is a process whereby successive estimates are
prepareduntilafinalestimateclosestheprocess.
CLASS5ESTIMATE
(Typicallevelofprojectdefinitionrequired:>0%to2%offullprojectdefinition.)
Class 5 estimates are generally prepared based on very limited information, and subsequently have wide
accuracy ranges. As such, some companies and organizations have elected to determine that due to the
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inherent inaccuracies, such estimates cannot be classified in a conventional and systemic manner. Class 5
estimates, due to the requirements of end use, maybeprepared within a very limited amount of time and
with little effort expended. Class 5 estimates are prepared for any number of strategic business planning
purposes, such as but not limited to market studies, assessment of initial viability, evaluation of alternate
schemes,projectscreening,projectlocationstudies,evaluationofresourceneedsandbudgeting,longrange
capitalplanning,etc.
CLASS4ESTIMATE
(Typicallevelofprojectdefinitionrequired:1%to15%offullprojectdefinition.)
Class 4 estimates are generally prepared based on limited information and subsequently have fairly wide
accuracyranges.Theyaretypicallyusedforprojectscreening,determinationoffeasibility,conceptevaluation,
and preliminary (but generally not final) budget approval. Class 4 estimates are prepared for a number of
purposes,suchasbutnotlimitedto,detailedstrategicplanning,businessdevelopment,projectscreeningat
more developed stages, alternative scheme analysis, confirmation of economic and/or technical feasibility,
andpreliminarybudgetapprovalorapprovaltoproceedtonextstage.
CLASS3ESTIMATE
Class 3 estimates are generally prepared to form the basis for budget authorization, appropriation, and/or
funding.Class3estimatesaretypicallypreparedtosupportfullprojectfundingrequests,andbecomethefirst
of the project phase control estimate against which all actual costs and resources will be monitored for
variations to the budget. They are used as the projectbudget until replaced by more detailed estimates. In
manyownerorganizations,aClass3estimatemaybethelastestimaterequiredandcouldwellformtheonly
basisforcost/schedulecontrol.
CLASS2ESTIMATE
Class2estimatesaregenerallypreparedtoformadetailedcontrolbaselineagainstwhichallprojectworkis
monitoredintermsofcostandprogresscontrol.Forcontractors,thisclassofestimateisoftenusedasthe
bidestimatetoestablishcontractvalue.
CLASS1ESTIMATE
Class1estimatesaregenerallypreparedfordiscretepartsorsectionsofthetotalprojectratherthanforthe
entireproject.Thepartsoftheprojectestimatedatthislevelofdetailwilltypicallybeusedbysubcontractors
forbids,orbyownersforcheckestimates.Theupdatedestimateisoftenreferredtoasthecurrentcontrol
estimate and becomes the new baseline for cost/schedule control of the project. Class 1 estimates may be
preparedforpartsoftheprojecttocompriseafairpriceestimateorbidcheckestimatetocompareagainsta
contractorsorvendorsbidestimate,ortoevaluate/disputeclaimsorchangeorders.
Syn.: COST ESTIMATE TYPE, COST ESTIMATE CLASS, COST ESTIMATE CATEGORY. See also: AACE Recommended
PracticesNo.17R97CostEstimateClassificationSystemandNo.18R97CostEstimateClassificationSystem
AsAppliedinEngineering,Procurement,andConstructionfortheProcessIndustries.(1/04)
COSTESTIMATERESOURCECostestimateofphysicalresourcesneededtoperformaspecificconstructionactivity
which in turn drives an overall unit price. Typically includes labor resources, material resources, equipment
resources,subcontractorcostsandothercosts.ItistypicallyabbreviatedLMESO.(12/11)
COSTESTIMATETYPESyn.:COSTESTIMATECLASSIFICATIONSYSTEM.(1/04)
COST ESTIMATING Cost estimating is the predictive process used to quantify, cost, and price the resources
required by the scope of an investment option, activity, or project. Cost estimating is a process used to predict
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uncertainfuturecosts.Inthatregard,agoalofcostestimatingistominimizetheuncertaintyoftheestimategiven
the level andquality of scope definition. The outcome of cost estimating ideally includes bothanexpected cost
and a probabilistic cost distribution. As a predictive process, historical reference cost data (where applicable)
improve the reliability ofcost estimating.Cost estimating,by providing thebasis for budgets, alsoshares agoal
withcostcontrolofmaximizingtheprobabilityoftheactualcostoutcomebeingthesameaspredicted.(11/12)
COSTESTIMATINGRELATIONSHIP(CER)Inestimating,analgorithmorformulathatisusedtoperformthecosting
operation.CERsshowsomeresource(e.g.,cost,quantity,ortime)asafunctionofoneormoreparametersthat
quantify scope, execution strategies, orother defining elements. A CERmay beformulated in a manner that, in
additiontoprovidingthemostlikelyresourcevalue,alsoprovidesaprobabilitydistributionfortheresourcevalue.
(5/12)
COST ESTIMATOR (PROJECT) Project cost estimators predict the cost of a project for a defined scope, to be
completedatadefinedlocationandpointoftimeinthefuture.Costestimatorsassistintheeconomicevaluation
ofpotentialprojectsbysupportingthedevelopmentofprojectbudgets,projectresourcerequirements,andvalue
engineering.Theyalsosupportprojectcontrolbyprovidinginputtothecostcontrolbaseline.Estimatorscollect
andanalyzedataonallofthefactorsthatcanaffectprojectcostssuchas:materials,equipment,labor,location,
durationoftheproject,andotherprojectrequirements.(11/12)
COST INDEX A number which relates the cost of an item at a specific time to the correspondingcost at some
specifiedpriortime.Seealso:PRICEINDEX.(6/07)
COSTLOADINGInplanningandscheduling,assigninganestimatedoractualcosttoanactivity.Theestimated
cost may be only direct costs, or may include indirect costs. However, the CPM (critical path method) must be
developedusingonlyonecostloadingmethod.(6/07)
COSTOFCAPITALAterm,usuallyusedincapitalbudgeting,toexpressasaninterestratepercentagetheoverall
estimatedcostofinvestmentcapitalatagivenpointintime,includingbothequityandborrowedfunds.(11/90)
COSTOFLOSTBUSINESSADVANTAGEThecostassociatedwithlossofrepeatbusinessand/orthelossofbusiness
duetorequiredresourcesandcosts.(11/90)
COST OF OWNERSHIP The cost of operations, maintenance, followon logistical support, and end item and
associatedsupportsystems.Seealso:OPERATINGCOST.[3](11/90)
COSTOFQUALITY
(1) Consists of the sum of those costs associated with: (a) Cost of quality conformance; (b) Cost of quality
nonconformance;and(c)Costoflostbusinessadvantage.
(2) Cost incurred or expended to ensure quality, including those associated with the cost of conformance and
nonconformance.[8](6/07)
COST OF QUALITY CONFORMANCE The cost associated with the quality management activities of appraisal,
training,andprevention.(11/90)
COST OF QUALITY NONCONFORMANCE The cost associated with deviations involving rework and/or the
provisionofdeliverablesthataremorethanrequired.(11/90)
COSTPERFORMANCEINDEX/INDICATOR(CPI)Theratioofearnedvaluetoactualcosts(CPI=BCWP/ACWP).A
value greater than 1 indicates that costs are running under budget. A value less than 1 indicates that costs are
runningoverbudget.Oftenusedtopredictmagnitudeofapossiblecostoverrunbydividingitintotheoriginalcost
estimate(originalcostestimate/CPI=projectedcostatcompletion).(6/07)
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COSTPERFORMANCEREPORT(CPR)Acommonreportusedtoreportearnedvaluemanagement(EVM)
informationtoanowner.(10/13)
COSTTOCOMPLETETheamountthataninprogressactivityorgroupofactivitieswillcosttocomplete.(6/07)
COSTVALUESeealso:FUNCTIONALWORTH.(11/90)
COSTVARIANCEThedifferencebetweentheearnedvalueandactualcost.Costvariance(CV)=budgetedcostof
work performed (BCWP) actual cost of work performed (ACWP). A negative cost variance indicates that the
activity(ies)isrunningoverbudget.(6/07)
COSTOFLIVING INDEX In modern usage, a price index based on a constant utility concept as opposed to a
constantbasketconcept.(11/90)
COSTING
(1)Theapplicationofcostandresourcestoaquantifiedscope.
(2) A process of determining actual costs from actual expenditures. The way costs are estimated and the way
moneyisspentarerarelythesame,makingitnecessarytoanalyzeandredistributeactualexpenditurestoarrive
atcostdatathatisusefulforfutureestimatingpurposes.(5/12)
COSTING,ACTIVITYBASED(ABC)Costinginawaythatthecostsbudgetedtoanaccounttrulyrepresentallthe
resourcesconsumedbytheactivityoritemrepresentedintheaccount.(1/03)
CPMSeealso:CRITICALPATHMETHOD(CPM).(6/07)
CRASHCOSTSThecostofreducinganactivitytoitscrashduration.(6/07)
CRASHDURATIONWhenneedingtoshortenanetworkcriticalpath,activitiesmaybe'crashed'.Thisrepresents
drasticactiontoreducethedurationofacriticalactivityandshouldonlytakeninexceptionalcircumstancesdueto
adramaticincreaseinresourceconsumption.(6/07)
CRASHINGActiontodecreasethedurationofanactivityorprojectbyincreasingtheexpenditureofresources.
(6/07)
CREWAsetofworkersandworkequipmentdesignatedtoperformanactivity.(1/14)
CREWHOURAnhourofeffortforacrewofworkers.Forexample,ifacrewhas2workers,acrewhourincludes2
laborhours.(6/07)
CREW RATE Labor cost per crew hour for a given crew. The labor cost may include only wages or wages plus
benefits, burdens, and other markups. The labor cost may also include an allowance for the costs of tools and
equipmentusedbythecrewinperformanceoftheirwork.Seealso:LABORCOST.(6/07)
CRITICALACTIVITYAnactivityontheprojectscriticalpath.Adelaytoacriticalactivitycausesacorresponding
delay in the completion of the project. Although some activities are critical, in the dictionary sense, without
beingonthecriticalpath,thismeaningisseldomusedintheprojectcontext.(6/07)
CRITICALCHAINThatsetoftaskswhichdeterminestheoveralldurationofaproject,afterconsideringresource
capacity.Itistypicallyregardedastheconstraintorleveragepointofaproject.(6/07)
CRITICALCHAINMETHODDifferentiatedfromthecriticalpathmethod,thisprojectplanningandmanagement
technique considers resources that constrain the work, not only the precedence of activities. The method
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determinesthelongestdurationsequenceofresourceconstrainedactivitiesthroughaprojectnetworkthus,the
shortestpossible project durationthe critical chain. Algorithms for application of the method are both
deterministic and stochastic. Time buffers are included to protect completion dates and provide adequate
solutions,sincecontingencyisremovedfromdurationsofindividualactivities.(8/07)
CRITICAL ELEMENT A cost element or a profit element which, due to its potential variability, can change the
bottomline,eitherfavorablyorunfavorably,byanamountequaltoorgreaterthanitscriticalvariance.Seealso:
CRITICALVARIANCE.(12/11)
CRITICAL PATH The longest continuous chain of activities (may be more than one path) which establishes the
minimumoverallprojectduration.Aslippageordelayincompletionofanyactivitybyonetimeperiodwillextend
finalcompletioncorrespondingly.Thecriticalpathbydefinitionhasnofloat.Seealso:LONGESTPATH.(6/07)
CRITICALPATHANALYSISProcedureforcalculatingthecriticalpathandfloatsinanetwork.(6/07)
CRITICALPATHMETHOD(CPM)
(1) Technique used to predict project duration by analyzing which sequence of activities has least amount of
schedulingflexibility.Earlydatesarefiguredbyaforwardpassusingaspecificstartdateandlatedatesarefigured
byusingabackwardpassstartingfromacompletiondate.
(2)Networkschedulingusingactivitydurationsandlogictiesbetweenactivitiestomodeltheplantoexecutethe
work. CPM scheduling is the method of choice for managing projects of long duration, complex technical
integration,ortheneedtocoordinatefastorearlycompletionofthework.(6/07)
CRITICAL RELATIONSHIP A driving relationship between two critical activities, thus defining which activity
influencesthefinalcompletionoftheproject.(6/07)
CRITICAL SEQUENCE Sequence of activities having zero float after resource limits are taken into account in
calculatingfloat.(6/07)
CRITICALSEQUENCEANALYSISAprocessofcalculatingacriticalsequenceofactivitieswhiletakingintoaccount
resourcelimitsthatreflectsanactivity'sflexibility.(6/07)
CRITICALTASKAtaskthatmustfinishontimefortheentireprojecttofinishontime.Ifacriticaltaskisdelayed,
theprojectcompletiondateisalsodelayed.Acriticaltaskhaszeroslacktime.Aseriesofcriticaltasksmakeupthe
projectscriticalpath.(6/07)
CRITICAL VARIANCE A percentage of the bottomline used to identify critical elements. The percentage is a
functionoftheclassofestimate(Class1or2vs.Class3,4,or5)andthetypeofbottomline(costorprofit).If
necessary,thepercentagecanbeincreasedtoamaximumoftwiceitsbasevalueinordertoreducethenumberof
qualifyingelementstoanacceptablenumber(typically20orso)inordertoavoidintroducingiatrogenicrisk.See
also:BOTTOMLINE;CRITICALELEMENT.(12/11)
CRITICALITY A measure of the significance or impact of failure of a product, process, or service to meet
establishedrequirements.(11/90)
CRITICALITY INDEX Describes how often a particular task was on the critical path during the quantitative risk
analysis(e.g.,MonteCarlocomputersimulation).Expressedasafactorbetween0and1orasapercentage.Tasks
with a high criticality index appear more frequently on the critical path. When combined with the duration
sensitivity,itdeterminesthecrucialityindex.(12/11)
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CRUCIALITYThedegreethatachangeinariskmodelelementproducesachangeintheoveralloutcome(i.e.,
strongriskdrivershavehighcruciality).Inschedulerisk,crucialityofanactivityincreaseswithitscriticality(i.e.,
sometimesreferredtoastheproductofsensitivityandcriticality).Seealso:RISKDRIVER;CRITICALITY.(12/11)
CRUDEMATERIALSIncludesproductsenteringthemarketforthefirsttimewhichhavenotbeenfabricatedor
manufacturedbutwillbeprocessedbeforebecomingfinishedgoods(e.g.,steelscrap,wheat,rawcotton).Syn.:
RAWMATERIALS.(11/90)
CURRENT COST ACCOUNTING (CCA) a methodology prescribed by the Financial Accounting Board to compute
andreportfinancialactivitiesinconstantdollars.(11/90)
CURRENT DATE LINE A vertical line in a Gantt chart, resource graph, or other charts with dates on one axis,
indicatingthecurrentdate.(6/07)
CURRENTDOLLARSDollarsofpurchasingpowerinwhichactualpricesarestated,includinginflationordeflation.
Intheabsenceofinflationordeflation,currentdollarsequalconstantdollars.[1](11/90)
CURRENTFINISHDATEThecurrentestimateofthecalendardatewhenanactivitywillbecompleted.(6/07)
CURRENT PERIOD (OF A GIVEN PRICE INDEX) Period for which prices are compared to the base period prices.
(11/90)
CURRENT SCHEDULE Schedule update, which reflects actual progress to date, plus forecast progress going
forwardandisaccepted/usedformonitoringandcontrollingthework.(6/07)
CURRENTSTARTDATEThecurrentestimateofthecalendardatewhenanactivitywillbegin.(6/07)
CURRENTSTATUSInprojectcontrol,areportthatcomparesactualprogresswithplannedprogressasofthelast
reportingdate.(6/07)
CUSTOMINTHEINDUSTRYAnestablishedpracticeinaparticularindustryinthegeneralarea.Itmaybeusedto
showthepracticetobefollowedinaparticularcircumstance.(11/90)
CUSTOMER The ultimate consumer, user, client, beneficiary or second party who will be responsible for
acceptanceoftheproject'sdeliverables.(6/07)
CUSTOMER FURNISHED EQUIPMENT (CFE) Equipment provided to the contractor doing the project by the
customer for the project and typically specified in the contract. Also referred to as owner furnished
material/equipment(OFM/OFE).(6/07)
CUTOFFDATETheendingdateinareportingperiod.(6/07)
CYCLETIMEThetimedurationthatittakestocreateadeliverable.Includestimeforbothdirecteffortonthe
deliverableandtimespentonotheractivities,projectsorprocessesthatintentionallyorunintentionallyaddtothe
duration.(6/07)
DAILYCREWOUTPUTTheamountofworkaccomplishedbyacrewinoneday(typically8hours).Thisisaspecial
formofproductionrate.(1/14)
DAMAGES,ACTUALTheincreasedcosttoonepartyresultingfromanotherparty'sactsoromissionsaffectingthe
contractbutnotincorporatedintoacontractmodification.(11/90)
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DAMAGES, LIQUIDATED An amount of money stated in the contract as being the liability of a contractor for
failure to complete the work by the designated time(s). Liquidated damages ordinarily stop at the point of
substantial completion of the project or beneficial occupancy by the owner. Also can apply to contract defined
outputperformance.(6/07)
DAMAGES,RIPPLESeealso:IMPACTCOST.(11/90)
DANGLEAnactivityinanetworkthathasneitherpredecessorsnorsuccessors.(6/07)
DATADATE
(1) The date on which the schedule has been updated to reflect actual progress (percent complete, remaining
durations,newactivitiesandchangedlogic,etc.inputintoschedule)andprojectsanewcompletiondate.
(2) The calendar date that separates actual (historical) data from scheduled data. Scheduling software uses the
datadatetobaseitsnetworkcalculations.
Seealso:STATUSDATE;TIMENOW;PROGRESSDATE(6/07)
DATECONSTRAINTAfixeddateimposedonanactivitytoforceittostartorfinishbyoronacertaindateina
schedule model. A date constraint overrides the logic of the schedule and can, if improperly used, cause
unintendedresults.(6/07)
DATEFORTHECOMMENCEMENTOFTHECONTRACTTIMEThedatewhenthecontracttimecommencestorun
and on which the contractor shall start to perform the contractor's obligations under the contract documents.
(11/90)
DATEOFACCEPTANCEDateonwhichtheclientagreestofinalacceptanceoftheproject.Commitmentsagainst
theauthorizedfundsusuallyceaseatthistime.Thisisanevent.Seealso:DELIVERY(6/07)
DAY WORK ACCOUNT A method of payment for work not included in the scope of the contract that the
constructioncontractorisobligedtoperformattherequestordirectionoftheowneroritsagent.Generally,such
dayworkaccountispaidforonunitpriceorcostplusterms.(6/07)
DESCOPEForearnedvalue,projectscoperemovedwithaseparatecontractualaction.Itisscopewithschedule
andbudgetthatisreturnedtotheownerforotheruses.Thenetresultisthetotalprojectbudgetisreduced,and
theoveralldurationoftheprojectmayalsobereduced.Alternately,theamountofprojectscoperemovedmaybe
keptinUndistributedBudget/ScheduleMarginuntilreturnedtotheowner.Seealso:PROJECTSCOPE.(10/13)
DECELERATIONTheoppositeofacceleration.Adirection,eitherexpressedorimplied,toslowdownjobprogress.
(11/90)
DECISION ANALYSIS (DA) A systematic and typically quantitative process for selecting the optimum of two or
morealternativesinordertoaddressaproblemoropportunity.(12/11)
DECISIONBASISReferstothedefinitionofthecomponentsorcriteriaonwhichadecisionisbased.Generally
includesdefinedalternatives,information,andpreferences.Seealso:DECISIONPOLICY.(12/11)
DECISIONDRIVERVariablesinadecisionmodelthatinfluencedecisionoutcomes.(12/11)
DECISIONEVENTStateintheprogressofaprojectwhenadecisionisrequiredbeforethestartofanysucceeding
activity.Thedecisiondetermineswhichofanumberofalternativepathsistobefollowed.(6/07)
DECISION FRAMING Methods to identify, define, layout or frame the decision to be addressed during the
structuringstepofdecisionanalysis.Seealso:DECISIONANALYSIS.(12/11)
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DECISIONIMPLEMENTATIONIndecisionanalysis,thisreferstotheprocessstepforimplementingtheselected
alternativeandperformingcontinuousimprovement.(12/11)
DECISION MODEL A quantitative model that that provides a base methodology that supports objective,
consistentandappropriatedecisionmakingbyanorganizationconsideringallagreedmodelinputsandoutputs.
Seealso:DECISIONPOLICY.(6/07)
DECISION POLICY Definitive position of an organization on how investment or project decisions will be made.
Establishes the basis for decision models. Provides a basis for consistent and appropriate decision making and
definesauthorityandaccountabilitywithintheorganization.Seealso:POLICY.(6/07)
DECISIONQUALITYCHAINAgenerallyrecognizedqualitymanagementmodelfordecisionanalysis.Itincludesthe
followingelements:a.Appropriateframe,b.Creative,doablealternatives,c.Meaningful,reliableinformation,d.
Clear values and tradeoffs, e. Logically correct reasoning, and f. Commitment to action. See also: DECISION
ANALYSIS.(12/11)
DECISIONTREEAgraphicalrepresentationofthedecisionprocess.Sequentialdecisionsaredrawnintheformof
branchesofatree,stemmingfromaninitialdecisionpointandextendingallthewaytofinaloutcomes.Eachpath
throughbranchesofthetreerepresentsaseparateseriesofdecisionsandprobabilisticevents.(6/07)
DECISIONSUNDERCERTAINTYSimpledecisionsthatassumecompleteinformationandnouncertaintyconnected
withtheanalysisofthedecisions.(11/90)
DECISIONSUNDERRISKAdecisionprobleminwhichtheanalystelectstoconsiderseveralpossiblefutures,the
probabilitiesofwhichcanbeestimated.(11/90)
DECISIONSUNDERUNCERTAINTYANDRISKAdecisionforwhichtheanalystelectstoconsiderseveralpossible
futures,theprobabilitiesofwhichcannotbeestimated.(12/11)
DECLINING BALANCE DEPRECIATION Method of computing depreciation in which the annual charge is a fixed
percentage of the depreciated book value at the beginning of the year to which the depreciation applies. Syn.:
PERCENTONDIMINISHINGVALUE.(11/90)
DECOMPOSITIONSeparationofthescopeofworkandrequirementsintosmaller,componentpackages,sothat
workeffortcanbemoreeffectivelymonitoredandcontrolled.(8/07)
DEESCALATEAmethodtoconvertpresentdaycostsorcostsofanypointintimetocostsatsomepreviousdate
viaapplicableindexes.(11/90)
DEFECTAdeviationofaseveritysufficienttorequirecorrectiveaction.(11/90)
DEFECTIVEAnadjectivewhich,whenmodifyingthework,referstoworkthatisunsatisfactory,faultyordeficient,
ordoesnotconformtothecontractdocuments,ordoesnotmeettherequirementsofanyinspection,reference
standard, test or approval referred to in the contract documents, or has been damaged prior to the engineer's
recommendationoffinalpayment(unlessresponsibilityfortheprotectionthereofhasbeenassumedbytheowner
atsubstantialcompletioninaccordancewiththecontractdocuments).(11/90)
DEFECTIVE SPECIFICATIONS Specifications and/or drawings which contain errors, omissions, and/or conflicts,
whichaffectorpreventthecontractor'sperformanceofthework.(11/90)
DEFECT,LATENTAdefectintheworkwhichcannotbeobservedbyreasonableinspection.(11/90)
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DEFECT,PATENTAdefectintheworkwhichcanbeobservedbyreasonableinspection.(11/90)
DEFINITION (PROJECT) Process of quantifying performance and interface requirements during system
decompositionandelaborationphaseofaproject.Seealso:LIFECYCLEPROJECTLIFECYCLE.(6/07)
DEFINITIONPHASEAnearlyphaseintheprojectlifecyclewhenthescopeisdefined.Syn.:PLANNINGPHASE;
DEVELOPMENTPHASE;FRONTEND(6/07)
DEFINITIVE ESTIMATE An estimate generally involving a high degree of deterministic estimating methods. It is
generally prepared in great detail. See also: COST ESTIMATE CLASSIFICATION, CLASS 2 ESTIMATE and CLASS 1
ESTIMATE.(5/12)
DEFLATION A persistent decrease in the level of consumer prices, or a persistent increase in the purchasing
powerofmoneycausedbyadecreaseinavailablecurrencyandcreditrelativetotheproportionofavailablegoods
andservices(i.e.,negativeinflation).Seealso:INFLATION.(12/11)
DELAYTocausetheworkorsomeportionoftheworktostartorbecompletedlaterthanplannedorlaterthan
scheduled.(4/04)
DELAY,COMPENSABLE
(1) Delays that are caused by the owner's actions or inactions. Contractor is entitled to a time extension and
damagecompensationforextracostsassociatedwiththedelay.
(2)Ifthedelayisdeemedcompensablethepartywillbeentitledtoadditionalcompensationforthecostsofdelay,
aswellasadditionaltimeforcontractperformance.However,itispossibleforadelaytobecompensablewithout
extendingthecontractperformancetime.Generallyspeaking,adelaythatcouldhavebeenavoidedbyduecareof
onepartyiscompensabletotheinnocentpartysufferinginjuryordamageasaresultofthedelaysimpact.[10]
(3) A contractor is entitled to recover for delay costs and a time extension provided that three conditions are
satisfied:1)Thedelayiscausedbytheowneroriswithintheownerscontrol;2)Thedelayresultsinadditional
costs to the contractor; and 3) The contractor has not assumed the risk of delay. Because this entitlement is
impliedineverycontract,itdoesnotneedtobeexpresslystatedinthecontract.[11](6/07)
DELAY,CONCURRENTTwoormoredelaysinthesametimeframeorwhichhaveanindependenteffectonthe
enddate.Theowner/engineerandthecontractormayeachberesponsiblefordelayincompletingthework.This
maybareitherpartyfromassessingdamageagainsttheother.Thismayalsorefertotwoormoredelaysbythe
samepartyduringasingletimeperiod.(11/90)
DELAY,EXCUSABLEAnydelaybeyondthecontrolandwithoutthefaultornegligenceofthecontractororthe
owner,causedbyeventsorcircumstancessuchas,butnotlimitedto,actsofGodorofthepublicenemy,actsof
interveners, acts of government other than the owner, fires, floods, epidemics, quarantine restrictions, freight
embargoes,hurricanes,tornadoes,labordisputes,etc.Generally,adelaycausedbyanexcusabledelaytoanother
contractoriscompensablewhenthecontractdocumentsspecificallyvoidrecoveryofdelaycosts.(11/90)
DELAY,INEXCUSABLEAnydelaycausedbyeventsorcircumstanceswithinthecontrolofthecontractor,suchas
inadequate crewing, slow submittals, etc, which might have been avoided by the exercise of care, prudence,
foresight,ordiligenceonthepartofthecontractor.(11/90)
DELAY,NONPREJUDICIALAnydelayimpactingaportionoftheworkwithintheavailabletotalfloatorslacktime,
andnotnecessarilypreventingcompletionoftheworkwithinthecontracttime.(11/90)
DELAY,PACING
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(1)Decelerationoftheprojectwork,byoneofthepartiestothecontract,duetoadelaytotheenddateofthe
projectcausedbytheotherparty,soastomaintainsteadyprogresswiththerevisedoverallprojectschedule.
(2) A delay resulting from a conscious and contemporaneous decision to pace progress of an activity against
anotheractivityexperiencingdelayduetoanindependentcause.
(3)Theconsumptionoffloatcreatedbyanotherdelay,inperformingworkonanactivitynotdirectlydependenton
theprogressoftheworkexperiencingtheotherdelay.(6/07)
DELAY,PARENTTheallegedownercauseddelaythatcreatedorincreasedtherelativetotalfloatconsumedby
thepacingdelay.Theparentdelaymuststartorexistpriortothepacingdelay.Alsotheparentdelaymustbeon
thecriticalpathorhavealowerfloatvaluethanthepacedactivitypriortopacing.(6/07)
DELAY, PREJUDICIAL Any excusable or compensable delay impacting the work and exceeding the total float
available in the progress schedule, thus preventing completion of the work within the contract time unless the
workisaccelerated.(11/90)
DELAYINGRESOURCEInresourceplanningandscheduling,inadequateavailabilityofoneormoreresourcesmay
requirethatcompletionofanactivitybedelayedbeyondthedateonwhichitcouldotherwisebecompleted.The
delayingresourceisthefirstresourceonanactivitythatcausestheactivitytobedelayed.(6/07)
DELIVERABLE
(1)Areportorproductofoneormoretasksthatsatisfyoneormoreobjectivesandmustbedeliveredtosatisfy
contractualrequirements.
(2) Another name for products, services, processes, or plans created as a result of doing a project. A project
typicallyhasinterimaswellasfinaldeliverables(6/07)
DELIVERYTransferorhandoverofaproductfromonepartytoanother.Syn.:TURNOVER.(6/07)
DELPHI TECHNIQUE A forecasting technique that seeks expert consensus by sharing their opinions with each
otheranonymouslyaftereachroundofforecasts.Basedonthearrayofanonymousexpertopinionsthenshared,
panel participants rethink and reforecast for the next round. When forecasts are congruent or nearly so, the
forecastingprocessiscomplete.(8/07)
DEMANDFACTOR
(1)Theratioofthemaximuminstantaneousproductionratetotheproductionrateforwhichtheequipmentwas
designed.
(2)Theratiobetweenthemaximumpowerdemandandthetotalconnectedloadofthesystem.(11/90)
DEMINGCYCLESyn.:PLANDOCHECKACT(PDCA)CYCLE.(6/07)
DEMURRAGE A charge made on cars, vehicles, or vessels held by or for consignor or consignee for loading or
unloading,forforwardingdirectionsorforanyotherpurpose.(11/90)
DEPENDENCIESRelationshipsbetweenproductsortasks.Forexample,oneproductmaybemadeupofseveral
other'dependent'productsorataskmaynotbeginuntila'dependent'taskiscomplete.Seealso:RELATIONSHIP.
(6/07)
DEPENDENCYArelationbetweenactivities,suchthatonerequiresinputfromtheother.(6/07)
DEPENDENT VARIABLE An event or condition whose impact or probability of occurrence depends on another
variable.Seealso:INDEPENDENTVARIABLE.(12/11)
DEPLETION
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(1)Aformofcapitalrecoveryapplicabletoextractiveproperty(e.g.,mines).Depletioncanbeonaunitofoutput
basisrelatedtooriginalorcurrentappraisalofextentandvalueofthedeposit.(Knownaspercentagedepletion.)
(2) Lessening of the value of an asset due to a decrease in the quantity available. Depletion is similar to
depreciationexceptthatitreferstosuchnaturalresourcesascoal,oil,andtimberinforests.(11/90)
DEPRECIATEDBOOKVALUEThefirstcostofthecapitalizedassetminustheaccumulationofannualdepreciation
costcharges.(11/90)
DEPRECIATION
(1)Declineinvalueofacapitalizedasset.
(2) A form of capital recovery applicable to a property with a life span of more than one year, in which an
appropriateportionoftheasset'svalueisperiodicallychargedtocurrentoperations.(11/90)
DESCRIPTIVE Portrayal of content in words, either orally or written. When applied to instructions, implies
informationconcerninghowsomethingistobedone,ratherthanstepbystepdetailsofwhatistobedone,i.e.
prescriptive.(6/07)
DESIGN & DEVELOPMENT PHASE Definition phase in a generic project life cycle that encompasses detailed
technical, commercial and organizational decisions. There is often substantial opportunity to optimize these
decisions without expenditure of significant resources by modeling, prototyping and testing. Management
approvalgatesarenecessarywheremajordecisionswillbemade.Insomeindustries,thisphaseisdealtwithas
twoseparatephaseswithamanagementgatebetweenthetwo.Thisallowsdesigntobematuredbeforeapproval
isgivenforsignificantresourceexpenditureonfulldesign/development.Equally,thegatemayberequiredbefore
majorprocurementdecisionsandcommitmentsaremadeafterinitialdesignbutpriortofulldesign/development.
Seealso:DEFINITIONPHASE.(6/07)
DESIGN DEVELOPMENT Process of identifying and verifying technical solutions to meet requirements of
conceptualdesign.Takesconceptualdesigntonextlevelofdetail,butnotasdetailedasthedetaileddesignstage.
Dependingonsizeandnatureofproject,itmaybeaseparatestageintheprojectlifecycle.(6/07)
DESIGN REVIEW A formal, documented, comprehensive and systematic examination of a design to evaluate
design requirements and capability of the design to meet these requirements and to identify problems and
proposesolutions.(6/07)
DESIRABLELOGICNetworklogicthatisdesirableforthecontractor(butnotnecessarilyfortheclient),basedon
some preference or advantage. Desirable logic may impose unnecessary conditions that preclude an optimum
solution.Seealso:IRREFUTABLELOGIC;PREFERENTIALLOGIC.(6/07)
DETAILED ENGINEERING The detailed design, drafting, engineering, and other related services necessary to
purchaseequipmentandmaterialsandconstructafacility.(11/90)
DETAILEDREQUIREMENTArequirementthatdescribesthespecificfunctionthataparticularproductprovidesat
alevelofdetailsufficienttosupportexecutionofthework.[8](6/07)
DETAIL(ED)SCHEDULE
(1) A schedule used to communicate the daytoday activities to working levels on the project. The detailed
schedulewouldtypicallycoveractivitiesuptoatleastthenextmajormilestone.Thedetailedschedulesupports
andisconsistentwiththemasterschedule.
(2)Aschedule,whichdisplaysthelowestlevelofdetailnecessarytocontroltheprojectthroughjobcompletion.
Theintentofthisscheduleistofinalizeremainingrequirementsforthetotalproject.(6/07)
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DETERMINISTICESTIMATEAnestimatewherenoneofthevariablesareprobabilisticandthatisdevelopedusing
deterministic methods (i.e., not subject to significant conjecture). In some usage, this term is synonymous with
BASEESTIMATE(evenifthebaseestimateisdevelopedusingstochasticmethods).(12/11)
DETERMINISTICNETWORK/MODEL
(1)Anetworkwithnofacilitiestoaccommodateprobabilisticdependencies.Precedencenetworksaresaidtobe
deterministic.
(2) A deterministic model, as opposed to a stochastic model, contains no random elements and for which,
therefore,thefuturecourseofthesystemisdeterminedbyitsstateatpresent(and/orinthepast).(6/07)
DEVELOPMENTProcessofworkingoutandextendingtheoretical,practical,and/orusefulapplicationofanidea,
concept,orpreliminarydesign.(6/07)
DEVELOPMENT COSTS Those costs specific to a project, either capital or expense items, which occur prior to
commercial sales and which are necessary in determining the potential of that project for consideration and
eventualpromotion.Majorcostareasincludeprocess,product,andmarketresearchanddevelopment.(11/90)
DEVELOPMENTPHASESyn.:DEFINITIONPHASE.(6/07)
DEVIATION
(1)A departure from established requirements. Deviations occur when the work product either fails to meet or
unnecessarilyexceedstherequirements.Thechange(positiveornegative)maybeconsideredpotentialoritmay
alreadybeintheprocessofactuallyoccurring.Thedeviationisusedtoprovideadetaileddescriptionanddetailed
estimate(orROMestimate)ofchangeimpactsthataretheresultofdesigndevelopments,productivity,omissions,
errors, price fluctuation, supplier changes, etc., or anything else that changes the forecast cost and schedules.
Deviationsaredocumentedbyprojectcontrolsandcommunicatedtotheprojectmanager.Adeviationprovides
the project team with an opportunity to mitigate an adverse impact or to optimize the outcome and is used
primarilyasacommunicationtool.Note:Deviationasusedhereinreferstoasinglepointvariance.Trendrefersto
apatternofadatagroup.
(2)Insystemsengineering,adeviationintheworkproductmaybeclassifiedasanimperfection,nonconformance,
ordefect.(6/07)
DEVIATION COSTS The sum of those costs, including consequential costs such as schedule impact, associated
withtherejectionorreworkofaproduct,process,orserviceduetoadeparturefromestablishedrequirements.
Alsomayincludethecostassociatedwiththeprovisionofdeliverablesthataremorethanrequired.(11/90)
DIAGRAMMING(SCHEDULE)Seealso:SCHEDULING.(6/07)
DIFFERINGSITECONDITIONSSubsurfaceorlatentphysicalconditionsatthesitedifferingmateriallyfromthose
conditionsindicatedinthecontractdocumentsorunknownphysicalconditionsatthesite,ofanunusualnature,
differing materially from conditions normally encountered and generally recognized as inherent in work of the
natureprovidedforinthecontract.(11/90)
DIRECTCOSTSCostsofcompletingworkthataredirectlyattributabletoitsperformanceandarenecessaryforits
completion. 1) In construction, the cost of installed equipment, material, labor and supervision directly or
immediatelyinvolvedinthephysicalconstructionofthepermanentfacility.2)Inmanufacturing,service,andother
nonconstruction industries: the portion of operating costs that is readily assignable to a specific product or
processarea.(6/07)
DIRECTPACINGWhenthepacedeventhasalogicalrelationshiptotheparentdelay.(6/07)
DISCIPLINE
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(1)Areaoftechnicalexpertiseorspecialty.[8]
(2) A discrete area of study and endeavor where only specialized education and experience enable the full
comprehensionofthecontentofthesubjectmatteranditsappropriateapplication.(8/07)
DISCONTINUOUSACTIVITYAnactivityinwhichtheintervalbetweenstartandfinishdatesisallowedtoexceedits
durationinordertosatisfystarttostartandfinishtofinishrelationshipswithotheractivities.(6/07)
DISCOUNTEDCASHFLOW
(1)Thepresentworthofasequenceintimeofsumsofmoneywhenthesequenceisconsideredasaflowofcash
intoand/oroutofaneconomicunit.
(2)Aninvestmentanalysiswhichcomparesthepresentworthofprojectedreceiptsanddisbursementsoccurring
at designated future times in order to estimate the rate of return from the investment or project. Also called
discounted cash flow rate of return, interest rate of return, internal rate of return, investor's method or
profitabilityindex.(11/90)
DISCOUNTEDPAYBACKPERIOD(DPB)Thetimerequiredforthecumulativebenefitsfromaninvestmenttopay
backtheinvestmentcostandotheraccruedcostsconsideringthetimevalueofmoney.[1](11/90)
DISCOUNT FACTOR A multiplicative number (calculated from a discount formula for a given discount rate and
interestperiod)thatisusedtoconvertcostsandbenefitsoccurringatdifferenttimestoacommontime.[1](11/90)
DISCOUNTINGAtechniqueforconvertingcashflowsthatoccurovertimetoequivalentamountsatacommon
time.[1](11/90)
DISCOUNTRATETherateofinterestreflectingtheinvestor'stimevalueofmoney,usedtodeterminediscount
factors for converting benefits and costs occurring at different times to a base time. The discount rate may be
expressedasnominalorreal.[1](11/90)
DISCRETEEFFORTTasksthathaveaspecificmeasurableendproductorendresult.Discretetasksareidealfor
earnedvaluemeasurement.Seealso:WORKPACKAGE.(6/07)
DISCRETEMILESTONEAmilestonethathasadefinitescheduledoccurrence.(6/07)
DISCRETETASKAmeasurableactivitywithanoutput.(6/07)
DISCRETIONARY DEPENDENCY Dependency defined by preference, rather than necessity. These are typically
employedinpreferentialorsoftlogic.(6/07)
DISINFLATIONAdecreaseintherateofinflation(forexample,achangeintherateofinflationfrom4%to2%).
Differsfrom,butmayportenddeflation.(12/11)
DISPATCHING The selecting and sequence of jobs to be run at individual work stations and the assignment of
thesejobstoworkers.Inmanycompanies,dispatchingisdonebytheactualshoplinesupervisor,setupworkeror
leadworker.Adispatcherisusuallyarepresentativeoftheproductioncontroldepartmentwhichhandlesthisjob
assignmenttask.(11/90)
DISPUTE A disagreement between the owner and the contractor as to a question of fact or contract
interpretationwhichcannotberesolvedtothemutualsatisfactionoftheparties.(11/90)
DISRUPTIONAninterference(actionorevent)withtheorderlyprogressofaprojectoractivity(ies).Disruption
has been described as the effect of change on unchanged work and manifests itself primarily as adverse labor
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productivityimpacts.Ifsuchdisruptioniscausedbyownerorengineeraction(orfailuretoact),thecontractormay
beentitledtorecoveranyresultingcosts.Seealso:RIPPLEEFFECT.(6/07)
DISTRIBUTABLESTheportionofaprojectscostthatcannotbeassociatedwithanyspecificdirectaccount.In
construction,thisincludesthefieldnonmanualstaff,fieldoffice,officesupplies,temporaryconstruction,utilities,
small tools, construction equipment, weather protection, snow removal, lost time, labor burden, etc. When
completion cost reports are prepared, the distributable costs may be distributed across the direct accounts for
fixedassetaccounting.Seealso:INDIRECTCOSTS.(6/07)
DOCUMENT
(1)(noun)Wordsorimagesassembledforacommunicativepurposewithinaboundedphysicalmediumtypically
onsheetsofpaperorindigitalmemoryfiles.
(2)(verb)Torecordcommunications,events,actions,orcircumstanceswithinaboundedphysicalmedium.(8/07)
DRAWINGS,PLANSThedrawings,plansorreproductionsthereof,whichshowlocation,character,dimensions,
anddetailsoftheworktobeperformedandwhicharereferredtointhecontractdocuments.(11/90)
DRIVING RELATIONSHIP A relationship between two activities in which the start or completion of the
predecessor activity determines the early dates for the successor activity with multiple predecessors. See also:
FREEFLOAT.(6/07)
DRIVINGACTIVITYThepredecessoractivity(ies)thatdeterminesanotheractivity'searlystart.(6/07)
DUMMYACTIVITYUsedonlyinactivityonarrow(AOA)networkstocreatelogicrelationshipsbetweenactivities
denotingadependency,butnotanaction.Dummiesareactivitieswithzeroduration,butarenotmilestones.
Dummyactivitiesaretypicallydrawnasdottedlines.(6/07)
DUMMYSTARTACTIVITYAnactivityenteredintothenetworkforthesolepurposeofcreatingasinglestartfor
thenetwork.(11/90)
DURABLEGOODSGenerally,anyproducerorconsumergoodswhosecontinuousserviceabilityislikelytoexceed
threeyears(e.g.,trucks,furniture).(11/90)
DURATIONTheamountoftimeestimatedtocompleteanactivityinthetimescaleusedintheschedule(hours,
days, weeks, etc.). Planned production rates and available resources will define the duration used in a given
schedule. The following four types of duration are used: 1) Original duration: Duration input by the planner; 2)
Current duration: Duration based on latest progress date for inprogress activities. Calculated rate of progress
providesanewcompletionestimate;3)Actualduration:Durationbasedonactivity'sactualstartandactualfinish.
Applies only to completed activities; and 4) Remaining duration: The expected time required to complete an
activity. It is calculated as the difference between the data date and the expected finish date for inprogress
activities.(Equaltotheoriginaldurationfornonprogressedactivities.Equaltozeroforcompletedactivities.)See
also:ACTIVITYDURATION;CYCLETIME.(6/07)
DURATIONCOMPRESSIONShorteningprojectschedulewithoutreducingprojectscope.Durationcompressionis
notalwayspossibleandoftenrequiresanincreaseinprojectcost.Seealso:CRASHING;FASTTRACK(ING).(8/07)
DURATION SENSITIVITY the measure of the correlation between the duration of a task and the duration of a
project.Whencombinedwiththecriticalityindex,itdeterminesthecrucialityindex.(12/11)
DYNAMIC RISK Risk for which the characteristics, probability and/or impact change over time or with the
occurrenceofprecedingevents.Seealso:STATICRISK.(12/11)
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DYNAMIC RISK ANALYSIS Risk analysis which addresses dynamic risks. May employ elements of systems
dynamics.Seealso:SYSTEMSDYNAMICS.(12/11)
EARLIESTEXPECTEDCOMPLETIONDATETheearliestcalendardateonwhichthecompletionofanactivitywork
packageorsummaryitemoccurs.[4](11/90)
EARLYBARAnactivitybarshownonthebarchartstartingattheearliestdateitspredecessorscompletionwill
allowittobegin.(6/07)
EARLY DATES Calculated in the forward pass of time analysis, early dates are the earliest dates on which an
activitycanstartandfinish.(6/07)
EARLYEVENTTIME(EV)Theearliesttimeatwhichaneventmayoccur.(11/90)
EARLY FINISH (EF) The earliest date or time an activity may finish as calculated by the schedule during the
forwardpass.Equaltotheearlystartoftheactivityplusitsremainingduration.(6/07)
EARLY START TIME (ES) the earliest time any activity may begin as logically constrained by the network for a
specificworkschedule.(11/90)
EARLYSTART(ES)Theearliestdateortimeanactivitymaystartascalculatedbythescheduleduringtheforward
pass.(6/07)
EARLYWORKSCHEDULEPredicatedontheparametersestablishedbytheproposalscheduleandanynegotiated
changes,theearlyworkscheduledefinesreportablepiecesofworkwithinmajorareas.Theformatisdeveloped
intoalogicnetworkincludingengineeringdrawings,bidinquiries,purchaseorders,andequipmentdeliveries,and
can be displayed as a timephased network. The detail of this schedule concentrates on projected engineering
constructionissuedrawingsreleasedandequipmentdeliveries.Theactivitiesoftheearlypartofconstructionare
moredefinedthanintheproposalormilestoneschedule.(11/90)
EARNEDHOURS(EH)Thetimeinstandardhourscreditedasaresultofthecompletionofagiventaskoragroup
oftasks.(6/07)
EARNEDSCHEDULE(ES)Thenumberofwholepluspartialprojectplannedvalue(PV)timeincrementsthat
equatestotheearnedvalueaccrued.(11/14)
EARNED VALUE (EV) Measure of the value of work performed so far, also called the budgeted cost of work
performed(BCWP).Thevalueoftheworkearnedatthedateofanalysis(datadate).Thecostoftheworkthat
hasbeenaccomplishedintermsoftheBCWS.Representsthebudgetvalueofworkperformed,ratherthanthe
actual cost of the work performed. In comparison to planned value (PV), provides a measure of performance
takingintoaccountbothtimeandcostexpended.Syn.:BUDGETEDCOSTOFWORKPERFORMED(BCWP).Seealso:
PLANNEDVALUE(PV);ACTUALCOST(AC).(10/13)
EARNED VALUE CONCEPT In general (nonEVMS) terms, the objective measurement at any time of work
accomplished (performed) in terms of budgets planned for that work, and the use of these data to indicate
contractcostandscheduleperformance.(6/07)
EARNEDVALUEMANAGEMENT[SYSTEM](EVM[S])Aprojectprogresscontrolsystemthatintegratesworkscope,
schedule,andresourcestoenableobjectivecomparisonoftheearnedvaluetotheactualcostandtheplanned
scheduleoftheproject.(10/13)
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EARNEDVALUEREPORTSCostandscheduleperformancereportsthatarepartoftheperformancemeasurement
system.Thesereportsmakeuseoftheearnedvalueconceptofmeasuringworkaccomplishment.(11/90)
EARNINGSVALUEThepresentworthofanincomeproducer'sprobablefuturenetearnings,asprognosticatedon
thebasisofrecentandpresentexpenseandearningsandthebusinessoutlook.(11/90)
ECONOMICS COSTS A valuation measure used in decision making that combines accounting costs and
opportunitycosts.Seealso:OPPORTUNITYCOSTS.(12/11)
ECONOMIC EVALUATION METHODS A set of economic analysis techniques that considers all relevant costs
associatedwithaprojectinvestmentduringitsstudyperiod,comprisingsuchtechniquesaslifecyclecost,benefit
tocostratio,savingstoinvestmentratio,internalrateofreturn,andnetsavings.[1](11/90)
ECONOMIC LIFE (CYCLE) That period of time over which an investment is considered to be the leastcost
alternativeformeetingaparticularobjective.Syn.:ASSETLIFECYCLE.[1](11/90)
ECONOMICRETURNTheprofitderivedfromaprojectorbusinessenterprisewithoutconsiderationofobligations
tofinancialcontributorsandclaimsofothersbasedonprofit.(11/90)
ECONOMICVALUEThevalueofpropertyinviewofallitsexpectedeconomicuses,asdistinctfromitsvaluein
viewofanyparticularuse.Also,economicvaluereflectstheimportanceofapropertyasaneconomicmeanstoan
end,ratherthanasanendinitself.(11/90)
ECONOMY The cost or profit situation regarding a practical enterprise or project as in economy study,
engineeringeconomy,andprojecteconomy.(11/90)
EFFECT In the context of TCM risk management, this refers to the impact of a risk event or condition. Syn.:
IMPACT;CONSEQUENCE.Seealso:EVENT;CONDITION.(12/11)
EFFECTIVEDATEOFTHEAGREEMENTThedateindicatedintheagreementonwhichitbecomeseffective,butif
nosuchdateisindicated,thedateonwhichtheagreementissignedanddeliveredbythelastofthetwopartiesto
signanddeliver.(11/90)
EFFECTIVEINTERESTThetruevalueofinterestratecomputedbyequationsforcompoundinterestratefora1
yearperiod.(11/90)
EFFICIENCYSyn.:PRODUCTIVITY.(6/07)
EFFICIENCYFACTORAmeasureofoverallperformanceusedinaworkmeasurementsystem.Itiscalculatedby
dividingthestandardtimetoperformtheworkbytheactualtime.(6/07)
EFFORTThenumberoflaborunitsnecessarytocompletework.Effortisusuallyexpressedinstaffhours,staff
daysorstaffweeksandshouldnotbeconfusedwithduration.(6/07)
EFFORTREMAININGEstimateofeffortremainingtocompleteanactivity.Afarmoreusefulmeasureofprogress
thanpercentagecomplete.(6/07)
EFFORTDRIVEN ACTIVITY An effortdrive activity provides the option to determine activity duration through
resourceusage.Theresourcerequiringthegreatesttimetocompletethespecifiedamountofworkontheactivity
willdetermineitsduration.(6/07)
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EIGHTYHOURRULEMethodofbreakingdowneachprojectactivityortaskintoworkpackagesthatrequireno
morethan80hoursofefforttocomplete.[8](6/07)
EIGHTYTWENTYRULEAstatisticalprinciplenamedafterItalianeconomistVilfredoPareto,whoobservedthat
80%ofthewealthinItalywascontrolledby20%ofthepopulation.Incostmanagement,itiscommonlyusedto
describethesituationwhereasmallsubsetofcostitems,activities,andsoon,arethesourceofmostofthetotal
cost,duration,etc.Syn.:PARETOSLAW.(12/11)
ELEMENTARYCOMMODITYGROUPS(ELEMENTARYGROUPS)Thelowestlevelofgoodsandservicesforwhicha
consistentsetofvalueweightsisavailable.(11/90)
EMERGENTRISKOccurredriskwhoseoccurrencewasnotproactivelyanticipated.(12/11)
ENDACTIVITYAnactivitywithnologicalsuccessors.(6/07)
ENDEVENT(OFAPROJECT)Eventwithpreceding,butnosucceedingactivities.Theremaybemorethanoneend
event.(6/07)
ENDITEMAfinalcombinationofendproductscomponents,partsormaterialsthatisreadyforitsintendeduse.
Seealso:DELIVERABLE;PRODUCT.[7](6/07)
ENDINGNODEOFNETWORK(ADM)Anodewherenoactivitiesbegin,butoneormoreactivitiesend.(11/90)
ENDNETWORKEVENTTheeventthatsignifiestheendofanetwork.(11/90)
ENDOWMENT A fund established for the support of some project or succession of donations or financial
obligations.(11/90)
ENGINEER(INCONTRACTS)Theindividual,partnership,corporation,jointventure,oranycombinationthereof,
namedastheengineerintheagreementwhowillhavetherightsandauthorityassignedtotheengineerinthe
contract documents. The term "the engineer" means the engineer or the engineer's authorized representative.
(11/90)
ENGINEERINGCHANGENOTICE(ECN)Theformalreleaseofanengineeringchange.(6/07)
ENGINEERINGCHANGEPROPOSAL(ECP)Aproposalsubmittedbythesellerinresponsetoabuyerrequestforan
ECP to change the existing contract effort. Only the buyer can initiate the request for an engineering change
proposal. This activity is usually preceded by a request for change. The user, buyer, or the seller can initiate a
requestforchangetothecontract.Itisanexploratoryactivity.(6/07)
ENGINEERING CHANGE REQUEST (ECR) Request to consider a technical change to the technical baseline
submittedtoclientoritsagent.(6/07)
ENGINEEREDITEMSItemsthatarepurchasedtobeusedforaparticularpurposeandareengineeredtounique
specifications,asopposedtocommoditymaterials.Thistypicallyincludestaggeditemsandmaterialsthatrequire
detailedengineeringdatasheets.(6/07)
ENHANCEInTCMriskmanagement,aresponsestrategyforopportunitiesthatinvolvesincreasingtheprobability
and/orimpactofrisk.(12/11)
ENTERPRISE
(1)Abusinessorganizationinvolvedineconomicactivityandtakingrisksforpurposesofprofit.
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(2) In total cost management, any endeavor, business, government, group, individual or other entity that owns,
controls,oroperatesstrategicassets.(6/07)
ENTERPRISEPROJECTMANAGEMENTApplicationofprojectmanagementdisciplinethroughoutanenterprise.A
concept based on principle that prosperity depends on adding value to business, and that value is added by
systematicallyimplementingnewprojects,i.e.projectsofalltypesacrosstheorganization.(6/07)
ENTERPRISE RESOURCE PLANNING (ERP) Program/project resource planning of activities, supported by multi
module application software and processes to help an enterprise manage key parts of its business which may
include product planning, maintaining inventories, supply chain processes, providing customer services, human
resourcesplanning,etc.Itmayincludeothersysteminvolvinganykindofresourceconsumptionthatcanbenefit
fromintegrationofinformationacrossmanyfunctionalareas.(6/07)
ENTERPRISERISKMANAGEMENTTheriskmanagementprocessappliedtotheoverallenterprise,portfolioand
programlevelobjectives,nottojustasinglebusinessunit,assetorproject.(4/13)
EQUITABLE ADJUSTMENT A contract adjustment in price or time under, certain contract clauses, or both, to
compensatethecontractorexpenseincurredduetoactionsoftheownerortocompensatetheownerforcontract
reductions. An equitable adjustment includes an allowance for profit. Certain contract clauses provided for
adjustments,excludingprofit,andarenotconsideredequitableadjustments.(6/07)
EQUIVALENTSETSOFCOMMODITIESSetsofcommoditieswhichprovidethesametotalsatisfactiontoagiven
groupofconsumers(withoutnecessarilybeingidentical).(11/90)
EQUIVALENTUNIFORMANNUALVALUESyn.:ANNUALVALUE.[1](11/90)
EQUIVALENTUNITSTECHNIQUEAnearnedvaluetechniquethatassignsapreassignedequalweighttoaunitof
completion(e.g.drawingscomplete).(10/13)
ERRORSANDOMISSIONSDeficiencies,usuallyindesignordrafting,intheplansandspecificationsthatmustbe
correctedinorderforthefacilitytooperateproperly.Errorsinplansandspecificationsarenormallyitemsthatare
shownincorrectly,whileomissionsarenormallyitemsthatarenotshownatall.(11/90)
ESCALATIONAprovisionincostsorpricesforuncertainchangesintechnical,economic,andmarketconditions
overtime.Inflation(ordeflation)isacomponentofescalation.(12/11)
ESCALATOR CLAUSE Clause contained incollective agreements or purchase orders,providing foran automatic
priceadjustmentbasedonchangesinspecifiedindices.(6/07)
ESTEEMVALUESeealso:FUNCTIONALWORTH.(11/90)
ESTIMATEApredictionorforecastoftheresources(i.e.,time,cost,materials,etc)requiredtoachieveorobtain
anagreeduponscope(i.e.,foraninvestment,activity,project,etc.).Seealso:FORECAST,COSTESTIMATE(5/12)
ESTIMATE BACKUP Basic data, project objectives, scope, drawings, quotes, estimating data, qualifications and
assumptionsusedinpreparingtheestimateandsupportingthebasis.(6/07)
ESTIMATEATCOMPLETION(EAC)Anestimateofthetotalcostanactivityorgroupofactivitieswillaccumulate
uponfinalcompletion.Seealso:ESTIMATEATCOMPLETION[EAC(t)].(6/07)
ESTIMATEATCOMPLETION[EAC(t)]Theestimatedprojectdurationintimeincrements.Seealso:ESTIMATEAT
COMPLETION(EAC).(11/14)
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ESTIMATETOCOMPLETE(ETC)
(1)Ingeneralterms,theestimatedresources(i.e.,workhours,costs,time,and/ormaterials)requiredtocomplete
ascopeofwork.
(2)Inearnedvaluemanagement,anestimateoftheremainingcostsrequiredtocompleteanactivityorgroupof
activities.ETC=estimateatcompletion(EAC)actualcost(AC),isoftenusedtocalculatetheestimatedcostto
completetheprojectorprogramunderdiscussion.(10/13)
ESTIMATEDACTUALCOSTSInearnedvaluemanagementaccordingtotheANSIEIA748standard,thesearecost
added to cost from the accounting system to create the appropriate actual cost of work performed (ACWP).
EstimatedactualsaresometimesnecessarytoensuretheANSIEIA748requirementthatbudgetedcostofwork
performed(BCWP)isonthesamebasisasthereportedACWP.Thebasisforestimatedactualsisdocumentedand
reversedwhichinthecostisaccruedintheaccountingbooksofrecord.Exampleofrecordsmayincludeinvoices
received,materialpurchaseorders,submittedjournalvouchers.(10/13)
ESTIMATED COMPLETION DATE The predicted date at which all requirements for a defined task will be
completed.(6/07)
EVENT
(1) A point in time when certain conditions have been fulfilled, such as the start or completion of one or more
activities. Graphically, it is represented by a node. An event occurs only when all work preceding it has been
completed.Ithaszeroduration.
(2) In risk management (i.e. risk event), an incident or occurrence whose nature or result could be a threat or
opportunitytotheoutcomeoftheproject.Seealso:MILESTONEEVENT;CONDITION(RISKCONDITION).(12/11)
EVENTNAMEAnalphanumericdescriptionofanevent.[4](11/90)
EVENTNUMBERAnumericaldescriptionofaneventforcomputationandidentification.(11/90)
EVENTORIENTEDPlanningapproachfocusingoneventsratherthanactivities.(6/07)
EVENTSLACKThedifferencebetweenthelatestallowabledateandtheearliestdateforanevent.(11/90)
EVENT TIMES Time information generated through the network analysis calculation, which identifies the start
andfinishtimesforeacheventinthenetwork.(11/90)
EXCEPTIONREPORTAreportthatlistsexceptionstotheexpectednormasprogressandforecastinformationis
comparedagainsttheplan.(6/07)
EXCEPTIONS Those occurrences that cause deviation from a plan, such as issues, change requests and risks.
Exceptions can also refer to items that the cost variance and schedule variance exceed predefined thresholds.
(6/07)
EXCHANGEVALUESeealso:FUNCTIONALWORTH.(11/90)
EXCLUSIVE OR RELATIONSHIP Logical relationship indicating that only one of the possible activities can be
undertaken.(6/07)
EXCUSABLE COMPENSABLE DELAYS Delays that are caused by the owner's actions or inactions. Contractor is
entitled to a time extension and damage compensation for extra costs associated with the delay. See also:
EXCUSABLE DELAYS; EXCUSABLE NONCOMPENSABLE DELAYS; NONEXCUSABLE DELAYS; CONCURRENT DELAYS.
(6/07)
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EXCUSABLEDELAYSDelaysnotattributabletocontractor'sactionorinactions.Excusabledelayswhenfounded,
entitle contractor to a time extension if the completion date is affected. See also: EXCUSABLE COMPENSABLE
DELAYS;EXCUSABLENONCOMPENSABLEDELAYS;NONEXCUSABLEDELAYS;CONCURRENTDELAYS.(6/07)
EXCUSABLENONCOMPENSABLEDELAYSDelaysthatareneithercontractor'snorowner'sfault.Thecontractoris
entitledtoatimeextensionbutnottodamagecompensation.Nonexcusabledelays,i.e.delaysthatarecausedby
thecontractor'soritssubcontractor'sactionsorinactions.Consequently,thecontractorisnotentitledtoatime
extensionordelaydamages.Ontheotherhand,ownermaybeentitledtoliquidatedorotherdamages.Seealso:
EXCUSABLEDELAYS;EXCUSABLECOMPENSABLEDELAYS;NONEXCUSABLEDELAYS;CONCURRENTDELAYS.(6/07)
EXECUTE/EXECUTINGAccomplishapreconceivedobjectivebydirectingandimplementingactivities.(8/07)
EXEMPT EMPLOYEES Employees exempt from overtime compensation by federal wage and hours guidelines.
(6/07)
EXITCRITERIAConditionsthatmustbesatisfiedbeforetheprocesselementisconsideredcomplete.[8](6/07)
EXPANSIONAnyincreaseinthecapacityofaplantfacilityorunit,usuallybyaddedinvestment.Thescopeofits
possible application extends from the elimination of problem areas to the complete replacement of an existing
facilitywithalargerone.(11/90)
EXPECTEDBEGINDATESyn.:TARGETSTARTDATE.(11/90)
EXPECTEDVALUEInriskanalysis,theproductofprobabilitytimesimpact;i.e.,ariskweightedmeasureofimpact.
Instatisticalusage,synonymouswiththemean.(12/11)
EXPECTEDVALUEMETHODInquantitativeriskanalysisandcontingencyestimating,amethodthatemploysthe
productofarisksprobabilitytimesitsimpactastheprimaryapproachtoquantifyingrisks.Seealso:EXPECTED
VALUE.(12/11)
EXPENSEExpendituresofshorttermvalue,includingdepreciation,asopposedtolandandotherfixed
capital.Seealso:PLANTOVERHEAD.(11/90)
EXPERTJUDGMENT
(1)Opinions,advice,recommendations,orcommentaryproffered,usuallyuponrequest,byapersonorpersons
recognized,eitherformallyorinformally,ashavingspecializedknowledgeortraininginaspecificarea.[8]
(2) Deliberate discernment of a situation or proposed course of action by those whose knowledge, skills, and
abilitiesaredevelopedfromspecializededucationandexperience,whichenablethemtobetterunderstandthe
situation or propose an optimal course of action than could those whose professional backgrounds are not so
specialized.(8/07)
EXTERNALCONSTRAINTAconstraintfromoutsidetheprojectnetwork.(6/07)
EXPECTEDDURATIONThelengthoftimeanticipatedforaparticularactivityinthePERTmethodorinarrowor
precedencediagrammingmethods(ADM,PDM).(11/90)
EXPLOITInTCMriskmanagement,aresponsestrategyforopportunitiesthatinvolvestakingstepsthatincrease
theprobabilitythattheopportunitywilloccur.(12/11)
EXPOSUREInriskmanagement,referstothepotentialoractualimpactofoneormoreriskeventsorconditions.
Seealso:EVENT(RISKEVENT);CONDITION(RISKCONDITION).(12/11)
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EXPOSUREWINDOWInriskmanagement,referstothetimeduringwhichthereisapotentialoractualimpactof
oneormoreriskeventsorconditions.Seealso:EVENT(RISKEVENT);CONDITION(RISKCONDITION).(12/11)
FACILITY In project work, this term usually refers to the constructed environment, e.g., buildings, structures,
infrastructure,plantandequipment.(6/07)
FACTORYEXPENSESyn.:PLANTOVERHEAD.(11/90)
FAIR VALUE That estimate of the value of a property that is reasonable and fair to all concerned, after every
properconsiderationhasbeengivendueweight.(11/90)
FALLBACKPLANSyn.:CONTINGENCYPLAN.Seealso:CONTINGENTRESPONSE.(12/11)
FASTTRACK(ING) Scheduling activities to run simultaneously instead of consecutively as much as possible, in

order to speed work completion. Fasttracked activities thus typically begin before the predecessor activity is
finished.Seealso:SCHEDULECOMPRESSION;CRASHING.(8/07)
FAULTTREEANALYSIS(FTA)Ariskanalysismethodusedtoevaluateriskthreatsemployingadeductivelogictree
linkingaparenteventtothecombinationsofsubeventsthatcouldcauseit.(12/11)
FEEThechargefortheuseofone'sservicestotheextentspecifiedinthecontract.(11/90)
FIELDCOSTEngineeringandconstructioncostsassociatedwiththeconstructionsiteratherthanwiththehome
office.(11/90)
FIELD INDIRECTS Refers to costs necessary to support the direct work. These generally include: 1) Temporary
constructionandconsumables;2)Fieldsupervisionandfieldofficecosts;and3)Constructionequipmentandtools.
(6/07)
FIELDLABOROVERHEADThesumofthecostofpayrollburden,temporaryconstructionfacilities,consumables,
fieldsupervision,andconstructiontoolsandequipment.Seealso:FIELDINDIRECTS.(11/90)
FIELDORDERAwrittenorderissuedbytheengineertothecontractorwhichordersminorchangesinthework
butwhichdoesnotinvolveanadjustmentinthecontractpriceorthecontracttime.(11/90)
FIELD SUPERVISION COSTS The cost of salaries and wages of all field supervision personnel (excluding general
foreman), plus associated payroll burdens, home office overhead, living and travel allowances, and field office
operatingcosts.(6/07)
FIELDSUPERVISIONProjectsitesupervisoryandsupportstaffpersonnel(excludinggeneralforeman).(6/07)
FIFO(FIRSTIN,FIRSTOUT)Amethodofdeterminingthecostofinventoryusedinaproduct.Inthismethod,the
costsofmaterialsaretransferredtotheproductinchronologicalorder.Alsousedtodescribethemovementof
materials.Seealso:LIFO(LASTIN,FIRSTOUT).(11/90)
FINANCIALLIFESeealso:VENTURELIFE.(11/90)
FINISHDATEActualorestimatedtimeassociatedwithanactivity'scompletion.(6/07)
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FINISHFLOATAmountofexcesstimeanactivityhasbetweenitsearlyfinishandlatefinishdates.Thismaybe
referredtoasslacktime.Allfloatsarecalculatedwhenaprojecthasitsschedulecomputed.Seealso:FREEFLOAT.
(6/07)
FINISHTOFINISHLAGTheminimumamountoftimethatmustpassbetweenthefinishofoneactivityandthe
finishofitssuccessor(s).Alllagsarecalculatedwhenaprojecthasitsschedulecomputed.Finishtofinishlagsare
oftenusedwithstarttostartlags.(6/07)
FINISHTOFINISH(FF)Arelationshipinwhichthesuccessoractivitydependsuponandcanfinishonlyafterthe
predecessoractivityfinishes.Thepredecessormustfinishfirstandthenthesuccessorcanfinish.(6/07)
FINISHTOSTARTLAGTheminimumamountoftimethatmustpassbetweenthefinishofoneactivityandthe
startofitssuccessor(s).Thedefaultfinishtostartlagiszero.Alllagsarecalculatedwhenaprojecthasitsschedule
computed.Inmostcases,finishtostartlagsarenotusedwithotherlagtypes.(6/07)
FINISHTOSTART(FS)Arelationshipinwhichthesuccessoractivitycanstartonlyafterthepredecessoractivity
finishes.Thisisthemostcommonrelationshipused.(6/07)
FINISHEDGOODSCommoditiesthatwillnotundergoanyfurtherprocessingandarereadyforsaletotheuser
(e.g.,apparel,automobiles,bread).(11/90)
FIRSTCOSTCostsincurredinplacingafacilityintoservice,includingbutnotlimitedtocostsofplanning,design,
engineering,siteacquisitionandpreparation,construction,purchase,installation,propertytaxespaidandinterest
during the construction period, and constructionrelated fees. Syn.: INITIAL INVESTMENT COST; INITIAL COST. [1]
(11/90)
FIRSTEVENTNUMBERThenumberofthefirsteventintimeforaworkpackageorsummaryitem.Thisevent
numberdefinesthebeginningoftheworkpackageorsummaryiteminrelationtothenetwork.(11/90)
FIXED COST Those costs independent of short term variations in output of the system under consideration.
Includes such costs as maintenance; plant overhead; and administrative, selling and research expense. For the
purposeofcashflowcalculation,depreciationisexcluded(exceptinincometaxcalculations).Inconstructionthis
includesgeneralandadministrativecosts.(6/07)
FIXED DATE A calendar date (associated with a plan) that cannot be moved or changed during the schedule.
(6/07)
FIXEDSTARTSeealso:IMPOSEDSTARTDATE.(6/07)
FIXEDDURATIONSCHEDULINGAschedulingmethodinwhich,regardlessofthenumberofresourcesassignedto
thetask,thedurationremainsthesame.(6/07)
FIXEDPRICECONTRACTSeealso:CONTRACT.(6/07)
FLOAT
(1) In manufacturing, the amount of material in a system or process, at a given point in time, that is not being
directlyemployedorworkedupon.
(2)Inprojects,theamountoftimethatanactivitymayslipinitsstartandcompletionbeforebecomingcritical.
Syn.:SLACK.Seealso:TOTALFLOAT(TF);FREEFLOAT(FF);PROJECTFLOAT;NETWORKFLOAT.(6/07)
FLOAT PATH A theoretical sequence of activities that share the same float and thus act as a unit when
considering project completion. The concept of float paths allows for summarization and simplification of work
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packagesbyallowingmanagementorotherstakeholderstovisualizelargerworkpackagesthanthoseusedatthe
baseworklevel.(3/10)
FLOATTRENDCHARTSAchartshowingtheprogressivechangeovertimeinschedulefloatvalues.(6/07)
FLOWDIAGRAMAgraphicrepresentationthatutilizessymbols,labels,andarrowsastodepictthedetailsand
sequenceofoperationofaprocedureorprocesssystem.(6/07)
FOLLOWONWORKWorkthatisexpectedtoflowtheresultofcurrentwork.Thismaybeasubsequentproject,
anenhancement,orthemaintenanceoftheproductofthecurrentproject.(6/07)
FORECAST
(1)Anestimateandpredictionoffutureconditionsandeventsbasedoninformationandknowledgeavailableat
thetimeoftheforecast.
(2) When in respect to resource requirements, considering future conditions and events, it is a synonym for an
estimate.
Seealso:ESTIMATE.(6/07)
FORECASTING
(1)Theworkperformedtoestimateorpredictfutureconditionsandevents.Forecastingestablishestherangeof
possibilitieswithinwhichonecancometofocusontheobjectivesonewillcommittoachieve.Forecastingisthe
workinvolvedinanticipatingfutureevents,whileestablishingobjectivesistheworknecessarytocommitoneself
toaccomplishpredeterminedresults.
(2)Wheninrespecttoresourcerequirements,consideringfutureconditionsandevents,itisasynonymforcost
estimating. Forecasting and cost estimating are often confused with budgeting, which is a definite allocation of
resourcesandnotapredictionorestimate.(6/07)
FORMAL REPROGRAMMING In earned value, a term referring to restructuring the earned value performance
measurementbaseline(PMB).Itmayincludeanovertargetscheduleandorcostandmayincludeaprogramsingle
pointadjustment.Seealso:REPROGRAMMING.(10/13)
FORWARDPASS
(1) In projects, network calculations that determine the earliest start/earliest finish time (date) of each activity,
andestablishesthecriticalpath.
(2) In manufacturing, often referred to as forward scheduling, a scheduling technique where the scheduler
proceeds from a known start date andcomputes thecompletion date for an order usually proceeding fromthe
firstoperationtothelast.(6/07)
FRAGNET
(1)Asubnetoftheoverallprojectnetworkschedule.Afragnetistypicallymadeupofrelatedworkactivitiesto
allowgreaterdetailandbettercontrolofthework.
(2)AportionorfragmentofaCPMnetworkusuallyusedtoillustratechangestothewholenetwork.
Seealso:WORKBREAKDOWNSTRUCTURE(WBS).(6/07)
FREEFLOAT(FF)
Maximum amount by which an activity can be delayed beyond its early dates without delaying any successor
activitybeyonditsearlydates.Seealso:FREESLACK.(6/07)
FREEHAULThedistanceeverycubicyardofexcavatedmaterialisentitledtobemovedwithoutanadditional
chargeforhaul.(11/90)
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FREESLACKForataskwithoutsuccessors,thisistheamountoftimethetaskcanbedelayedwithoutdelaying
thefinishdateoftheproject.Seealso:FREEFLOAT(FF).[15](6/07)
FRINGEBENEFITSEmployeewelfarebenefits,i.e.,expensesofemploymentsuchasholidays,sickleave,health
andwelfarebenefits,retirementfund,training,supplementalunionbenefits,etc.(11/90)
FRONTENDSyn.:DEFINITIONPHASE.(6/07)
FRONTENDLOADING(FEL).Definingtheprojectscopeandplansinawaythatassuresthebestpracticallevelof
definitionisachievedasneededtosupportaprojectdecisiongate.(6/07)
FRONTENDSCHEDULEUsually,abarchartschedulethatisusedtoprovideaprojectworkscheduleandastatus
reportingsystemearlyinthework.DefinitionandplanningaregenerallystillunderwayontheCPMscheduleof
activities.Itisconsideredaprojectlevelschedule.(6/07)
FUNCTIONAnexpressionofconceptualrelationshipsusefulinmodelformulations(e.g.,productivityisafunction
ofhoursworked).(11/90)
FUNCTIONALREPLACEMENTCOSTThecurrentcostofacquiringthesameservicepotentialasembodiedbythe
assetunderconsideration.(11/90)
FUNCTIONAL USE AREA The net usable area of a building or project exclusive of storage, circulation,
mechanical,andsimilartypesofspace.(11/90)
FUNCTIONALSYSTEMAnassemblyofpartsorcomponentsand/orsubsystemshavingoneprimaryenduseinthe
project.Itshouldbenotedthatsecondaryandtertiaryusesforfunctionalsystemsarecommon.(11/90)
FUTUREVALUEThevalueofabenefitoracostatsomepointinthefuture,consideringthetimevalueofmoney.
Syn.:FUTUREWORTH.[1](11/90)
FUNCTIONALWORTHThelowestoverallcostforperformingafunction.Fourtypesareasfollows:1)COSTVALUE
the monetary sum of labor, material, burden, and all other elements of cost required to produce an item or
provide a service; 2) ESTEEM VALUE the monetary measure of the properties of a product or service, which
contribute to desirability or salability but not to required functional performance; 3) EXCHANGE VALUE the
monetary sum at which a product or service can be traded; and 4) USE VALUE the monetary measure of the
necessaryfunctionalpropertiesofaproductorservicethatcontributetoperformance.(11/90)
FUTUREWORTHSeealso:FUTUREVALUE.[1](11/90)
GANTTCHARTAtimescaledbarchartnamedafterHenryL.Gantt.Syn.:BARCHART.(6/07)
GENERAL&ADMINISTRATIVECOSTS(G&A)Thefixedcostincurredintheoperationofabusiness.G&Acostsare
also associated with office, plant, equipment, staffing, and expenses thereof, maintained by a contractor for
general business operations. G&A costs are not specifically applicable to any given job or project. See also:
OVERHEAD.(6/07)
GENERAL REQUIREMENTS Nontechnical specifications defining the scope of work, payments, procedures,
implementationconstraints,etc.pertainingtothecontract.(6/07)
GENERALTERMSANDCONDITIONS
(1) That part of a contract, purchase order, or specification that is not specific to the particular transaction but
appliestoalltransactions.
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(2) General definition of the legal relationships and responsibilities of the parties to the contract and how the
contractistobeadministered.Theyareusuallystandardforacorporationand/orproject.(6/07)
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) Principles established by a Financial Accounting

Standards Board that provide a foundation for 'acceptable' accounting practices. The GAAP represent a set of
guidelinesand,asapracticalmatter,necessitatesubjectivityintheirapplication.(6/07)
GIVENYEARTheyearorperiodselectedforcomparison,relativetothebaseyearorbaseperiod.(11/90)
GLOBALCALENDARCalendarwhichsetstypicalworkweek,workdaysandholidays.Itisthedefaultcalendarused
foractivities.Seealso:CALENDAR.(6/07)
GRAPHICAL EVALUATION AND REVIEW TECHNIQUE (GERT) Network analysis technique that allows for
conditionalandprobabilistictreatmentoflogicalrelationships(i.e.,someactivitiesmaynotbeperformed).(6/07)
GROSSAREAGenerally,thesumofallthefloororslabareasofaprojectthatareenclosedbytheexteriorskinof
thebuilding.(11/90)
GROSS CONCURRENCY The method of counting concurrent delay events based purely on contemporaneous
occurrencewithoutregardtoCPMprinciples.(6/07)
GROSSNATIONALPRODUCT(GNP)Thetotalnationaloutputofgoodsandservicesatthemarketpricesforthe
statedyear.(11/90)
GUIDELINE A recommended or customary method of working to accomplish an objective. A guideline is not

enforcedbutisgenerallyfollowed.(6/07)
HAMMOCKACTIVITYAnaggregateorsummaryactivity.Allrelatedactivitiesaretiedasonesummaryactivityand
reportedatthesummarylevel.Ithasnodurationofitsownbutderivesonefromthetimedifferencebetweenthe
twopointstowhichitisconnected.Thehammockactivitydoesnotaffectscheduledatesoftheactivitiesitspans.
(6/07)
HANGERAnunintendedbreakinanetworkpath.(6/07)
HARDLOGIC
(1)Mandatorylogic.
(2)Clearlyunderstoodworkscopeallowsonetodefineworkactivitiesandlogicwithprecision.Theoppositeof
softlogic.(6/07)
HAULDISTANCEThedistancemeasuredalongthecenterlineormostdirectpracticalroutebetweenthecenter
of mass of excavation and the center of mass finally placed. It is the average distance material is moved by a
vehicle.(11/90)
HEDGEInmasterproductionscheduling,aquantityofstockusedtoprotectagainstuncertaintyindemand.The
hedgeissimilartosafetystock,exceptthatahedgehasthedimensionoftimingaswellasamount.(11/90)
HEURISTIC An experiencebased technique used as a general way of solving a problem, e.g., Rule of Thumb.
(12/11)
HIERARCHICALCODINGSTRUCTUREAcodingsystemthatcanberepresentedasamultileveltreestructurein
whicheverycodeexceptthoseatthetopofthetreehasaparentcode.(6/07)
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HIERARCHICALPLANNINGPlanningapproachwhereeachmanageriallevelbreaksplanningtasksdownintothose
activities that must be done at that level. Typically, upperlevel planning establishes the objectives for the next
lowerlevelmanager'splanning.(6/07)
HIERARCHY(HIERARCHICAL)Arankingofitemsaccordingtotheirlogicalrelationships.(6/07)
HIGHESTANDBESTUSEThevaluationconceptthatrequiresconsiderationofallappropriatepurposesorusesof
thesubjectpropertyinordertodeterminethemostprofitablelikelyutilization.(11/90)
HISTORICRECORDSDocumentationfrompastprojectsthatcanbeusedtopredicttrends,analyzefeasibilityand
highlightproblemareas/pitfallsonfuturesimilarprojects.(6/07)
HISTORICAL DATABASE Records accumulating past project experience stored as data for use in planning,
estimating,forecastingandpredictingfutureevents.Oftenincludesdatathathasbeenprocessedsoastofacilitate
planningandotherpurposessuchasvalidationandbenchmarking(e.g.,metrics,etc).(6/07)
HOLDINGTIMETimethatanitemisnotoperationalsothatitmaybeserviced.(11/90)
HOLIDAY An otherwise valid working day that has been designated as exempt. Holidays typically occur on a
yearly basis. In the US, holidays may include New Years Day, Memorial Day, Independence Day, Labor Day,
ThanksgivingandChristmas.(6/07)
HOMEOFFICECOSTThosenecessarycosts,typicallynotincurredattheprojectsite,involvedintheconductof
everyday business, which can be directly assigned to specific projects, processes, or end products, such as
engineering, procurement, expediting, legal fees, auditor fees inspection, estimating, cost control, taxes, travel,
reproduction,communications,etc.(6/07)
HYPERCRITICALAconditionwhenanimposeddatehasbeensetsuchthatthecriticalpathleadingtothatpointis
toolongtofinishbythatdate.Thecriticalpaththenbecomeshypercriticalandpossessesnegativefloat.(6/07)
HYPERCRITICAL ACTIVITIES Activities on the criticalpath with negative float. This can beachieved through the
impositionofconstraintssuchastargetdates.(6/07)
INODEInanactivityonarrow(AOA)schedule,thenodeatthebeginningoftheactivityarrow.(6/07)
IJNOTATIONAsystemofnumberingnodesinanactivityonarrownetwork.TheInodeisalwaysthebeginning
oftheactivity,whiletheJnodeisalwaysthefinish.(6/07)
IATROGENIC RISK In a risk analysis, an understatement of true risk caused by faulty risk analysis practices
including,butnotlimitedto:failingtoidentifysignificantthreatsrisksand/oropportunities,assigningprobability
density functions to too many elements in a Monte Carlo Analysis or range estimate, incorrectly assuming
independencebetweeninputelementsforriskanalysissimulations,andfailingtoadequatelyquantifytheranges
ofinputelements.Syn.:ANALYSTINDUCEDRISK;ANALYSTCAUSEDRISK.(12/11)
IDENTIFIERAnalphanumericcodedepictinganameorhierarchy.Seealso:CODE.(6/07)
IDLEEQUIPMENTCOSTThecostofequipmentthatremainsonsitereadyforusebutisplacedinastandbybasis.
Ownershiporrentalcostsarestillincurredwhiletheequipmentisidle.(11/90)
IDLETIMEAtimeintervalduringwhicheithertheworker,theequipmentorbothdonotperformusefulwork.
(6/07)
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IMMEDIATEACTIVITYAnactivitythatcanbeforcedtostartonitsearliestfeasibledatebyresourcescheduling,
evenifthatmeansoverloadingaresource.(6/07)
IMPACTSyn.:CONSEQUENCE;EFFECT.(12/11)
IMPACTCOSTAddedexpensesduetotheindirectresultsofachangedcondition,delay,orchangesthatarea
consequenceoftheinitialevent.Examplesofthesecostsarepremiumtime,lostefficiency,andextendedfieldand
homeofficeoverhead.(4/04)
IMPACTVERSUSPROBABILITYRATINGSyn.:RISKMATRIX.(12/11)
IMPERFECTINFORMATIONinformationordataforwhichthereexistssomeuncertainty.(12/11)
IMPERFECTIONAdeviationthatdoesnotaffecttheuseorperformanceoftheproduct,process,orservice.In
practice,imperfectionsaredeviationsthatareacceptedasis.(11/90)
IMPOSEDDATE
(1)Apredeterminedcalendardateset(usuallyexternally)withoutregardtologicalconsiderationsofthenetwork.
(2) A date externally assigned to an activity that establishes the earliest or latest date in which the activity is
allowedtostartorfinish.(6/07)
IMPOSED FINISH DATE A predetermined calendar date set without regard to logical considerations of the
network,fixingtheendofanactivityandallotheractivitiesprecedingthatendingnode.(11/90)
IMPOSEDSTARTDATEAstartdateimposedonanactivitybyanexternalconstraint.(6/07)
IMPOSSIBILITYAninabilitytomeetcontractrequirementsbecauseitwasinfactphysicallyimpossibletodoso
(actualimpossibility).(11/90)
IMPRACTICABILITYInabilitytoperformbecauseofextremeandunreasonabledifficulty,expense,injury,orloss
involved.Thisissometimesconsideredpracticalimpossibility.(11/90)
IMPUTATION (OF PRICE MOVEMENT) The assignment of known price changes to a certain commodity on the
basisoftheassumedsimilarityofpricemovement.(11/90)
INPLACE VALUE Value of a physical property, e.g., market value plus costs of transportation to site and
installation.(11/90)
INPROGRESS ACTIVITY An activity that has been started but not completed on a given reporting/data date.
(6/07)
INPROGRESSINVENTORYSeealso:WORKINPROCESS.(11/90)
INCLUSIVE OR RELATIONSHIP Logical relationship indicating that at least one, but not necessarily all, of the
activitieshavetobeundertaken.(6/07)
INCOME Used interchangeably with profit. Avoid using income instead of sales revenue. See also: PROFIT.
(11/90)
INCREMENTAL COST (BENEFIT) The additional cost (benefit) resulting from an increase in the investment in a
project.Syn.:MARGINALCOST(BENEFIT).[1](11/90)
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INCREMENTAL MILESTONE TECHNIQUE An earned value technique that preassigns budget to technical
milestone completions. When the milestone is completed 100% of the budgeted weight assigned to the
milestoneisearned.(10/13)
INDEPENDENT EVENT An event which in no way affects the probability of the occurrence of another event.
(11/90)
INDEPENDENTESTIMATEATCOMPLETION[IEAC(t)]Thedifferencebetweenthebaselineprojectdurationand
theestimatedprojectdurationintimeincrements.(11/14)
INDEPENDENTFLOATThedegreeofflexibilitythatanactivityhaswhichdoesnotaffectthefloatavailableonany
precedingorsucceedingactivities.(6/07)
INDEPENDENTVARIABLEAneventorconditionwhoseimpactorprobabilityisnotcertain,butwhichdoesnot
dependinanywayonthevalueorprobabilityofanyothereventorcondition.Seealso:DEPENDENTVARIABLE.
(12/11)
INDICATEDTOTALCOSTAnestimatedfinalcostofaproject,programorendeavorbasedoncurrentprogressand
forecastefforttocomplete.Seealso:ESTIMATEATCOMPLETION.(6/07)
INDIRECTCOSTS
Costsnotdirectlyattributabletothecompletionofanactivity,whicharetypicallyallocatedorspreadacrossall
activitiesonapredeterminedbasis.
(1)Inconstruction,(field)indirectsarecostswhichdonotbecomeafinalpartoftheinstallation,butwhichare
requiredfortheorderlycompletionoftheinstallationandmayinclude,butarenotlimitedto,fieldadministration,
directsupervision,capitaltools,startupcosts,contractor'sfees,insurance,taxes,etc.
(2) In manufacturing, costsnot directly assignable to theend product or process, such as overhead andgeneral
purposelabor,orcostsofoutsideoperations,suchastransportationanddistribution.Indirectmanufacturingcost
sometimes includes insurance, property taxes, maintenance, depreciation, packaging, warehousing and loading.
Seealso:DISTRIBUTABLES;FIELDINDIRECTS;HOMEOFFICECOST;BURDENS.(10/13)
INDIRECTPACINGWhenthepacedeventdoesnothavealogicalrelationshiptotheparentdelay.Thefactthat
the indirect pacing delay and the parent delay occur during the same period is merely a function of schedule
timing,notmandatorylogic.(6/07)
INDIVIDUALPRICEINDEXAnindexwhichmeasuresthepricechangeforaparticularcommodityandwhichmay
becomputedastheratioofitspricesattwopointsintime.(11/90)
INDIVIDUALWORKPLANThelowestlevelofthetechnicalplanthatdefinesthetasksandresponsibilitiesofan
individualteammember.(6/07)
INEFFICIENCYThestateofbeinglessproductiveorefficientthatexpectedorplanned.(6/07)
INEXCUSABLE DELAYS Project delays those are attributable to negligence on the part of the contractor, which
leadinmanycasestopenaltypayments.(6/07)
INFLATIONApersistentincreaseinthelevelofconsumerprices,orapersistentdeclineinthepurchasingpower
of money, caused by an increase in available currency and credit beyond the proportion of available goods and
services.Seealso:DEFLATION.(12/11)
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INFLUENCEDIAGRAMAgraphicaldisplayoftherelationshipsamongfactorsinfluencingadecision.Thediagram
shows the influencing relationships among controllable decisions, uncertain conditions, objective variables, and
dependentvariables.(8/07)
INHERENTRISKAriskthatexists(butmayormaynotbeidentified)duetotheverynatureoftheasset,project,
task,element,orsituationbeingconsidered.(12/11)
INITIALCOSTSyn.:FIRSTCOST.[1](11/90)
INITIALINVESTMENTCOSTSyn.:FIRSTCOST.[1](11/90)
INITIATIONTheprocessofpreparingfor,assemblingresourcesandgettingworkstarted.Mayapplytoanylevel,
e.g.,program,project,phase,activity,task.(6/07)
INPUTMILESTONESImposedtargetdatesortargeteventsthataretobeaccomplished,andwhichcontrolthe
planwithrespecttotime.(6/07)
INPUTOUTPUTANALYSISAmatrixwhichprovidesaquantitativeframeworkforthedescriptionofaneconomic
unit. Basic to inputoutput analysis is a unique set of inputoutput ratios for each production and distribution
process.Iftheratiosofinputperunitofoutputareknownforallproductionprocesses,andifthetotalproduction
ofeachendproductoftheeconomy,orofthesectionbeingstudiedisknown,itispossibletocomputeprecisely
theproductionlevelsrequiredateveryintermediatestagetosupplythetotalsumofendproducts.Further,itis
possibletodeterminetheeffectateverypointintheproductionprocessofaspecifiedchangeinthevolumeand
mixofendproducts.(11/90)
INTANGIBLES
(1)Ineconomystudies,conditionsoreconomyfactorsthatcannotbereadilyevaluatedinquantitativetermsasin
money.
(2)Inaccounting,theassetsthatcannotbereliablyevaluated(e.g.,goodwill).(11/90)
INTEGRATEDCHANGECONTROLTheprocessofreviewingallchangerequests,approvingchangesandcontrolling
changestodeliverablesandorganizationalprocessassets.Seealso:CHANGECONTROL;CHANGEMANAGEMENT;
CONFIGURATIONMANAGEMENT.(6/07)
INTEGRATED COST/SCHEDULE REPORTING The development of reports that measure actual versus budget, S
curves,BCWS,BCWP,andACWP.Seealso:EARNEDVALUEMANAGEMENT[SYSTEM](EVM[S])(8/07)
INTEGRATEDPRODUCTTEAMS(IPT)Anorganizationalelementresponsibleforasegmentoftheworkbreakdown
structure (WBS). Typically they are cross functional and assigned a charter of responsibility to function as an
organizational breakdown structure (OBS) manager in earned value terminology. See also: ORGANIZATIONAL
BREAKDOWNSTRUCTURE(OBS).(10/13)
INTERDEPENDENTEVENTNotsubjecttoareciprocalrelationship.(6/07)
INTEREST
(1)Financialshareinaprojectorenterprise.
(2)Periodiccompensationforthelendingofmoney.
(3)Ineconomystudy,synonymouswithrequiredreturn,expectedprofit,orchargeforuseofcapital.
(4)Thecostfortheuseofcapital.Sometimesreferredtoasthetimevalueofmoney.(11/90)
INTERESTRATETheratiooftheinterestpaymenttotheprincipalforagivenunitoftimeandisusuallyexpressed
asapercentageoftheprincipal.(11/90)
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INTEREST RATE, COMPOUND The rate earned by money expressed as a constant percentage of the unpaid
balanceattheendofthepreviousaccountingperiod.Typicaltimeperiodsareyearly,semiannually,monthly,and
instantaneous.(11/90)
INTERESTRATE,EFFECTIVEAninterestrateforastatedperiod(peryearunlessotherwisespecified)thatisthe
equivalentofasmallerrateofinterestthatismorefrequentlycompounded.(11/90)
INTEREST RATE, NOMINAL The customary type of interest rate designation on an annual basis without
considerationofcompoundingperiods.Afrequentbasisforcomputingperiodicinterestpayments.(11/90)
INTERESTRATEOFRETURNSeealso:PROFITABILITYINDEX(PI).(11/90)
INTERFACEAcommonphysicalorfunctionalboundarybetweendifferentorganizationsorcontractor'sproducts.
Itisusuallydefinedbyaninterfacespecificationandmanagedbyasystemintegrationorganization.(6/07)
INTERFACEACTIVITYAnactivityconnectinganodeinonesubnetwithanodeinanothersubnet,representing
logicalinterdependence.Theactivityidentifiespointsofinteractionorcommonalitybetweentheprojectactivities
andoutsideinfluences.(6/07)
INTERFACE MANAGEMENT The management of communication, coordination and responsibility across a

commonboundarybetweentwoorganizations,phases,orphysicalentities,whichareinterdependent.(6/07)
INTERFACENODEAcommonnodefortwoormoresubnetsrepresentinglogicalinterdependence.(11/90)
INTERFERENCE Conduct that interrupts the normal flow of operations and impedes performance. A condition
impliedineveryconstructioncontractisthatneitherpartywilldoanythingtohindertheperformanceoftheother
party.(11/90)
INTERIMDATESDatesestablishedwhichdesignatethestartorthecompletionofdesignatedfacilitiesorfeatures
ofafacility.Alsoreferredtoasintermediateaccessorintermediatecompletiondates.(6/07)
INTERIM DELIVERABLES Intermediate deliverables that will be produced as precursors to the final deliverable.
(6/07)
INTERMEDIATEEVENTSDetailedeventsandactivities,thecompletionofwhicharenecessaryforandleadtothe
completionofamajormilestone.(11/90)
INTERMEDIATEMATERIALSCommoditiesthathavebeenprocessedbutrequirefurtherprocessingbeforethey
becomefinishedgoods(e.g.,fabric,flour,sheetmetal).(11/90)
INTERMEDIATENODEAnodewhereatleastoneactivitybeginsandoneactivityends.(11/90)
INTERNALRATEOFRETURN(IRR)Thecompoundrateofinterestthat,whenusedtodiscountstudyperiodcosts
andbenefitsofaproject,willmaketheirtimevaluesequal.Seealso:PROFITABILITYINDEX(PI).[1](8/07)
INTERRUPTIONAstoppingorhinderingofthenormalprocessorflowofanactivity.(6/07)
INVENTORYRawmaterials,productsinprocess,andfinishedproductsrequiredforplantoperationorthevalue
ofsuchmaterialandothersupplies,e.g.,catalysts,chemicals,spareparts.(11/90)
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INVESTMENT The sum of the original costs or values of the items that constitute the enterprise; used
interchangeably with capital; may include expenses associated with capital outlays such as mine development.
(11/90)
INVESTMENTCOSTIncludesfirstcostandlaterexpendituresthathavesubstantialandenduringvalue(generally
morethanoneyear)forupgrading,expanding,orchangingthefunctionaluseofafacility,product,orprocess. [1]
(11/90)
INVESTOR'SMETHODSeealso:DISCOUNTEDCASHFLOW.(11/90)
IRREFUTABLELOGICNetworklogicthatisrationalandcompellingandcannotbedisputedonthebasisofreason.
Seealso:DESIRABLELOGIC.(6/07)
ISHIKAWA DIAGRAM Diagram used to illustrate how various causes and subcauses create a specific effect.
NamedafteritsdeveloperKaoruIshikawa.Alsocalledcauseandeffectdiagramorfishbonediagram.[8](6/07)
ISSUE In risk management, a risk that has occurred or an unplanned question or decision that needs to be
addressedbyaprocessotherthanriskmanagement.(12/11)
ISSUES MANAGEMENT Management of issues that remain unresolved because they are either in dispute, are
uncertain,lackinformation,orlackauthorityorcommitmentfortheirresolution.(6/07)
JNODEInanactivityonarrow(AOA)schedule,thenodeattheendoftheactivityarrow.(6/07)
JOBAgroupofcontiguousoperationsrelatedbysimilarityoffunctionsthatcanbecompletedbyoneormore
workerswithoutinterferenceordelay.(6/07)
JUDGMENTALSAMPLINGAprocedureofselectingthesamplewhichisbasedonspecificcriteriaestablishedby
sampledesigners.Theselectionofpriceditemsandoutletsisnotaprobabilitysamplethatis,itisnotbasedon
randomchance.(11/90)
JUNIORFLOATThelowestfreefloatofallprecedingactivities.(3/10)
JUSTINTIMEA'pull'logisticalsystemdrivenbyactualdemand.Thegoalistoproduce,provideordeliverparts
orsuppliesjustintimeforthenextoperation.Theapproachreducesstockinventoriesorstoragecosts,butleaves
noroomforerror.Asmuchamanagerialphilosophyasitisaninventorysystem.(6/07)
KEY ACTIVITY An activity that is considered of major significance. A key activity is sometimes referred to as a
milestoneactivity.(11/90)
KEY EVENT SCHEDULE A schedule comprised of key events or milestones. These events are generally critical
accomplishmentsplannedattimeintervalsthroughouttheprojectandusedasabasistomonitoroverallproject
performance. The format may be either network or bar chart and may contain minimal detail at a highly
summarizedlevel.Thisisoftenreferredtoasamilestoneschedule.(6/07)
KEY EVENTS Major events the achievement of which that are deemed to be critical to the execution of the
project.Akeyeventissometimesreferredtoasamilestone.(6/07)
KEYPERFORMANCEPerformancethatiscriticaltotheprojectoraprojectsystem.Seealso:KEYPERFORMANCE
INDICATORS(KPI).(6/07)
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KEYPERFORMANCEINDICATORS(KPI)Indicatorsthat:1)Aredeterminedatprocess/projectinitiationandlisted
inorderofpriority;2)Reflectdirectlyonkeyprocess/projectobjectives[goals];and3)Providebasisfortradeoff
decisionsmadeduringexecution.Atprocess/projectcompletiontheseKPIs:1)Willbethemostrelevantmeasures
to confirm process/project acceptability and its product by the process/project's stakeholders as being
"successful";and2)Canbereasonablymeasuredinsomeway,atsometime,onsomescalewithsomelevelof
confidence.(6/07)
KEYSUCCESSINDICATORS(KSI)Syn.:KEYPERFORMANCEINDICATORS(KPI).(6/07)
KNOWNAquantityorconditioncharacterizedbycertainty.(12/11)
KNOWNUNKNOWN An identifiable quantity or value having variability or an identifiable condition lacking

certainty.(12/11)
LABOREffortexpendedbypeopleforwagesorsalary.Generallyclassifiedaseitherdirectorindirect.Directlabor
is applied to meeting project objectives and is a principal element used in costing, pricing, and profit
determination; indirect labor is a component of indirect cost, such as overhead or general and administrative
costs.[8](10/06)
LABORBURDENFringebenefitsplustaxesandinsurancestheemployerisrequiredtopaybylawbasedonlabor
payroll,onbehalfoforforthebenefitoflabor.(Insomecountries,theseincludegovernmentretirementbenefits,
unemploymentinsurancetax,andworker'scompensation).(5/12)
LABORCOST
(1)BARELABOR:Grossdirectwagespaidtotheworker.
(2)BURDENEDLABOR:Grossdirectwagespaidtotheworker,pluslaborburden.
(3) ALL IN LABOR: Gross direct wages paid to the worker, plus labor burden, plus field indirects, plus general &
administrativecost,plusprofit.(6/07)
LABOREFFICIENCYVARIANCEAcostvariancecanbebrokenintoefficiencyandratevarianceelements.Efficiency
is calculated as: (budgeted cost of work performed rate) X (budgeted cost of work performed hours actual
hours).See:COSTVARIANCE;LABORRATEVARIANCE.(10/13)
LABORHOURAworkerhourofeffort.Syn.:WORKHOUR.(6/07)
LABORNORMSyn.:LABORPRODUCTIVITYNORM(1/14)
LABOR NORM PREAMBLE A narrative to precisely describe the content (inclusion and exclusions), the normal
conditions, the unit of measurement and method of measurement of an activity and its applicable labor norm.
(1/14)
LABOR PRODUCTIVITY A measure of production output relative to labor input. In economics, industrial
engineering, and earned value management, quantity/work hour measures are common (higher values reflect
higherproductivityorefficiency).Incostestimating,inversemeasuressuchasworkhours/quantityorunithours
arecommon(wherelowervaluesreflecthigherproductivityorefficiency).Regardlessofthemeasureused,labor
productivity(orefficiency)isimprovedbyincreasingproductionforagivenworkhourordecreasingworkhours
foragivenproduction.(6/07)
LABORPRODUCTIVITYFACTORAvaluebywhichalaborproductivitymeasureforareferenceprojectoractivityis
multipliedtoobtainanadjustedproductivitymeasureforthesameofsimilarprojectoractivityunderadifferent
setofconditions.Properfactoruserequiresthattheuserascertainthetypeoflaborproductivitymeasureitwill
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beappliedagainst(e.g.,considerwhetherthelaborproductivitymeasuretobefactoredisexpressedintheform
ofworkhours/quantityorquantity/workhours).(6/07)
LABORPRODUCTIVITYNORMAvaluesetastheagreedreferenceorbenchmarklaborproductivityforaspecific
activityunderaspecificsetofstatedconditionsorqualifications.Syn.:LABORNORM(1/14)
LABOR RATE Labor cost expressed on a per unit of labor effort basis (e.g., labor costs/labor hour). See also:
LABORCOST.(6/07)
LABORRATEVARIANCEAcostvariancecanbebrokenintoefficiencyandratevarianceelements.Ratevarianceis
calculatedas:(budgetedcostofworkperformedhours)X(budgetedcostofworkperformedrateactualcostof
workperformedrate).See:COSTVARIANCE;LABOREFFICIENCYVARIANCE.(10/13)
LADDERInplanningandscheduling,asequenceofparallelactivitiesconnectedattheirstartsorfinishes,orboth.
Thestartandfinishofeachsucceedingactivityarelinkedonlytothestartandfinishoftheprecedingactivityby
leadandlagactivities,whichconsumeonlytime.(6/07)
LADDER ACTIVITY A type of activity identified in network scheduling. An arrangement in which two or more
seriesofactivitiesprogressconcurrentlybutinlockstepbecauseofdependentlinksbetweenthesamerungsof
eachladder.(6/07)
LADDERING A method of showing the logic relationship of a set of several parallel activities with the arrow
technique.(11/90)
LAGTimethatanactivityfollows,orisdelayedfromthestartorfinishofitspredecessor(s).Sometimescalledan
offset. A lagmay have a negative value tied to the finish of a previous activity, reflecting a fast track approach.
However,theuseofnegativelagswhenbuildingbaselineschedulemodelsispoortechniqueandoftenprohibited
byspecification.(6/07)
LAGDURATIONAdurationbywhichagiventaskmustbecompletedbeforethesucceedingactivitycanbegin.
(6/07)
LAGRELATIONSHIPThefourbasictypesoflagrelationshipsbetweenthestartand/orfinishofaworkitemand
the start and/or finish of another work item are: 1) Finishtostart (FS); 2) Starttofinish (SF); 3) Finishtofinish
(FF);and4)Starttostart(SS).(11/90)
LAG TIME The amount of time delay between the completion of one task and the start of its successor task.
(6/07)
LATEDATESCalculatedinthebackwardpassoftimeanalysis,latedatesarethelatestdatesonwhichanactivity
canstartandfinishwithoutdelayingasuccessoractivity.(6/07)
LATEEVENTDATECalculatedfrombackwardpass,itisthelatestdateaneventcanoccur.(6/07)
LATEFINISH(LF)Thelatestdateortimeanactivitymayfinishascalculatedbythebackwardpass.(6/07)
LATE START (LS) The latest date or time an activity may start so the project may be completed on time as
calculatedduringthebackwardpass.(6/07)
LATENT CONDITION A concealed, hidden, or dormant condition that cannot be observed by a reasonable
inspection.(11/90)
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LATEST EVENT TIME (LET) The latest time an event may occur without increasing the project's scheduled
completiondate.(11/90)
LATESTARTThelatesttimeatwhichanactivitycanstartwithoutlengtheningtheproject.(11/90)
LATEST REVISED ESTIMATE In earned value, the sum of the actual incurred costs plus the latest estimateto
complete for a work package or summary item as currently reviewed and revised, or both (including applicable
overheadwheredirectcostsarespecified).(6/07)
LATINHYPERCUBEMETHODAstratifiedrandomsamplingtechniquesimilartotheMonteCarlomethod,which
convergeswithfewersamples.Seealso:MONTECARLO;SIMULATION.(12/11)
LAWSANDREGULATIONSLaws,rules,regulations,ordinances,codesand/ororders.(11/90)
LEADAPDMconstraintintroducedbeforeaseriesofactivitiestoschedulethematalatertime.(11/90)
LEADTimethatanactivityprecedesthestartofitssuccessor(s).LeadistheoppositeofLag.(6/07)
LEAD DURATION/LEAD TIME A duration or time by which a given task must be started before the succeeding
activitycanbegin.(6/07)
LEARNINGCURVEAgraphicrepresentationoftheprogressinproductioneffectivenessastimepasses.Learning
curvesareusefulplanningtools,particularlyintheprojectorientedindustrieswherenewproductsandworkers
arephasedinratherfrequently.Thebasisforthelearningcurvecalculationisthefactthatworkerswillbeableto
performworkmorequicklyaftertheygetusedtoperformingit.(6/07)
LESSONS LEARNED A project team's learning, usually defined during close out. Should be limited to
capturing/identifying work process improvements. A finding that established policies or procedures were not
followedisnotavalidlessonslearned.(6/07)
LETTEROFCREDITAvehiclethatisusedinlieuofretentionandispurchasedbythecontractorfromabankfora
predeterminedamountofcreditthattheownermaydrawagainstintheeventofdefaultinacceptancecriteriaby
thecontractor.Alsoapplieswhenanownerestablishesalineofcreditinaforeigncountrytoprovideforpayment
tosuppliersofcontractorsforgoodsandservicessupplied.(11/90)
LEVEL FINISH/SCHEDULE (FS) The date when the activity is scheduled to be completed using the resource
allocationprocess.(6/07)
LEVELFLOATThedifferencebetweenthelevelfinishandthelatefinishdate.(6/07)
LEVELIZED FIXEDCHARGE RATE The ratio of uniform annual revenue requirements to the initial investment,
expressedasapercent.(11/90)
LEVEL OF DETAIL All projects need to determine the level of detail requirements for estimates, accounting
reports,costreports,schedulingreports,andtypesofschedules.Thelevelofdetailisgenerallyconstrainedbythe
levelofscopedefinition.Determiningthelevelofdetailshouldconsiderrequirementstoexecutetheprojectand
meethistoricaldatarequirements.(6/07)
LEVELOFEFFORT(LOE)
(1)Supporteffort(e.g.,supervision)thatdoesnotreadilylenditselftomeasurementof
discreteaccomplishment.Itisgenerallycharacterizedbyauniformrateofactivityoveraspecificperiodoftime.
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(2)Anearnedvaluetechniqueusedtoestimateprogressofworkthatisgenerallynotmeasurable.Supporteffort
(e.g. management, security, project controls) that does not lend itself to measurement of discrete
accomplishment.LOEworkischaracterizedbyaplannedandsometimeslevelofsupportoveraspecificperiodof
time.Performanceisclaimedbythepassageoftimeandmaynotaccuratelyreflecttheamountofworkthatis
actuallyaccomplished.(11/14)
LEVELSTART/SCHEDULE/(SS)Thedatetheactivityisscheduledtobeginusingtheresourceallocationprocess.
Thisdateisequaltoorlaterintimethanearlystart.(11/90)
LEVELINGSeealso:RESOURCELEVELING.(6/07)
LEVELSOFSCHEDULES.Thelevelofscheduleisdifferentiatedbythedegreeofdetailintheschedules.Thethree
mainlevelsofschedulingarethefollowing:ManagementSummary,ProjectLevel,andControlLevel.
1. MANAGEMENT SUMMARY SCHEDULE (LEVEL 1 SCHEDULE) The level of schedule containing the least
amount of detail, typically including major functions, milestone objectives, master schedules, and bar chart
summariesofprojectstatus.Usedbymanagementandtheclienttomonitorallaspectsoftheproject.Itisa
rollupoftheprojectlevelschedule(level2).
2. PROJECT LEVEL SCHEDULE (LEVEL 2 SCHEDULE) An activity and deliverablecentered schedule
containingamiddleamountofdetailintimescalednetworkdiagramsorbarcharts.Itintegratestheprojects
engineering,procurement,andconstructionactivitiesbynetworklogic,identifiescriticalpathandkeyproject
dates,andprovidesmeasurementofaccomplishmentsagainstestablishedobjectives.TheCPM(criticalpath
method)schedulingtechniqueisusedtodeveloptheprojectlevelschedule.Thestatusofthedetailactivities
summarizestothemanagementsummaryschedule(level1schedule).
3. CONTROL LEVEL SCHEDULE (LEVEL 3 SCHEDULE) Represents detail and individual work tasks, which
summarizeattheprojectlevelIIactivitiesanddeliverables.Clearly,showsworkbydisciplineorresponsibility,
and usually presented in bar chart or tabular form. Maintained by each discipline/contractor in the
engineering phase and by superintendents and contractors in the construction phase. Immediate term
schedules,alsoreferredtoasweeklyworkschedules,andshouldprovideenoughdetailtomanageworkat
theforemanlevel.(6/07)
LEVERAGE(TRADINGONEQUITY)Theuseofborrowedfundsorpreferredstockintheintentofemployingthese
"senior"fundsatarateofreturnhigherthantheircostinordertoincreasethereturnupontheinvestmentofthe
residualowners.(11/90)
LIFE
(1)PHYSICAL:Thatperiodoftimeafterwhichamachineorfacilitycannolongerberepairedinordertoperformits
designfunctionproperly.
(2)SERVICE:Theperiodoftimethatamachineorfacilitywillsatisfactorilyperformitsfunctionwithoutamajor
overhaul.
Seealso:VENTURELIFE;STUDYPERIOD;ECONOMICLIFE(CYCLE).(11/90)
LIFECYCLEThestages,orphasesthatoccurduringthelifetimeofanobjectorendeavor.Alifecyclepresumesa
beginning and an end witheach end implyinga newbeginning. In life cycle cost or investment analysis, the life
cycleisthelengthoftimeoverwhichaninvestmentisanalyzed(i.e.,studyperiod).Thefollowingaretypicallife
cycles:Seealso:STUDYPERIOD,LIFE.[1]
1. ASSET LIFE CYCLE The stages, or phases of asset existence during the life of an asset. Asset life cycle
stagestypicallyincludeideation,creation,operation,modification,andtermination.
2. PRODUCT LIFE CYCLE Complete history of a product through its concept, definition, production,
operation, and obsolescence or disposal phases. The distinction between product life cycle and project life
cycleisthatthelatterdoesnotincludethelasttwophases.
3. PROJECT LIFE CYCLE The stages or phases of project progress during the life of a project. Project life
cyclestagestypicallyincludeideation,planning,execution,andclosure.(6/07)
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LIFE CYCLE COST (LCC) METHOD A technique of economic evaluation that sums over a given study period the
costs of initial investment (less resale value), replacements, operations (including energyuse),and maintenance
andrepairofaninvestmentdecision(expressedinpresentorannualvalueterms).[1](11/90)
LIFECYCLECOSTINGConsiderationofallcostswhendesigningaprojectsproduct,includingcostsfromconcept,
throughimplementationandstartup,todismantling.Itistypicallyusedformakingdecisionsbetweenalternatives.
(6/07)
LIFECYCLEVALUEANALYSIS(LCVA)Amethodologythatanalyzestheimpactsonvaluationofaprojectorasset
overtheirlifecycleandidentifiesopportunitiesforimprovedoutcomes.(12/11)
LIFO(LASTIN,FIRSTOUT)Amethodofdeterminingthecostofinventoryusedinaproduct.Inthismethod,the
costs of material are transferred to the product in reverse chronological order. LIFO is used to describe the
movementofgoods.Seealso:FIFO(FIRSTIN,FIRSTOUT).(11/90)
LIMIT(LOTSIZEINVENTORYMANAGEMENTINTERPOLATIONTECHNIQUE)Atechniqueforlookingatthelotsizes
forgroupsofproductstodeterminewhateffecteconomiclotsizeswillhaveonthetotalinventoryandtotalsetup
costs.(11/90)
LINE OF BALANCE (LOB) A graphical display of scheduled units versus actual units over a given set of critical
schedule control points on a particular day. The line of balance technique is oriented towards the control of
productionactivities.(6/07)
LINEOFCREDITGenerallyaninformalunderstandingbetweentheborrowerandthebankastothemaximum
amountofcreditthatthebankwillprovidetheborroweratanyonetime.(11/90)
LINEARPROGRAMMINGMathematicaltechniquesforsolvingageneralclassofoptimizationproblemsthrough
minimization(ormaximization)ofalinearfunctionsubjecttolinearconstraints.Forexample,inblendingaviation
fuel,manygradesofcommercialgasolinemaybeavailable.Pricesandoctaneratings,aswellasupperlimitson
capacities of input materials which can be used to produce various grades of fuel are given. The problem is to
blendthevariouscommercialgasolinesinsuchawaythat:1)Costwillbeminimized(profitwillbemaximized);2)
Aspecifiedoptimumoctaneratingwillbe met;and3)Theneedforadditionalstoragecapacitywillbeavoided.
(11/90)
LINEARRESPONSIBILITYCHARTAspecialtypeofmatrixinwhichtherowslisttheseriesoffunctions,activities,or
tasksinsomelogicsequence,suchastheprojectlifecycle,andtheadjacentcolumnsidentifythepositions,titles
orpeopleinvolved.Attheintersectionofeachadjacentcolumnanditslineitemisplacedadistinguishingsymbol
representingthelevelortypeofresponsibilityinvolvedbythatperson.(6/07)
LINEAR SCHEDULING METHOD (LSM) Scheduling method that may be used on horizontal projects (pipelines,
highways, etc.) Highly repetitive tasks make up the majority of the work. LSM schedules use velocity diagrams
representingeachactivity.LSMschedulingisnotwidelyused.(6/07)
LINKAdependencybetweentasksthatspecifieswhenataskbeginsorendsrelativetoanothertask.(6/07)
LINKEDBARCHARTAbarchartdrawntoshowdependencylinksbetweenactivities/tasks.(6/07)
LINKEDPROJECTSMultiplerelatedprojectsconnectedatinterfacepoints.Oftendepictedbyuseofabarchart
showingdependencylinksbetweenactivitiesondifferentprojects.(6/07)
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LINKINGPROCEDUREAprocedurebywhichanewseriesofindexesisconnectedtoanoldseriesinagivenlink
period,generallybecauseofachangeinbaskets.Actually,indexesofthenewserieswithlinkperiodastimebase
aremultipliedbytheoldindexforthelinkperiodasthegivenperiod.Seealso:SPLICINGTECHNIQUE.(11/90)
LIQUIDATEDDAMAGESSeealso:DAMAGES,LIQUIDATED.(6/07)
LMESOSyn.:COSTESTIMATERESOURCE(12/11)
LOADFACTOR
(1) A ratio that applies to physical plant or equipment average load/maximum demand, usually expressed as a
percentage.Itisequivalenttopercentofcapacityoperationiffacilitiesjustaccommodatethemaximumdemand.
(2)Theratioofaverageloadtomaximumload.(11/90)
LOADLEVELINGThetechniqueofaveraging,toaworkablenumber,theamountornumberofpeopleworkingon
a given project or in a given area of a project at a particular point in time. Load leveling is a benefit of most
schedulingtechniquesandisnecessarytoinsureastableuseofresources.Syn.:WORKPOWERLEVELING.(11/90)
LOCAL COST The cost of local labor, equipment taxes, insurance, equipment, and construction materials
incorporatedinaconstructionproject,withlocalcurrencies.Thisincludesthefinishingofimportedgoodsusing
locallaborandmaterials,thecostoftransformingimportedraworsemifinishedproductsusinglocallaborand
plantfacilities,andthemarketingoflocallyproducedproducts.(6/07)
LOCATIONFACTORAninstantaneous(currenthasnoescalationorcurrencyexchangeprojection)overalltotal
projectfactorfortranslatingthesummationofallprojectcostelementsofadefinedconstructionprojectscopeof
work,fromonegeographicallocationtoanother.Locationfactorsincludegivencosts,freights,duties,taxes,field
indirects, project administration, and engineering and design. Location factors do not include the cost of land,
scope/designdifferencesforlocalcodesandconditions,andthecostforvariousoperatingphilosophies.(6/07)
LOGIC Relationship describing the interdependency of starts and finishes between activities or events. Every
activity should have a predecessor (except for the initial activity or event), and every activity should have a
successor (except for the ending activity or event). Activity logic is determined by need to meet competing
constraints defined by contract requirements, physical capabilities of trades performing work, safety concerns,
resourceallocations,andpreferentialactivityrelationships.(6/07)
LOGICDYNAMIC(CONDITIONAL)Alogicstructurewhichallowsforchangesinschedulelogicdependingonthe
occurrence of risk events or conditions (typically includes conditional branching.) See also: CONDITIONAL
BRANCHING;LOGICSTATIC(FIXED);LOGICDIAGRAM;NETWORK.(1/14)
LOGICSTATIC(FIXED)Alogicstructurewhichdoesnotallowforchangesinschedulelogicdependingonthe
occurrence of risk events or conditions (typically excludes conditional branching). See also: CONDITIONAL
BRANCHING;LOGICDYNAMIC(CONDITIONAL);LOGICDIAGRAM;NETWORK.(1/14)
LOGIC CONSTRAINT A restraint inserted in an activity of arrow (AOA) network, which defines dependent
relationshipsbetweentwoactivities.(6/07)
LOGICDIAGRAMGraphicdiagramofanetworkscheduleshowingtherelationshipsbetweenaparticularactivity
anditspredecessorsandsuccessors.Syn.:LOGICNETWORKDIAGRAM.(6/07)
LOGICNETWORKSeealso:NETWORK(6/07)
LOGICNETWORKDIAGRAMSyn.:LOGICDIAGRAM.Seealso:NETWORK.(3/04)
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LOGICRESTRAINT
(1)Adummy,whichdefinesthedependencyofonepartofthenetworkonanotherpartofit.
(2)Adummyarroworconstraintconnectionthatisusedasalogicalconnectorbutthatdoesnotrepresentactual
work items. It is usually represented by a dotted line, and is sometimes called a dummy because it does not
representwork.Itisanindispensablepartofthenetworkconceptwhenusingthearrowdiagrammingmethodof
CPMscheduling.(6/07)
LOGIC SEQUENCING Thearranging of project activities in to a selfevident or reasoned and progressive series.
(6/07)
LONG LEAD ITEMS Those components of a system or piece of equipment for which the times to design and
fabricatearethelongestandforwhichanearlycommitmentoffundsmaybedesirableornecessaryinorderto
meettheearliestpossibledateofsystemcompletion.(6/07)
LONG LEAD PROCUREMENT Early procurement of material or parts to accommodate early use or long
procurement spans. Contractors maychoose to seekbuyerapproved preaward commitments of fundsto meet
longleadrequirements.(6/07)
LONGEST PATH (LP) Longest continuous path of activities through a project, which controls project early
completion.Itispossiblefor otherwisedefinedcriticalpathactivitiestonotbeonthelongestpathandlongest
path activities to not show calculated critical float. The longest path analysis is unaffected by activity calendars.
Thelongestpathisdeterminedbythestringofactivities,relationships,andlagsthatpushtheprojecttoitslatest,
early finish date. The longest path is calculated by first performing a CPM forward pass to determine driving
relationshipsandtheprojectslatest,earlyfinishdate.Theactivity(oractivities)withthelatest,earlyfinishdates
arethenidentifiedandallpredecessordrivingrelationshipstracedbacktotheprojectstartdate.Theseactivities
constitute the project's longest path. The longest path depends upon relationships driving the timing of activity
starts, thus use of constraints and resource leveling can interrupt and invalidate longest path analysis. Use of
interruptibleactivitiescanalsoresultinfalselongestpathindications.Forcompleteaccuracy,longestpathanalysis
shouldtakeplaceabsentofconstraints,resourceleveling,and/orinterruptibleactivities.(6/07)
LONGESTPATHVALUEAnumericalcalculationassignedtoeveryactivityinaCPMschedulethatdetermineshow
nearthatactivityistobeingconsideredamemberofthelongestpath.Itisexpressedinthesametimeunitsasthe
totalfloatforthatactivity.Alongestpathfloatvalueofzerowouldindicatethattheactivityisonthelongestpath.
(3/10)
LOOKAHEADSCHEDULEAshortperiod(twoorthreeweeks)schedule,typicallypresentedinbarchartformat
showing what needs to be accomplished to keep the project on schedule. Lookahead schedules are often
discussedatweeklyprojectmeetingstocoordinateandcontrolthefollowingweekswork.(6/07)
LOOP/LOGICLOOPAcircularsequenceofdependencylinksbetweenactivitiesinanetwork.Createsanerrorin
networklogicresultingfromsuccessoractivitiesalsobeingapredecessortotheactivityinquestion.Alsoknownas
circularlogic.Logicloopscanbeveryfrustratingandtimeconsumingtoeliminateincomplexnetworkschedules.
(6/07)
LOSSOFPRODUCTIVITY/EFFICIENCYSeealso:INEFFICIENCY.(11/90)
LOSTPRODUCTIVITYSeealso:INEFFICIENCY.(4/04)
LOT BATCH A definite quantity of some product manufactured under conditions of production that are
considereduniform.(11/90)
LOTSIZEThenumberofunitsinthelot.(11/90)
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LOWESTMANAGEMENT LEVEL (LML) A term used in the dynamic baseline model hierarchy in which a project
may be positioned and is the control point for a project. It represents the level at which the project must be
managedonanongoingbasisinordertodealeffectivelywiththedynamicissuesbelowtheLSB.
a) For a production project the LML is the supervisor level. A supervisor is the lowest management level with
sufficientcapacityandauthoritytodealeffectivelywithadynamicproceduresbaseline.
b) For a construction project the LML is the manager level. A manager is the lowest management level with
sufficientcapacityandauthoritytodealeffectivelywithadynamicconstructionbaseline.
c) For a development project the LML is the director level. A director is the lowest management level with
sufficientcapacityandauthoritytodealeffectivelywithadynamicrequirementsbaseline.
d) For an evolution project the LML is theowner level. The project owner is the lowest management level with
sufficientcapacityandauthoritytodealeffectivelywithadynamicobjectivesbaseline.(6/07)
LOWEST STATIC BASELINE (LSB) Using the flow down of organizational objectives from corporate values to
projectobjectivestofunctionalrequirementstoproductdesign,theLSBisthelowestlevelthatisrelativelyfixed
foragivenprojectinthehierarchyandisthereforereadily"baselineable".Atermusedinthedynamicbaseline
model hierarchy in which a project may be positioned. A project can only be expected to meet its LSB, and
thereforesuccessorfailureshouldonlyrealisticallybemeasuredrelativetothatbaseline.(6/07)
LUMPSUMThecompleteinplacecostofasystem,asubsystem,aparticularitem,oranentireproject.(6/07)
MAINTENANCE AND REPAIR COST The total of labor, material, and other related costs incurred in conducting
corrective and preventative maintenance and repair on a facility, on its systems and components, or on both.
Maintenancedoesnotusuallyincludethoseitemsthatcannotbeexpendedwithintheyearpurchased.Suchitems
mustbeconsideredasfixedcapital.[2](11/90)
MAJORCOMPONENTSPartoftheaggregationstructureofapriceindex(e.g.,aCPIcanbesubdividedintomajor
components of food, housing, clothing, transportation, health and personal care, recreation, reading and
education,tobaccoandalcohol).(11/90)
MAJOR MILESTONE The most significant milestones in the project's life or duration, representing major
accomplishments or decision points; usually associated with the first breakdown level in the work breakdown
structure.[4](11/90)
MAJORSYSTEMACQUISITIONPROJECTSThoseprojectsthataredirectedatandarecriticaltofulfillingamission,
entailtheallocationofrelativelylargeresources,andwarrantspecialmanagementattention.(11/90)
MANAGEMENT BY EXCEPTION Issuance of management reports only when action is called for. Helps avoid
wading through voluminous reports where progress is going according to plan. However, system may require
subjectivejudgmentbysomeonewhoisnotaswellplacedtodosoasthemanagerhimself.Exceptionreportstend
tobeharbingersofbadnews,lackinggoodnewsandhenceseenasdetrimentalratherthanbeneficial.(6/07)
MANAGEMENTBYMETHODS(MBM)Level2ofafiveleveldynamicbaselinemodelinwhichthoseproficientin
MBR build on their knowledge base, level 1 (MBR) with customized project management processes and
procedures.Atthislevelpractitionersgetacquaintedwith,andbecomeproficientintheuseof,standardproject
management tools, frameworks and templates. The work breakdown structure, the responsibility assignment
matrix,schedulingtechniques,cost/scheduleperformancecontrolandmonitoringandconfigurationmanagement
arethehallmarksoflevel2learning.Atthislevel,anemployeehasthecapacitytousethetoolstoanalyzeproject
performancedataandtomakerecommendationsforcorrectiveactionsaccordingly.(6/07)
MANAGEMENT BY OBJECTIVES (MBO) A management theory that calls for managing people based on
documented work statements mutually agreed to by manager and subordinate. Progress on these work
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statementsisperiodicallyreviewed,andinaproperimplementation,compensationistiedtoMBOperformance.
Level 3 of a five level dynamic baseline model structure in which establishing and maintaining the project
objectivesasthereferencepointandmanagingandmanipulatingthemethodsatlevel2(MBM)andtherulesat
level1(MBR)asappropriatetothathorizon.(6/07)
MANAGEMENTBYPOLITICS(MBP)Apotentiallevel5ofafiveleveldynamicbaselinemodelstructure.Thisisan
extrapolation of the model, which would lead to a management approach where the essential values of the
corporation are a dynamic baseline. This would entail dealing with some higher order issues wherein project
managerswouldcontendwithharmonizingvariouscorporateagendasinapoliticizedenvironment.Alevel5MBP
would be dealing with an intangibleproduct witha focus on governance issues. TheLML at level 5 wouldbe in
essenceapolitician.(6/07)
MANAGEMENTBYRULES(MBR)Level1ofafiveleveldynamicbaselinemodelstructureatwhichbehavioristhe
first level of learning. MBR is indoctrination into the official operations for an organization. Employees are
encouraged to develop a strong sense of affiliation with the organizations institutional framework rules,
regulations,policies,procedures,directives,laws,acts,etc.Atthisleveloflearning,anemployeeistaughthowto
applyexistingrulestoconductbusiness,andonoccasions,tointerpretrulesinsomenewwayforthepurposeof
addressingprojectissuesnotreadilycoveredintheexistingframework.(6/07)
MANAGEMENTBYVALUES(MBV)Level4ofafiveleveldynamicbaselinemodelstructureinwhichanemployee
has the capacity to manipulate and evolve the objective throughout the project life cycle as appropriate to the
overarching corporate values. MBV practitioners are expected to revisit and adjust project objectives with their
attentionfocusedonthecorporatevalueshorizon.Inturn,thisrequiresthecapacitytomanipulatethetoolsand
theruleswiththeknowledgeandexperiencetounderstandtheimplicationsasperlevel3(MBO).(6/07)
MANAGEMENT BY WALKING AROUND (MBWA) Part of the Hewlett Packard legacy and popularized by
management theorist Tom Peters. MBWA works on the assumption that a manager must circulate to fully
understandtheteam'sperformanceandproblems.Thebestmanagers,accordingtoPeters,spend10percentof
theirtimeintheiroffices,and90percentoftheirtimetalkingandworkingwiththeirpeople,theircustomers,and
theirsuppliers.(6/07)
MANAGEMENTCONTROLPOINTApointintheprojectlifecycle,usuallyseparatingmajorphasesorstages,at
whichseniormanagementhastheopportunitytoconfirmordenycontinuationintothenextphaseorstage.See
also:CONTROLGATE.(6/07)
MANAGEMENT CONTROL SYSTEMS The systems (e.g., planning, scheduling, budgeting, estimating, work
authorization, cost accumulation, performance measurement, etc) used by owners, engineers, architects, and
contractorstoplanandcontrolthecostandschedulingofwork.[4](11/90)
MANAGEMENTRESERVE
(1)Anamountaddedtoanestimatetoallowfordiscretionarymanagementpurposesoutsideofthedefinedscope
of the project, as otherwise estimated. May include amounts that are within the defined scope, but for which
managementdoesnotwanttofundascontingencyorthatcannotbeeffectivelymanagedusingcontingency.Syn.:
RESERVE;RESERVEALLOWANCE.
(2)InearnedvaluemanagementaccordingtotheANSIEIA748standard,anamountheldoutsidetheperformance
measurement baseline to handle unknown contingency at the total program level. Management reserve has no
scope,isnotidentifiedtospecificrisks,andisnottimephased.Itistypicallynotestimatedornegotiatedandis
createdinthebudgetdevelopmentprocess.(10/13)
MANAGEMENT SCHEDULE RESERVE (MSR) A designated amount of time to account for risks that cannot be
quantified and/or managed with contingency, or to allow time for management discretionary purposes and the
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useofmanagementreservegenerallyrequiresaformalbaselinechange.Managementreservesaregenerallynot
relatedtoschedulecontingency.Seealso:MANAGEMENTRESERVE(MR).(10/13)
MANAGEMENT SCIENCE The application of methods and procedures including sophisticated mathematical
techniques to facilitate decision making in the handling, direction, and control of projects and manufacturing
operations.(11/90)
MANDATORY DEPENDENCY Dependency inherent in the nature of the work being done, such as a physical
limitation.Usedinhardlogic.[8](6/07)
MANPOWERLOADINGCHARTHistogramshowingtheallocationoflaborbyperiod.Seealso:HISTOGRAM.(6/07)
MANPOWER PLANNING Process of forecasting an organization's manpower needs over time, in terms of
numbers and skills, and obtaining the human resources required to match an organizations needs. See also:
RESOURCEPLANNING.(6/07)
MANUFACTURINGCOSTThetotalofvariableandfixedordirectandindirectcostschargeabletotheproduction
ofagivenproduct,usuallyexpressedincentsordollarsperunitofproduction,ordollarsperyear.Transportation
and distribution costs, and research, development, selling and corporate administrative expenses are usually
excluded.Seealso:OPERATINGCOST.(11/90)
MANUFACTURINGRESOURCEPLANNING(MRPII)Amethodfortheeffectiveplanningofalltheresourcesofa
manufacturingcompany.Ideally,itaddressesoperationalplanninginunits,financialplanningindollars,andhasa
simulationcapabilitytoanswer"whatif"questions.Itismadeupofavarietyoffunctions,eachlinkedtogether:
business planning, production planning, master production scheduling, material requirements planning, capacity
requirementsplanning,andtheexecutionsystemsforcapacityandpriority.Outputsfromthesesystemswouldbe
integrated with financial reports such as the business plan, purchase commitment report, shipping budget,
inventory projections in dollars, etc. Manufacturing resource planning is a direct outgrowth and extension of
materialrequirementplanning(MRP).(11/90)
MAPIMETHOD
(1)AprocedureforreplacementanalysissponsoredbytheMachineryandAlliedProductsInstitute.
(2) A method of capital investment analysis which has been formulated by the Machinery and Allied Products
Institute.Thismethodusesafixedformatandprovideschartsandgraphstofacilitatecalculations.Aprominent
featureofthismethodisthatitexplicitlyincludesobsolescence.(11/90)
MARGINAL ANALYSIS An economic concept concerned with those incremental elements of costs and revenue
whichareassociateddirectlywithaspecificcourseofaction,normallyusingavailablecurrentcostsandrevenueas
abaseandusuallyindependentoftraditionalaccountingallocationprocedures.(11/90)
MARGINALCOST(BENEFIT)Syn.:INCREMENTALCOST(BENEFIT).[1](11/90)
MARKETING The broad range of activities concerned primarily with the determination of consumer or user
demandsordesires,bothexistingandpotential;thesatisfactionofthesedemandsordesiresthroughinnovation
or modification; and the building of buyer awareness of product or service availability through sales and
advertisingefforts.(11/90)
MARKETINGCOSTANALYSISThestudyandevaluationoftherelativeprofitabilityorcostsofdifferentmarketing
operations in terms of customer, marketing units, commodities, territories, or marketing activities. Typical tools
includecostaccounting.(11/90)
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MARKETING RESEARCH The systematic gathering, recording, and analyzing of data about problems relating to
themarketingofgoodsandservices.Suchresearchmaybeundertakenbyimpartialagenciesorbybusinessfirms,
ortheiragents.Marketingresearchisaninclusivetermwhichincludesvarioussubsidiarytypes:
a) MARKET ANALYSIS, of which product potential is a type, which is the study of size, location, nature, and
characteristicsofmarkets.
b)SALESANALYSIS(ORRESEARCH),whichisthesystematicstudyandcomparisonofsales(orconsumption)data.
c)CONSUMERRESEARCH,ofwhichmotivationresearchisatypewhichisconcernedchieflywiththediscoveryand
analysisofconsumerattitudes,reactions,andpreferences.(11/90)
MARKETVALUEThemonetarypriceuponwhichawillingbuyerandawillingsellerinafreemarketwillagreeto
exchangeownership,bothpartiesknowingallthematerialfactsbutneitherbeingcompelledtoact.Themarket
valuefluctuateswiththedegreeofwillingnessofthebuyerandsellerandwiththeconditionsofthesale.Theuse
of the term market suggests the idea of barter. When numerous sales occur on the market, the result is to
establishfairlydefinitemarketpricesasthebasisofexchanges.(11/90)
MARKUP As variously used in construction estimating, includes such percentage applications as general
overhead,profit,andotherindirectcosts.Whenmarkupisappliedtothebottomofabidsheetforaparticular
item,system,orotherconstructionprice,anyoralloftheaboveitems(ormore)maybeincluded,dependingon
localpractice.(11/90)
MASTERPRODUCTIONSCHEDULE(MPS)Inmanufacturing,forselecteditems,astatementofwhatthecompany
expects to manufacture. It is the anticipated build schedule for those selected items assigned to the master
scheduler.Themasterschedulermaintainsthisscheduleand,inturn,itbecomesasetofplanningnumberswhich
"drives" MRP.It representswhat thecompany planstoproduce expressed in specific configurations, quantities,
anddates.TheMPSshouldnotbeconfusedwithasalesforecast,whichrepresentsastatementofdemand.The
master production schedule must take forecast plus other important considerations (backlog, availability of
material, availability of capacity, management policy and goals, etc.) into account prior to determining the best
manufacturingstrategy.(11/90)
MASTERSCHEDULEAconsolidatedscheduleincorporatingmultiple,relatedprojectsorpartsofaprojectsothat
they may be monitored and controlled as a unit. See also: LEVEL OF SCHEDULES MANAGEMENT SUMMARY
SCHEDULE.(6/07)
MASTERSCHEDULEITEMInmanufacturing,apartnumberselectedtobeplannedbythemasterscheduler.The
itemwouldbedeemedcriticalintermsofitsimpactonlowerlevelcomponentsand/orresourcessuchasskilled
labor,keymachines,dollars,etc.Amasterscheduleitemmaybeanenditem,acomponent,apseudonumber,or
aplanningbillofmaterial.(11/90)
MASTERSCHEDULERThepersonwhomanagesthemasterprojectorproductionschedule.(6/07)
MATERIALCOSTThecostofeverythingofasubstantialnaturethatisessentialtotheconstructionoroperation
of a facility, both of a direct or indirect nature. Generally includes all manufactured equipment as a basic part.
(11/90)
MATERIALDIFFERENCEAchangethatisimportanttotheperformanceoftheworkorthatwillhaveameasurable
influenceoreffectonthetime,costof,orproceduresfortheworkunderthecontract.(11/90)
MATERIAL REQUIREMENTS PLANNING (MRP) A system which uses bills of material, inventory and open order
data, and master production schedule information to calculate requirements for materials. It makes
recommendations to release replenishment orders for material. Further, since it is timephased, it makes
recommendations to reschedule open orders when due dates and need dates are not in phase. See also:
MANUFACTURINGRESOURCEPLANNING(MRPII).(11/90)
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MAXIMUMOUTOFPOCKETCASHThehighestyearendnegativecashbalanceduringprojectlife.(11/90)
MEANSANDMETHODSSyn.:METHODOFPERFORMANCE.(6/07)
MECHANICALCOMPLETIONPlacingafixedassetinservice.Mechanicalcompletionisanevent.(11/90)
MECHANICAL COMPLETION Unit is essentially complete for startup operation and test run. All major work is
completed. Minor work not interfering with operation may not be completed, such as punch list and minor
touchupwork.Acceptanceletterwillhavebeensubmittedtotheclient.Precisedefinitionmayvaryandisusuallya
contractualprovision.Clientcustodymaycommence.Itisimportantthatthisdefinitionbeclearlydefinedinthe
contract.(6/07)
MERGEBIASInPERTandotherdeterministicscheduleanalysismethods,abiasthatisintroducedbecausethe
methoddoesnotrecognizethatparallelslackpathscancontributetoriskatthemergepoints.(12/11)
MERGE NODE In a network diagram, a node at which two or more activities precede the start of subsequent
activity.(6/07)
MERITSHOPSyn.:OPENSHOP.(11/90)
METALANGUAGE(RISK)Inriskidentification,astructureddescriptionofcause,riskandeffect.Forexample:Due
to<cause>,thereisathreat/opportunitythat<risk>mayoccur,whichmayleadto<effect>.(12/11)
METHOD OF MEASUREMENT The procedure, usually standardized, according to which the quantities of work
expressedinabillofquantities(BOQ)shallbemeasured.Seealso:BILLOFQUANTITIES(BOQ);RULESOFCREDIT.
(6/07)
METHODOFPERFORMANCEMannerinwhichthespecifiedproductorobjectiveisaccomplished,whichisleftto
thediscretionofthecontractorunlessotherwiseprovidedinthecontract.Iftheownerordersthecontractorto
modify the construction procedure, this constitutes a change in method. If the imposition of this modification
resultsinadditionalcosttothecontractor,thecontractormaybeentitledtorecoveryunderthechangesclause.
Syn.:MEANSANDMETHODS.(6/07)
MICROSCHEDULINGSchedulingofactivitieswithadurationlessthanoneday(inminutes,hoursorfractional
days).(6/07)
MILESTONEAzerodurationactivityoreventwhichisusedtodenoteaparticularpointintimeforreferenceor
measurement. Milestones are not true activities in that theydo not consume time or resources. Often used for
management summary reporting. A milestone should be capable of validation by meeting all of the items
prescribedinadefiningchecklistasagreedwiththestakeholders.Seealso:KEYACTIVITY;KEYEVENTS.(6/07)
MILESTONEDICTIONARYAdescriptionofexactlywhatisrequiredtosatisfyeachmilestone.(6/07)
MILESTONEFLAGAnumericcodethatmaybeenteredonaneventtoflagtheeventasamilestone.(11/90)
MILESTONE LEVEL The level of management at which a particular event is considered to be a key event or
milestone.(11/90)
MILESTONE,PAYMENTThosemilestonesonwhichpaymentsfalldue.(6/07)
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MILESTONEPLANAplancontainingonlymilestonesthathighlightkeyactivitiesoreventsoftheproject.Seealso:
MILESTONESCHEDULE.(6/07)
MILESTONE REPORT An output report at a specified level showing the latest allowable date, expected date,
schedulecompletiondate,andtheslackforthesuccessoreventcontainedoneachactivityoreventnameflagged
asamilestoneatthelevelspecified.(11/90)
MILESTONE SCHEDULE A schedule comprised of key events or milestones selected as a result of coordination
between the client's and the contractor's project management. These events are generally critical
accomplishmentsplannedattimeintervalsthroughouttheprojectandusedasabasistomonitoroverallproject
performance. The format may be either network or bar chart and may contain minimal detail at a highly
summarizedlevel.(11/90)
MISREPRESENTATION Inaccurate factual information furnished by either party to a contract, even if done
unintentionally.(11/90)
MITIGATION A risk response strategy for threats intended to reduce consequences and/or the probability of
occurrence. In contracting, refers to the affirmative obligation of each party to a contract to take action to
decrease,lessenorminimizedamages(timeandmoney)totheotherparty.(12/11)
MITIGATION OF DAMAGES To take all possible measures to avoid damage and delay and, if not avoidable, to
reduceorlessentheextracostsincurredduetooccurrenceoftheevent.(11/90)
MODELPRICINGThetechniquesofusingverbal,symbolic,oranalogmodelstodepictcostrelationships,andthe
formwhichtheytake.Mathematicsandcomputersarebasicanalyticaltoolsformodelpricing.(11/90)
MODELINGCreationofaphysicalrepresentationormathematicaldescriptionofanobject,systemorproblem
thatreflectsthefunctionsorcharacteristicsoftheiteminvolved.Modelbuildingmaybeviewedasbothascience
andanart.CostestimateandCPMscheduledevelopmentshouldbeconsideredmodelingpracticesandnotexact
representationsoffuturecosts,progressandoutcomes.(6/07)
MODIFICATION,BILATERALAnagreementnegotiatedbyandenteredintobybothpartiesforamodificationof
theexistingcontracttermsofamutuallyagreedtimeorpriceadjustment.(11/90)
MODIFICATION,UNILATERALAmodificationtothecontractissuedbytheownerwithouttheagreementofthe
contractorastothetimeorpriceadjustment.(11/90)
MONETARYEQUIVALENTSTheexpressionorvaluationofvariousobjectivesandrequirementsoftheenterprise
(e.g.,environmental,safety,etc.)intermsofmonetaryunitstoprovideasinglemeasuretobeusedindecision
modeling.(12/11)
MONITORING Periodic gathering, validating and analyzing various data on contract status to determine any
existing or potential problems. Usually one accomplishes this through use of the data provided in contractor
reports on schedule, labor, cost and technical status to measure progress against the established baselines for
each of these report areas. However, when deemed necessary, onsite inspection and validation and other
methodscanbeemployed.(11/90)
MONTE CARLO SIMULATION A computer sampling technique based on the use of pseudorandom numbers
thatselectssamplesforasimulationofarangeofpossibleoutcomes.Seealso:LATINHYPERCUBE.(12/11)
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MONTHLYGUIDESCHEDULEAdetailedtwomonthscheduleusedtodetailthesequenceofactivitiesinanarea
for analysis or to plan work assignments. This schedule is usually prepared on an "as needed" basis or within a
criticalarea.Syn.:SHORTTERMACTIVITIES(11/90)
MONTHTOMONTHPRICEINDEXApriceindexforagivenmonthwiththeprecedingmonthasthebaseperiod.
(11/90)
MOSTLIKELYTIMEThemostrealistictimeestimateforcompletinganactivityundernormalconditions.Usedin
probabilisticscheduling.Seealso:PERT(PROJECTEVALUATIONANDREVIEWTECHNIQUE).(6/07)
MOSTLIKELYVALUEInriskanalysis,usuallyreferstothemodeofadistribution.Ifthedistributionismultimodal,
uniformorcomplex,thismayexpresstheestimatorsjudgment.Seealso:BESTESTIMATE.(12/11)
MOVING AVERAGE Smoothing a time series by replacing a value with the mean of itself and adjacent values.
(11/90)
MRPSyn.:MATERIALREQUIREMENTSPLANNING(MRP).(11/90)
MRPIISyn.:MANUFACTURINGRESOURCEPLANNING(MRPII)(6/07)
MULTIPROJECT SCHEDULING Technique used to consolidate multiple projects CPM schedules into a master
schedule.Thetechniqueisusedtomonitorandcontrolanoverallprogram.Seealso:PROGRAM(6/07)
MULTIPLEFINISHNETWORKAnetworkthathasmorethanonefinishactivityorfinishevent.(11/90)
MULTIPLESTARTNETWORKAnetworkthathasmorethanonestartactivityorevent.(11/90)
MULTIPLESTRAIGHTLINEDEPRECIATIONMETHODAmethodofdepreciationaccountinginwhichtwoormore
straightlineratesareused.Thismethodpermitsapredeterminedportionoftheassettobewrittenoffinafixed
numberofyears.Onecommonpracticeistoemployastraightlineratewhichwillwriteoff3/4ofthecostinthe
first half of the anticipated service life; with a second straight line rate to write off the remaining 1/4 in the
remaininghalflife.(11/90)
MUSTFINISHDateanactivitymustfinishby.Itisaconstraintdate.Seealso:IMPOSEDFINISHDATE.(6/07)
MUSTFINISHBYDATEDateusedbyschedulingsoftwaretocalculatethefinalcompletionstatusoftheproject.
Withouttheimpositionofamustfinishbydate,theendoftheprojectwouldfloatouttoitsnaturalcompletion.
(6/07)
MUSTSTARTDateanactivitymuststartby.Itisaconstraintdate.Seealso:IMPOSEDSTARTDATE.(6/07)
NEARCRITICALACTIVITYAscheduleactivitywithminimaltotalfloatascomparedwiththecriticalpath(s),and
forwhichthereissomeriskofdelaythatwillcausethenearcriticalactivitytobecomecritical.Theamountoffloat
thatmanagementperceivestobenearcriticalisprojectdependentandopentoprofessionaljudgment.(10/13)
NEARCRITICALPATHAnactivityorsetofactivitiesthatarealmostcriticalorareatriskofbecomingcriticalif
delayedpasttheirexpectedcompletiontimes.Inclusioninthislistmaybemadebyusingtotalfloat,longestpath
value, or multiple critical paths. The value associated with these nearcritical path activities typically are
approximatelyonehalfofthereportingperiodsdurationorless.(3/10)
NEARTERMACTIVITIESActivitiesthatareplannedtobegin,beinprocess,orbecompletedduringarelatively
shortperiod,suchas30,60,or90days.(6/07)
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NEGATIVEFLOAT
(1)Theamountoftimebywhichtheearlydateofanactivityexceedsitslatedate.Itishowfarbehindanactivityis
fromitsplannedearlystart/finishdate.
(2)Timebywhichthedurationofanactivityorpathhastobereducedinordertopermitalimitingimposeddate
tobeachieved.(6/07)
NEGATIVELAGAlagthathasanegativevalue.Ingeneral,negativelagsshouldbeavoided.Seealso:LAG.(10/13)
NEGLIGENCE Failure to exercise that degree of care in the conduct of professional duties that should be
exercised by the average, prudent professional, practicing in the same community under similar circumstances.
Under this concept, an architect/engineer is not liable for errors of judgment, but only for a breach of duty to
exercisecareandskill.(11/90)
NET AREA When used in building construction, it is the area, exclusive of encroachments by partitions,
mechanicalspace,etc,whichisavailableforcirculationorforanyotherfunctionalusewithinaproject.(11/90)
NET BENEFITS (SAVINGS) The difference between the benefits and the costs where both are discounted to
presentorannualvaluedollars.[1](11/90)
NETPRESENTVALUESyn.:PRESENTVALUE.(11/90)
NET PROFIT Earnings after all operating expenses (cash or accrued noncash) have been deducted from net
operatingrevenuesforagivenperiod.(11/90)
NET PROFIT, PERCENTOFSALES The ratio of annual profits to total sales for a representative year of capacity
operations. An incomplete measure of profitability, but a useful guidepost for comparing similar products and
companies.Seealso:PROFITMARGIN.(11/90)
NETPURCHASES(CONCEPTOF)Accordingtothisconcept,anyproceedsfromthesaleinthereferenceyearofa
used commodity belongs to a given elementary group and are subtracted from the expenditure reported on
commoditiesinthatelementarygroup.(11/90)
NETWORKTheseriesofactivitiesrequiredtocompleteaproject.Typicallyincludesalogicdiagramofaproject
consisting of the activities and events that must be accomplishedto reachtheobjectives, showingtheirrequired
sequenceofaccomplishmentsandinterdependencies.Seealso:CRITICALPATHMETHOD(CPM);LOGICDIAGRAM.
(6/07)
NETWORKANALYSISProcessofidentifyingearlyandlatestartandfinishdatesforactivitiesbyuseofaforward
andbackwardpassthroughtheCPMmodel.Seealso:CRITICALPATHMETHOD(CPM).(6/07)
NETWORKDIAGRAMSyn.:LOGICDIAGRAM.(6/07)
NETWORK FLOAT The total float values that exist on the various chains of activities within the CPM network.
Distinguishfromprojectfloat.Seealso:PROJECTFLOAT.(6/07)
NETWORKINTERFACEActivityoreventcommontotwoormorenetworkdiagrams.(6/07)
NETWORK LOGIC The collection of activity dependencies that make up a project network diagram. See also:
LOGIC.(6/07)
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NETWORK OPEN END A condition where at least one CPM network activity other than the first has no
predecessororotherthanthelasthasnosuccessor.(8/07)
NETWORKPATHAnycontinuousseriesofconnectedactivitiesinaprojectnetworkdiagram.(6/07)
NETWORKPLANNINGAbroadgenerictermfortechniquesusedtoplancomplexprojectsusinglogicdiagrams
(networks).TwoofthemostpopulartechniquesareADMandPDM.(11/90)
NETWORK SCHEDULING Method of planning and scheduling a project where activities are arranged based on
predecessorandsuccessorrelationships.Networkcalculationsdeterminewhenactivitiesmaybeperformedand
whichactivitiesarecriticalorhavefloat.Seealso:CRITICALPATHMETHOD(CPM).(8/07)
NODEInanactivityonarrow(AOA)schedule,theeventmarkingthestart(Inode)orfinish(Jnode)ofanactivity.
Nodesaretypicallyrepresentedgraphicallyasacircle.(6/07)
NOMINALDISCOUNTRATETherateofinterestreflectingthetimevalueofmoneystemmingbothfrominflation
andtherealearningpowerofmoneyovertime.Thisisthediscountrateusedindiscountformulasorinselecting
discountfactorswhenfuturebenefitsandcostsareexpressedincurrentdollars.[1](11/90)
NONCASHAtermfrequentlyusedfortangiblecommoditiestobeusedfrominventoryandnotreplaced.(11/90)
NONCRITICALACTIVITIESORWORKITEMSActivitiesorworkitemsthathavepositivefloat.i.e.withindefined
limits,cantakelongertocompletethanplannedwithoutaffectingtotalprojectduration.(6/07)
NONDURABLEGOODSGoodswhoseserviceabilityisgenerallylimitedtoaperiodoflessthanthreeyears(such
asperishablegoodsandsemidurablegoods).(11/90)
NONEXCUSABLEDELAYS
(1) Delays that are caused by the contractor's or its subcontractor's actions or inactions. Consequently, the
contractor is not entitled to a time extension or delay damages. On the other hand, owner may be entitled to
liquidatedorotherdamages.
(2)Anonexcusabledelayisoneforwhichthepartyassumestheriskofthecostandconsequences,notonlyfor
itselfbutpossiblyfortheresultingimpactonothersaswell.Theconceptofnonexcusabilityisusedprimarilyasa
defensetorequestsfortimeextensionsorclaimsfordelay.[10]
See also: EXCUSABLE DELAYS; EXCUSABLE COMPENSABLE DELAYS; EXCUSABLE NONCOMPENSABLE DELAYS;
CONCURRENTDELAYS.(6/07)
NONEXEMPT EMPLOYEES Employees not exempt from overtime compensation by federal wage and hours
guidelines.(6/07)
NONSPLITTABLE ACTIVITY An activity that, once started, has to be completed to plan without interruption.
Resourcesshouldnotbedivertedfromanonsplittableactivity.(6/07)
NONWORKUNITAcalendarspecifiedtimeunitduringwhichworkwillnotbescheduled.(11/90)
NORMALIZATIONIndatabasemanagement,aprocessusedtomodifydatasothatitconformstoastandardor
norm(e.g.,conformtoacommonbasisintime,currency,location,etc.)(6/07)
NORMAL WEATHER That kind of weather, which could be expected for a period of time, based upon the
historicalweatherexperienceofthelocale.(6/07)
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NOTEARLIERTHANArestrictiononanactivitythatindicatesthatitmaynotstartorendearlierthanaspecified
date.(6/07)
NOT LATER THAN A restriction on an activity that indicates that it may not start or end later than a specified
date.(6/07)
NOTICE OF AWARD The written notice of acceptance of the bid by the owner to a bidder stating that upon
compliancebythebidderwiththeconditionsprecedentenumeratedtherein,withinthetimespecified,theowner
willsignanddelivertheagreement.(11/90)
NOTICETOPROCEED(NTP)Formalnotificationtoacontractororsupplier,requestingthestartoftheworkora
defined phase of work. May be in the form of a limited NTP (LNTP), which authorizes only limited areas of a
programorprojecttobeginwithinstatedboundariesinanticipationofasubsequentNTP.(6/07)
OBJECTIVE Something one wants to get done. A specific statement of quality, quantity and time values. In
contract/procurementmanagement,todefinethemethodtofollowandtheservicetobecontractedorresource
tobeprocuredfortheperformanceofwork.Intimemanagement,apredeterminedresult,towardwhicheffortis
directed.(6/07)
OBJECTIVEEVENTAneventthatsignifiesthecompletionofapaththroughthenetwork.Anetworkmayhave
morethanoneobjectiveevent.(11/90)
OBSOLESCENCE
(1) The condition of being out of date. A loss of value occasioned by new developments which place the older
propertyatacompetitivedisadvantage.Afactorindepreciation.
(2)Adecreaseinthevalueofanassetbroughtaboutbythedevelopmentofnewandmoreeconomicalmethods,
processes,and/ormachinery.
(3) The loss of usefulness or worth of a product or facility as a result of the appearance of better and/or more
economicalproducts,methodsorfacilities.(11/90)
OCCURREDRISKAriskeventorconditionthatwasidentifiedduringriskassessmentandthatactuallyoccurred.
(12/11)
OFFSITESGeneralfacilitiesoutsidethebatterylimitsofallprocessunits,suchasfieldstorage,servicefacilities,
utilities,mainelectricsubstation,administrativebuildings,railtracksandstorageyard,etc.(6/07)
OMISSIONAnypartofasystem,includingdesign,constructionandfabrication,thathasbeenleftout,resultingin
adeviation.Anomissionrequiresanevaluationtodeterminewhatcorrectiveactionisnecessary.(11/90)
ONSTREAMFACTORTheratioofactualoperatingdaystocalendardaysperyear.(11/90)
OPENSHOPAnemploymentorprojectconditionwhereeitherunionornonunioncontractorsorindividualsmay
beworking.Openshopimpliesthattheownerorprimecontractorhasnounionagreementwithworkers.Syn.:
MERITSHOP.(11/90)
OPENENDEDACTIVITIESCPMactivitiesthatdonothaveapredecessororasuccessormaybesaidtobeopen
ended.AsidefromtheoneactivitystartingtheCPMnetworkandthelastactivityinthatnetwork,openended
activitiesbreakthelogicalnetworkandmaynotexhibitcorrectfloatcalculations.(3/10)
OPERATINGCOSTTheexpensesincurredduringthenormaloperationofafacility,orcomponent,includinglabor,
materials, utilities, and other related costs. Includes all fuel, lubricants, and normally scheduled part changes in
ordertokeepasubsystem,system,particularitem,orentireprojectfunctioning.Operatingcostsmayalsoinclude
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general building maintenance, cleaning services, taxes, and similar items. See also: MANUFACTURING COST.
(11/90)
OPERATIONOngoingendeavor,oractivitiesthatutilizestrategicassetsforadefinedfunctionorpurpose.(1/02)
OPERATION PHASE Period when the completed deliverable is used and maintained in service for its intended
purpose.Theoperationphaseispartoftheassetorproductlifecycleasdistinctfromtheprojectlifecycle.See
also:LIFECYCLEASSETLIFECYCLE.(6/07)
OPERATIONS RESEARCH (OR) Quantitative analysis of industrial and administrative operations with intent to
derive an integrated understanding of the factors controlling operational systems and in view of supplying
managementwithanobjectivebasistomakedecisions.ORfrequentlyinvolvesrepresentingtheoperationorthe
systemwithamathematicalmodel.(11/90)
OPPORTUNITY Uncertain event that could improve the results, or improve the probability that the desired
outcomewillhappen.Seealso:RISK;THREAT;UNCERTAINTY.(6/07)
OPPORTUNITYCOSTSThevalueofalostopportunityofanalternativethatisnotselected.Seealso:ECONOMIC
COSTS.(12/11)
OPPORTUNITY COST OF CAPITAL The rate of return available on the next best available investment of
comparablerisk.[1](11/90)
OPTIMISTICDURATIONTheshortestofthethreedurationsinthethreedurationtechniqueorPERT.(6/07)
OPTIMISTIC TIME ESTIMATE The minimum time in which the activity can be completed if everything goes
exceptionallywell.(6/07)
OPTIMUMPLANTSIZETheplantcapacitywhichrepresentsthebestbalancebetweentheeconomicsofsizeand
thecostofcarryingexcesscapacityduringtheinitialyearsofsales.(11/90)
ORDEROFMAGNITUDEESTIMATEAnestimatepreparedbasedonlittleornoprojectdefinition.Seealso:COST
ESTIMATECLASSIFICATIONSYSTEM,CLASS5ESTIMATE.(5/12)
ORGANIZATION BREAKDOWN STRUCTURE (OBS) A hierarchical relationship of the organization, including

subcontractors,responsibleformanagingadesignatedscopeofworkwithintheworkbreakdownstructure(WBS).
Seealso:WORKBREAKDOWNSTRUCTURE(WBS).(1/14)
ORGANIZATIONAL CODES Numerical or alphabetized characters that the user specifies for the system to
associatewithaparticularactivityforsortingpurposes.Seealso:CODE.(11/90)
ORIGINAL DURATION First estimate of work time/duration needed to execute an activity. The most common
unitsoftimearehours,daysandweeks.Seealso:BASELINE.(6/07)
OUTOFSEQUENCEPROGRESSProgressthathasbeenreportedeventhoughactivitiesthathavebeendeemed
predecessorsinprojectlogichavenotbeencompleted.Schedulingsoftwaremayincludeaswitchtoturnonor
offhowthecalculationsdealwithoutofsequenceprogress.(6/07)
OUTLIERAvalueontheouterrangeofallvaluesforasampleorpopulation.(12/11)
OUTPUTGoods,services,orotherresultscreatedbyaprocess.(8/07)
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OVER TARGET BASELINE (OTB) In earned value management according to the ANSI EIA 748 standard, under
unusualcircumstancesaperformancemeasurementbaseline(PMB)maynolongerbereasonableforperformance
measurement. Typically this is when there is a significant difference between estimate at completion (EAC) and
budgetatcompletion(BAC)atthetotalprojectlevel.AnOTBiswhentheestimatetocomplete(ETC)isplannedfor
the future as the baseline, resulting in a performance measurement baseline (PMB) value that may exceed the
contractbudgetbase(CBB).AnOTBmaybeinconjunctionwithanovertargetschedule(OTS)and/orasinglepoint
adjustment.(10/13)
OVER TARGET SCHEDULE (OTS) In earned value management according to the ANSI EIA 748 standard, under
unusual circumstances, a performance measurement baseline (PMB) may no longer be reasonable for
performancemeasurement.Typicallythisiswhenthereisasignificantdifferencebetweentheforecastfinishand
thebaselinefinishatthetotalprojectlevel.AnOTSiswhenthescheduleisbaselinedtoadatethatexceedsthe
contractrequirements.(10/13)
OVERHAUL The distance in excess of that given as the stated haul distance to transport excavated material.
(11/90)
OVERHEAD A cost or expense inherent in the performing of an operation, (e.g., engineering, construction,
operating,ormanufacturing)whichcannotbechargedtooridentifiedwithapartofthework,productorasset
and, therefore, must be allocated on some arbitrary base believed to be equitable, or handled as a business
expenseindependentofthevolumeofproduction.Seealso:GENERAL&ADMINISTRATIVECOSTS(G&A).(5/12)
OVERLOAD In planning and scheduling and resource planning, an amount by which the resource required
exceedsitsresourcelimit.(6/07)
OVERPLAN (UNDERPLAN) The planned cost to date minus the latest revised estimate of cost to date. When
plannedcostexceedslatestrevisedestimate,aprojectedunderplanconditionexists.Whenlatestrevisedestimate
exceedsplannedcost,aprojectedoverplanconditionexists.(11/90)
OVERRUNTheactualcostsfortheworkperformedtodateminustheestimateorvalueforthatsamework.Ifthe
actualcostsaregreater,itisanoverrun;iftheactualcostsareless,itisanunderrun.Seealso:PROBABILITYOF
UNDERRUN(OROVERRUN).(6/07)
OWNEREntity,publicbodyorauthority,corporation,association,firmorpersonwithwhomthecontractorhas
enteredintotheagreementandforwhomtheworkistobeprovided,Seealso:CLIENT.(6/07)
OWNERFURNISHEDFIXTURES&EQUIPMENT(OFFE)Thatitemstheresponsibilityoftheownertofurnishthat
becomeincorporatedintothecontractorswork.Thetiming,interfaceandqualityofOFFEareoftenthesubjectof
dispute,delayingandaffectingthecontractorswork.(6/07)
PARALLEL ACTIVITIES Two or more activities than can be done at the same time. Allows a project to be
completedfasterthanifactivitieswerearrangedsequentially.Seealso:FASTTRACK(ING).(8/07)
PARAMETRICESTIMATEInestimatingpractice,describesestimatingalgorithmsorcostestimatingrelationships
that are highly probabilistic in nature (i.e., the parameters or quantification inputs to the algorithm tend to be
abstractions of the scope). Typical parametric algorithms include, but are not limited to, factoring techniques,
gross unit costs, and cost models (i.e., algorithms intended to replicate the cost performance of a process of
system).Parametricestimatescanbeasaccurateasdefinitiveestimates.(1/03)
PARAMETRICRISKANALYSISMethodsusingparametricestimatingwhereintheinputparametersareriskdrivers
and the outputs are a quantification of risk. Typically applied for systemic risks. See also: RISK ANALYSIS; RISK
SYSTEMIC.(12/11)
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PARENTAhigherlevelelementinahierarchicalstructure.Seealso:CHILD.(6/07)
PARENT ACTIVITY Task within the work breakdown structure that embodies several subordinate child tasks.
(6/07)
PARETO DIAGRAM A histogram, arranged by frequency of occurrence, which shows how many results were
generatedbyeachidentifiedcause.(6/07)
PARETOSLAWSyn.:EIGHTYTWENTYRULE.(12/11)
PARTIAL UTILIZATION Placing a portion of the work in service for the purpose for which it is intended (or a
relatedpurpose)beforereachingsubstantialcompletionforallthework.(11/90)
PATHAcontinuouschainofactivitieswithinanetwork.(6/07)
PATHCONVERGENCEAconditionwheremultipleCPMactivitiesprecedeasharedevent.(8/07)
PATHDIVERGENCEAconditionwheremultipleCPMactivitiessucceedasharedevent.(8/07)
PATHFLOATSeealso:FLOAT.(11/90)
PAYBACK METHOD A technique of economic evaluation that determines the time required for the cumulative
benefits from an investment to recover the investment cost and other accrued costs. See also: DISCOUNTED
PAYBACKPERIOD(DPB);SIMPLEPAYBACKPERIOD(SPB).[1](11/90)
PAYOFF(PAYBACK)PERIODSeealso:PAYOUTTIME.[1](11/90)
PAYOUT TIME The time required to recover the original fixed investment from profit and depreciation. Most
recent practice is to base payout time on an actual sales projection. Syn.: PAYOFF (PAYBACK) PERIOD. See also:
SIMPLEPAYBACKPERIOD(SPB).(11/90)
PAYROLLBURDENSee:LABORBURDEN.(5/12)
PDMSyn.:PRECEDENCEDIAGRAMMINGMETHOD(PDM).(11/90)
PDMARROWAgraphicalsymbolinPDMnetworksusedtorepresentthelagdescribingtherelationshipbetween
workitems.(11/90)
PDMFINISHTOFINISHRELATIONSHIPThisrelationshiprestrictsthefinishoftheworkitemuntilsomespecified
durationfollowingthefinishofanotherworkitem.(11/90)
PDMFINISHTOSTARTRELATIONSHIPThestandardnoderelationship,whereasuccessoractivitystartsafterthe
predecessorfinishes.RoutinelyusedinADM.(8/07)
PDMSTARTTOFINISHRELATIONSHIPTherelationshiprestrictsthefinishoftheworkitemuntilsomeduration
followingthestartofanotherworkitem.(11/90)
PDMSTARTTOSTARTRELATIONSHIPThisrelationshiprestrictsthestartoftheworkitemuntilsomespecified
durationfollowingthestartoftheprecedingworkitem.(11/90)
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PERCENTCOMPLETEAnestimateofthepercentagecompleteforanelementasofaparticulardatadate.Percent
completeiscalculateddifferentlyindifferentcontext:
1.Inscheduling,thistermmeanscompleteddurationovertotalduration.
2.Inearnedvalue,acomparisonofthetechnicalworkcompletedcomparedwiththecurrentprojectoftotalwork
required.Itisnotbasedonresourcesexpendedbutrathertechnicalscopecompleted.Inotherwords,technical
accomplishment(earnedvalue)percentcompleteisworkaccomplisheddividedbytotalscope.
3. In earned value, overall earned value (EV) percent complete can be calculated as Budgeted Cost of Work
Performed/BudgetatCompletion(orBCWP/BAC).
4. In earned valued, percent complete as spent is Actual Cost of Work Performed/Estimate at Completion (or
ACWP/EAC).(10/13)
PERCENTONDIMINISHINGVALUESyn.:DECLININGBALANCEDEPRECIATION.(11/90)
PERFECT (AND IMPERFECT) INFORMATION Perfect information is information or data that is known to be
absolutelycorrect(i.e.,thereisnouncertaintyassociatedwithit).Imperfectinformationisinformationordatafor
whichthereexistsuncertainty.Seealso:VALUEOFPERFECTINFORMATION.(12/11)
PERFORMANCEMEASUREMENTBASELINE(PMB)
(1)Thetimephasedbudgetplanagainstwhichcontractperformanceismeasured.
(2)InearnedvaluemanagementaccordingtotheANSIEIA748standard,theassignmentofbudgetstoscheduled
segments of work produces a plan against which actual performance can be compared. The PMB is the time
phasedprojectexecutionplanagainstwhichperformanceismeasured.Itincludesdirectandindirectcostsandall
cost elements. It also contains undistributed budget. PMB + management reserve (MR) = contract budget base
(CBB)unlessanovertargetbaseline(OTB)hasbeenimplemented.Seealso:BASELINE.(10/13)
PERFORMANCEMEASUREMENTSYSTEM
(1) An organizations defined processes for monitoring and updating project and/or organization progress at a
detailedlevelovertime.
(2)Aquantitativetool(forexample,rate,ratio,index,percentage)thatprovidesanindicationofanorganization's
performanceinrelationtoaspecifiedprocessoroutcome.
Seealso:KEYPERFORMANCEINDICTATORS(KPI).(6/07)
PERT(PROGRAM(ORPROJECT)EVALUATIONANDREVIEWTECHNIQUE)AlongwithCPM,PERTisaprobabilistic
techniqueforplanningandevaluatingprogressofcomplexprograms.Attemptstodeterminethetimerequiredto
completeeachelementintermsofpessimistic,optimistic,andbestguessestimates.(6/07)
PERTANALYSISAprocessbywhichyouevaluateaprobableoutcomebasedonthreescenarios:1)Bestcase;2)
Expectedcase;and3)Worstcase.Theoutcomeinquestionmaybedurationofatask,itsstartdate,oritsfinish
date.(6/07)
PERTCHARTAflowchartthatshowsalltasksandtaskdependencies.Tasksarerepresentedbyboxesandtask
dependenciesarerepresentedbylinesconnectingtheboxes.Inthisinstance,aPERTchartisnotbasedonPERT
probabilisticactivitydurations.(6/07)
PESSIMISTICTIMEESTIMATEThemaximumtimerequiredforanactivityunderadverseconditions.Itisgenerally
heldthatanactivitywouldhavenomorethanonechanceinahundredofexceedingthisamountoftime.(11/90)
PHANTOM FLOAT The difference between the theoretical remaining total float and the actual remaining
totalfloat.(3/10)
PHASEAmajorperiodinthelifeofanassetorproject.Aphasemayencompassseveralstages.Seealso:LIFE
CYCLE.(6/07)
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PHASEDCONSTRUCTIONImpliesthatconstructionofafacilityorsystemorsubsystemcommencesbeforefinal
designiscomplete.Phasedconstructionisusedinordertoachievebeneficialuseatanadvanceddate.Seealso:
FASTTRACK(ING).(8/07)
PHYSICALPERCENTAGECOMPLETEPercentageoftechnicalworkscopeofanactivityorprojectachievedasofa
particulardate.Physicalcompletionofanyactivityrepresentsthemostaccurate,unbiasedmeasureorappraisal,
temperedwithjudgmentandexperience.Physicalcompletionisnotlinkedtoworkhoursbudgetedorexpended.
(10/13)
PHYSICALPROGRESSThestatusofatask,activity,ordisciplinebasedonpreestablishedguidelinesrelatedtothe
amountorextentofworkcompleted.Seealso:METHODOFMEASUREMENT;PHYSICALPERCENTAGECOMPLETE.
(11/90)
PHYSICALRESTRAINTAsituationinwhichaphysicalactivityorworkitemmustbecompletedbeforethenext
activityorworkitemsinthesequencecanbegin(e.g.,concretemusthardenbeforeremovingformwork).(6/07)
PLAN
(1)Formalized,writtenmethodofaccomplishingaprojecttask.
(2)Anintendedfuturecourseofaction.
(3)Thebasisforprojectcontrols.
(4)Agenerictermusedforastatementofintentionswhethertheyrelatetotime,costorqualityintheirmany
forms.
(5)Apredeterminedcourseofactionoveraspecifiedperiodoftimewhichrepresentsaprojectedresponsetoan
anticipatedenvironmentinordertoaccomplishaspecificsetofadaptiveobjectives.(6/07)
PLANDOCHECKACT(PDCA)CYCLE
(1) Universal improvement methodology, advanced by W. Edwards Deming and based on the work of Walter
Shewart, designed to continually improve processes by which an organization produces a product or delivers a
service.
(2)ThefoundationfortheTotalCostManagement(TCM)process.
Syn.:DEMINGCYCLE.[8](6/07)
PLANNEDCOSTTheapprovedestimatedcostforaworkpackageorsummaryitem.Thiscostwhentotaledwith
theestimatedcostsforallotherworkpackagesresultsinthetotalcostestimatecommittedunderthecontractfor
theprogramorproject.(11/90)
PLANNEDDURATION(PD)Theplannedprojectscheduledurationintimeincrements.(11/14)
PLANNED DURATION OF WORK REMAINING (PDWR) The unearned portion of the project planned duration.
(11/14)
PLANNEDVALUE(PV)Measureoftheamountofmoneybudgetedtocompletethescheduledworkasofthedata
date.PVchangesaresubjecttobaselinecontrolrestrictions.Syn.:BUDGETEDCOSTOFWORKSCHEDULED(BCWS).
(10/13)
PLANNER In project control, a team member with the responsibility for planning, scheduling and tracking of
projects.Theyareoftenprimarilyconcernedwithschedule,progressandmanpowerresources.(6/07)
PLANNING
(1)Thedeterminationofaproject'sobjectiveswithidentificationoftheactivitiestobeperformed,methodsand
resources(cost,hours,time,materials,etc.)tobeusedforaccomplishingthetasks,assessmentofbothvalueand
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risks, assignment of responsibility and accountability, and establishment of an integrated plan to achieve
completionasrequired.
(2) In planning and scheduling, the identification of the project objectives and the ordered activity necessary to
completetheproject(thethinkingpart)andnottobeconfusedwithscheduling;theprocessbywhichtheduration
oftheprojecttaskisappliedtotheplan.Itinvolvesansweringthequestions:1)Whatmustbedoneinthefuture
toreachtheprojectobjective?;2)Howitwillbedone?;3)Whowilldoit?;and4)Whenitwillbedone?(10/06)
PLANNINGHORIZONInanMRPsystem,thespanoftimefromthecurrenttosomefuturedateforwhichmaterial
plansaregenerated.Thismustcoveratleastthecumulativepurchasingandmanufacturingleadtimeandisusually
substantiallylongertofacilitateMRPII.Seealso:MRP;MRPII.(11/90)
PLANNINGPACKAGEAlogicalaggregationofworkwithinacostaccount,normallythefartermeffortthatcanbe
identifiedandbudgetedinearlybaselineplanning,butwhichwillbefurtherdefinedintoworkpackages,levelof
effort(LOE),orapportionedeffort.Seealso:WORKPACKAGE.(11/90)
PLANNINGPHASESyn.:DEFINITIONPHASE.(6/07)
PLANNINGSESSIONAmeetingoftheprincipalmembersoftheprojectteamforthepurposeofestablishinga
consistentscopebasisforcontrolbydefiningmanageablesegmentsthatmeetthespecificneedsoftheproject.
(6/07)
PLANTOVERHEADThosecostsinaplantthatarenotdirectlyattributabletoanyoneproductionorprocessing
unit and are allocated on some arbitrary basis believed to be equitable. Includes plant management salaries,
payrolldepartment,localpurchasingandaccounting,etc.Syn.:FACTORYEXPENSE.(11/90)
PLUGDATEAdateassignedexternallytoanactivitythatestablishestheearliestorlatestdatewhentheactivity
isscheduledtostartorfinish.Syn.:CONSTRAINTDATE.(11/90)
POINTESTIMATESeealso:BASEESTIMATE.(12/11)
POLICY Definitive position of an organization on a specific issue. A policy provides a basis for consistent and
appropriatedecisionmakinganddefinesauthorityandaccountabilitywithintheorganization.Seealso:DECISION
POLICY.(6/07)
PORTFOLIOAnarrayofassetsprojects,programs,orothervaluableandoftenrevenueproducingitemsthat
aregroupedformanagementconvenienceorstrategicpurpose.Whenstrategicallycombined,theportfolioassets
servetocreatesynergiesamongandotherwisecomplementoneanother.(8/07)
PORTFOLIOMANAGEMENT
(1)Directionandoversightofanarrayofassetsgroupedtogetherforstrategicpurposeorconvenience.
(2)Intotalcostmanagement(TCM),thisisconsideredanaspectofstrategicassetmanagement(SAM).
Seealso:PORTFOLIO.(8/07)
POSITIVEFLOATAmountoftimeavailabletocompletenoncriticalactivitiesorworkitemswithoutaffectingthe
totalprojectduration.Seealso:FLOAT.(6/07)
PRECEDENCEDIAGRAMMINGMETHOD(PDM)
(1) A notation of a network that places the activity on a single node. A superset of the activity on node (AON)
method,whichallowsadditionalprecedentrelationshipsalongwithleadandlagtimes.Seealso:STARTTOSTART
(SS);FINISHTOFINISH(FF);STARTTOFINISH(SF).
(2)Anactivityorientedsysteminwhichactivitiesaredisplayedinuniformboxescompletewithactivitynumber,
startdurationandfinishdates.Thelogicalrelationbetweenactivityboxesisshownbylogicconnectorlines.Lead
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andlagtimescanalsobeshown.Thedisplayismoreeffectivethanarrowdiagrammingandisalsoeasiertorevise,
update,andprogramoncomputer.
Seealso:CRITICALPATHMETHOD(CPM);PERT(PROJECTEVALUATIONANDREVIEWTECHNIQUE).(6/07)
PRECEDINGEVENTSyn.:BEGINNINGEVENT.(11/90)
PRECONSTRUCTION CPM A plan and schedule of the construction work developed during the design phase
precedingtheawardofcontract.(11/90)
PREDECESSORAnactivitythatimmediatelyprecedesanotheractivity.(3/04)
PREDECESSORACTIVITY
(1)Anactivitythatmustnecessarilybecompletedbeforeitssuccessoractivitymaystart.
(2)Anyactivitythatexistsonacommonpathwiththeactivityinquestionandoccursbeforetheactivityinquestion.
(6/07)
PREDECESSOREVENTSeealso:BEGINNINGEVENT.(11/90)
PREFERENTIALLOGIC
(1)Contractor'sapproachtosequencingworkoverandabovethosesequencesindicatedinorrequiredbycontract
documents. Examples include equipment restraints, crew movements, form reuse, special logic (lead/lag)
restraints,etc.,factoredintotheprogressscheduleinsteadofdisclosingtheassociatedfloattimes.
(2)ModelingexecutionworkflowinaCPMscheduleusinglogicties,constraintsandothermechanismscontraryto
theexpectednormforthattypeofeffort.Mayormaynotbeanattemptatfloatsuppression,floatownership,or
necessary to model the expected means and methods actually used in this instance more accurately. The term
preferentiallogicnormallyhasanegativeconnotation.
Seealso:DISCRETIONARYDEPENDENCY.(6/07)
PRELIMINARY CPM PLAN CPM analysis of the construction phase made before the award of contracts to
determineareasonableconstructionperiod.Seealso:PRECONSTRUCTIONCPM.(11/90)
PRELIMINARYENGINEERINGIncludesalldesignrelatedservicesduringtheevaluationanddefinitionphasesofa
project.(11/90)
PRESCRIPTIVE Laid down as a guide,direction, or ruleof action specified. Usually implies instructions that are
givenstepbystepinsomedetailandthataretobefollowedwithoutquestioning,i.e.whatistobedone,rather
thanhowitistobedone,i.e.descriptive.(6/07)
PRESENTVALUEThevalueofabenefitorcostfoundbydiscountingfuturecashflowstothebasetime.Also,the
systemofcomparingproposedinvestments,whichinvolvesdiscountingataknowninterestrate(representinga
cost of capital or a minimum acceptable rate of return) in order to choose the alternative having the highest
presentvalueperunitofinvestment.Thistechniqueeliminatestheoccasionaldifficultywithprofitabilityindexof
multiplesolutions,buthasthetroublesomeproblemofchoosingorcalculatinga"costofcapital"orminimumrate
ofreturn.Syn.:PRESENTWORTH;NETPRESENTVALUE.[2](11/90)
PRESENTVALUEFACTOR
(1)Thediscountfactorusedtoconvertfuturevalues(benefitsandcosts)topresentvalues.
(2)Amathematicalexpressionalsoknownasthepresentvalueofanannuityofone.
(3) One of a set of mathematical formulas used to facilitate calculation of present worth in economic analysis
involvingcompoundinterest.
Syn.:PRESENTWORTHFACTOR.[2](11/90)
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PRESENTWORTHSyn.:PRESENTVALUE.[1](11/90)
PRESENTWORTHFACTORSyn.:PRESENTVALUEFACTOR.[1](11/90)
PREVENTION Quality activities employed to avoid deviations; includes such activities as quality systems
development, quality program development, feasibility studies, quality system audits, contractor/subcontractor
evaluation, vendors/suppliers of information/materials evaluation, quality orientation activities, and
certification/qualification.(11/90)
PRICETheamountofmoneyaskedorgivenforaproduct(e.g.,exchangevalue).Thechieffunctionofpriceis
rationingtheexistingsupplyamongprospectivebuyers.(11/90)
PRICEINDEXAnumberwhichrelatesthepriceofanitemataspecifictimetothecorrespondingpriceatsome
specifiedtime.Seealso:COSTINDEX.(5/12)
PRICING In estimating practice, after costing an item, activity, or project, the determination of the amount of
money asked in exchange for the item, activity, or project. Pricing determination considers business and other
interests(e.g.,profit,marketing,etc.)inadditiontoinherentcosts.Thepricemaybegreaterorlessthanthecost
dependingonthebusinessorotherobjectives.Inthecostestimatingprocess,pricingfollowscostingandprecedes
budgeting.(6/07)
PRICING, FORWARD An estimation of the cost of work prior to actual performance. It is also known as
prospectivepricing.Pricingforwardisgenerallyusedrelativetothepricingofproposedchangeorders.Seealso:
PRICING.(11/90)
PRICING,RETROSPECTIVEThepricingofworkafterithasbeenaccomplished.Seealso:PRICING.(11/90)
PRIMARYCLASSIFICATIONTheclassificationofcommoditiesby"commoditytype."(11/90)
PRIMECONTRACTORTheprincipal(oronly)contractorperformingacontractforanowner.(6/07)
PROACTIVEActinginanticipationoffutureproblems,needs,orchanges.Seealso:MITIGATION.(6/07)
PROBABILISTICDEPENDENCIESDependenciesbetweenactivitiesthatindicatealternativesequencesoflogicthat
haveprobabilitiesattachedtothem.(6/07)
PROBABILISTIC NETWORK Network containing alternative paths with which probabilities are associated rather
thandeterministicrelationshipsbetweenactivities.(6/07)
PROBABILISTIC RISK ASSESSMENT a quantitative process used to evaluate risks in a way that provides
probabilisticinformation.(12/11)
PROBABILITYOFUNDERRUNOROVERRUNInriskanalysisandcon ngencyes ma ng,thechancethatthecost

ortimewillbeless(underrun)ormore(overrun)thanagivencostortimefromthedistributionofoutcomesofthe
riskanalysismodel.Seealso:CONFIDENCELEVEL.(12/11)
PROCEDUREAprescribedmethodforperformingspecifiedwork.(6/07)
PROCESSSetofstepsoractivitiesrequiredtoachieveanoutput.(6/07)
PROCESSCONTROLManagingaprocesstoaprovenstandard.(6/07)
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PROCESS DESIGN Design of a process, which may be a management process either as required in corporate
management,ortechnicalasincommercialorindustrialengineering.(6/07)
PROCUREMENTAprocessforestablishingcontractualrelationshipstoaccomplishprojectobjectives.Typically,
the acquisition (and directly related matters) of equipment, material, and nonpersonal services (including
construction)bysuchmeansaspurchasing,renting,leasing(includingrealproperty),contracting,orbartering,but
not by seizure, condemnation, or donation. Includes preparation of inquiry packages, requisitions, and bid
evaluations; purchase order award and documentation; plus expediting, inplant inspection, reporting, and
evaluationofvendorperformance.Theassembly,tenderingandawardofcontractsorcommitmentdocuments.
Specificproceduresshouldbeestablishedfortheprocurementprocess.(6/07)
PRODUCT The output from a process in tangible or intangible form. Examples include the project brief as an
output from the planning phases, or the completed facility as an output from the producing phases. See also:
DELIVERABLE;ENDITEM.(6/07)
PRODUCTBREAKDOWNSTRUCTURE(PBS)Structurethatidentifiestheproductsthatarerequiredandthatmust
beproduced.Itdisplaysthesysteminahierarchicway.(6/07)
PRODUCTION PLAN The agreed upon strategy that comes from the production planning function. See also:
PRODUCTIONPLANNING.(11/90)
PRODUCTION PLANNING The function of setting the overall level of manufacturing or construction output. Its
primepurposeistoestablishproductionratesthatwillachievemanagement'sobjective,whileusuallyattempting
tokeeptheproductionforcerelativelystable.(11/90)
PRODUCTIONRATETheamountofwork,whichmaybeaccomplishedinagivenunitoftime.(4/04)
PRODUCTIONSCHEDULE
(1) In manufacturing, a plan which authorizes the factory to manufacture a certain quantity of a specific item.
Usuallyinitiatedbytheproductionplanningdepartment.
(2)Inprojects,ashortintervalscheduleusedtoplanandcoordinateagroupofactivities.(6/07)
PRODUCTIVITY A measure of output relative to input. Productivity (or efficiency) is improved by increasing
outputforagiveninput,ordecreasinginputforagivenoutput.Iftheinputisspecificallyworkhours,theterm
commonlyusedislaborproductivity.Syn.EFFICIENCY.Seealso:LABORPRODUCTIVITY.(6/07)
PRODUCTIVITYFACTORSeealso:LABORPRODUCTIVITYFACTOR.(6/07)
PROFIT
1) GROSS PROFIT: Earnings from an ongoing business after direct and project indirect costs of goods sold have
beendeductedfromsalesrevenueforagivenperiod.
2) NET PROFIT: Earnings or income after subtracting miscellaneous income and expenses (patent royalties,
interest,capitalgains)andfederalincometaxfromoperatingprofit.
3) OPERATING PROFIT: Earnings or income after all expenses (selling, administrative, depreciation) have been
deductedfromgrossprofit.(6/07)
PROFIT ELEMENT A quantified element of a profitability model whose change in value produces a favorable
changeinthebottomline.(12/11)
PROFITITEMSyn.:PROFITELEMENT.(12/11)
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PROFITMARGINAratioofprofittoeithertotalcostortotalrevenue.Usageoftenvariesdependingonthetype
of company. Retail companies generally use the profit to revenue ratio. Wholesale companies and contractors
generallyusetheprofittocostratio.(6/07)
PROFITABILITYAmeasureoftheexcessincomeoverexpenditureduringagivenperiodoftime.(11/90)
PROFITABILITYANALYSISTheevaluationoftheeconomicsofaproject,manufacturedproduct,orservicewithina
specifictimeframe.(11/90)
PROFITABILITY INDEX (PI) The rate of compound interest at which the company's outstanding investment is
repaidbyproceedsfortheproject.Allproceedsfromtheproject,beyondthatrequiredforinterest,arecredited,
bythemethodofsolution,towardrepaymentofinvestmentbythiscalculation.Alsocalleddiscountedcashflow,
interest rate of return, investor's method, internal rate of return. Although frequently requiring more time to
calculatethanothervalidyardsticks,PIreflectsinasinglenumberboththedollarandthetimevaluesofallmoney
involvedinaproject.Insomeveryspecialcases,suchasmultiplechangesofsignincumulativecashposition,false
andmultiplesolutionscanbeobtainedbythistechnique.(11/90)
PROGRAM
(1)Agroupingofrelatedprojectsusuallymanagedusingamasterschedule.
(2)Asetofprojectswithacommonstrategicgoal.
(3)InEuropeandelsewhere,theterm'program'orprogrammemaybeusedtomeananetworkschedule.(6/07)
PROGRAMMANAGEMENTManagementofaseriesofrelatedprojectsdesignedtoaccomplishbroadgoals,to
whichtheindividualprojectscontribute,andtypicallyexecutedoveranextendedperiodoftime.(6/07)
PROGRAMMANAGERAnofficialintheprogramdivisionwhohasbeenassignedresponsibilityforaccomplishing
aspecificsetofprogramobjectives.Thisinvolvesplanning,directingandcontrollingoneormoreprojectsofanew
orcontinuingnature,initiationofanyacquisitionprocessesnecessarytogetprojectworkunderway,monitoring
ofcontractorperformanceandthelike.(11/90)
PROGRESS
(1)Developmenttoamoreadvancedstage.Progressrelatestoaprogressionofdevelopmentandthereforeshows
relationshipsbetweencurrentconditionsandpastconditions.
(2)Partialcompletionofaproject,orameasureofit.Also,theactofenteringcurrentprogressupdateinformation
intoprojectmanagementsoftware.
Seealso:LIFECYCLE;STATUS.(6/07)
PROGRESS DATE Date used in order to calculate the progress of the project. All estimates to complete or
remaining durations should be assessed in accordance with the progress date. See..: ASOFDATE; DATA DATE;
TIMENOW.(6/07)
PROGRESSLINEAvisualrepresentationoftheprogressofaproject,displayedontheGanttchart.Foragiven
progressdate,theprogresslineconnectsinprogresstasks,therebycreatingagraphontheGanttchartwithpeaks
pointing to the left for work that is behind schedule and peaks pointing to the right for work that is ahead of
schedule.Thedistanceofapeakfromtheverticallineindicatesthedegreetowhichthetaskisaheadoforbehind
scheduleattheprogressdate.(6/07)
PROGRESSMEASUREMENT Measurement of thecurrent amount of work completed for purposesof assessing

progressoftheprojectorcontract,aswellasfordeterminingamountsdueundercontractagreements.Seealso:
METHODOFMEASUREMENT;PHYSICALPROGRESS.(6/07)
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PROGRESS MILESTONES Those project milestones identified as the basis for earning progress and/or making
progresspayments.(6/07)
PROGRESSOVERRIDEOneoftwotypesofschedulingsoftwarelogicusedtohandleactivitiesthatoccuroutof
sequence. When specified, it treats an activity with outofsequence progress as though it has no predecessor
constraints; its remaining duration is scheduled to start immediately, rather than wait for the activities
predecessorstocomplete.Seealso:RETAINEDLOGIC.(6/07)
PROGRESSREPORTAreportthatinformsmanagementofoverallprojectprogress(physicalpercentcomplete),
costs,performanceandmanpowerataspecificreportingcutoffdate.Includesmajoraccomplishments,objectives
fortheupcomingreportperiod,areasofconcern,andotherpertinentinformationnecessaryformanagementand
control.Seealso:STATUSREPORT.(6/07)
PROGRESSTRENDSyn.:TREND.(6/07)
PROJECT A temporary endeavor with a specific objective to be met within the prescribed time and monetary
limitationsandwhichhasbeenassignedfordefinitionorexecution.(6/07)
PROJECT BOUNDARY Boundary that defines how project interacts with other projects and nonproject activity
bothwithinandoutsidetheorganization.Seealso:BATTERYLIMIT.(6/07)
PROJECTCALENDARCalendarthatdefinesglobalprojectworkingandnonworkingperiods.Seealso:CALENDAR.
(6/07)
PROJECTCODESetofsymbolsassignedtoasetofcostclassesorsubdivisionsofthescopeofworkinaproject.
Thecodereflectsasystematic(orhierarchic)subdivisionofscope.Seealso:CODE,CODEOFACCOUNTS.(5/12)
PROJECT CONTROL A management process for controlling the investment of resources in an asset where
investmentsaremadethroughtheexecutionofaproject.Projectcontrolincludesthegeneralstepsof:1)Project
planningincludingestablishingprojectcostandschedulecontrolbaselines;2)Measuringprojectperformance;3)
Comparingmeasurementagainsttheprojectplans;and4)Takingcorrective,mitigating,orimprovementactionas
maybedeterminedthroughforecastingandfurtherplanningactivity.(6/07)
PROJECT DEFINITION Process of exploring thoroughly all aspects of proposed project and to explore relations
between required performance, development time and cost. See also: FRONT END; DEFINITION (PROJECT);
DEVELOPMENTPHASE.(6/07)
PROJECTDURATION
(1)Theelapseddurationfromprojectstartdatethroughprojectfinishdate.
(2) The overall duration a project within which it is scheduled to be completed. Contractual requirements may
imposeagivenprojectdurationforsuccessfulcompletion,fromwhichthescheduleisdevelopedtoachieve.(6/07)
PROJECT FINISH DATE (SCHEDULE) The latest scheduled calendar finish date of all activities on the project.
(11/90)
PROJECT FLOAT The time that exists between the early finish of the last activity of a CPM network and the
contractualcompletiondateoftheproject.Projectfloatcanbeinternalizedintothenetworkandbecomenetwork
float.Seealso:NETWORKFLOAT.(6/07)
PROJECTLIFESeealso:ECONOMICLIFE(CYCLE).[1](11/90)
PROJECTMANAGEMENT
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(1) The utilization of skills and knowledge in coordinating the organizing, planning, scheduling, directing,
controlling, monitoring and evaluating of prescribed activities to ensure that the stated objectives of a project,
manufacturedproduct,orservice,areachieved.
(2)Theartandscienceofmanagingaprojectfrominceptiontoclosureasevidencedbysuccessfulproductdelivery
andtransfer.(6/07)
PROJECTMANAGEMENTSOFTWAREAclassofcomputerapplicationsspecificallydesignedtoaidwithplanning
andcontrollingprojectresources,costsandschedules.(6/07)
PROJECT MANAGER An individual who has been assigned responsibility and authority for accomplishing a
specifically designated unit of work effort or group of closely related efforts established to achieve stated or
anticipatedobjectives,definedtasks,orotherunitsofrelatedeffortonascheduleforperformingthestatedwork
fundedasapartoftheproject.Theprojectmanagerisresponsiblefortheplanning,controlling,andreportingof
theproject.[4](11/90)
PROJECTNETWORKANALYSISSyn.:NETWORKANALYSIS.(6/07)
PROJECT OFFICE The organization responsible for administration of the project management system,
maintenance of project files and documents, and staff support for officials throughout the project life cycle.
(11/90)
PROJECT PHASES The main elements of a project life cycle. For engineering and construction projects, they
typically include preplanning, design, procurement, construction, startup, operation, and final disposition. See
also:LIFECYCLEPROJECTLIFECYCLE.(6/07)
PROJECT PLAN The primary document for project activities. It covers the project from initiation through
completion.Seealso:PLAN.(11/90)
PROJECTSCOPESyn.:SCOPE.Seealso:DESCOPE.(6/07)
PROJECTSTARTDATEThedateaprojectisscheduledtostart.Schedulingsoftwareusestheprojectstartdateas
thestartingdateforallnetworkcalculationsuntiladatadateisusedforcalculatingupdatedprogress.(6/07)
PROJECTSUMMARYWORKBREAKDOWNSTRUCTURE(PSWBS)AsummaryWBStailoredbyprojectmanagement
tothespecificproject,andidentifyingtheelementsuniquetotheproject.(11/90)
PROJECTTIMEThetimedimensioninwhichtheprojectisbeingplanned.(11/90)
PROJECTEDFINISHDATEThecurrentestimateofthecalendardatewhenanactivityorprojectwillbecompleted.
(6/07)
PROJECTEDSTARTDATEThecurrentestimateofthecalendardatewhenanactivityorprojectwillbegin.(6/07)
PROJECTION An extension of a series, or any set of values, beyond the range of the observed data. See also:
FORECASTING.(11/90)
PROMPTLISTAriskbreakdownstructure(RBS)orsimilardocumentusedasachecklistduringriskidentification,
monitoringandotherriskmanagementprocesssteps.(12/11)
PROPOSAL SCHEDULE The first schedule issued on a project; accompanies either the client's request or the
contractor'sproposal.(11/90)
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PROPOSED BASE CONTRACT PRICE The sum total of the individual total price amounts for items of work
designatedasbasebiditemslistedonthescheduleofpricesonthebidform(excludingalternates,ifany).(11/90)
PROPOSEDCOMBINEDCONTRACTPRICEThesumtotalofbidder'sproposedbasecontractpriceandallofthe
individualtotalpriceamountsforitemsofworkdesignatedasalternatebiditemslistedonthescheduleofprices
foralternatebiditemsonthebidform(excludingalladditionalalternates,ifany).(11/90)
PROPOSED CHANGE ORDER The form furnished by the owner or the engineer which is to be used: 1) By the
owner,whensignedbytheowner,asadirectiveauthorizingadditionto,deletionfrom,orrevisioninthework,or
anadjustmentincontractpriceorcontracttime,oranycombinationthereof;2)Bytheowner,whenunsigned,to
requirethatthecontractorfigurethepotentialeffectoncontractpriceorcontracttimeofaproposedchange,if
theproposedchangeisordereduponsigningbytheowner;3)Bythecontractor,tonotifytheownerthatinthe
opinionofthecontractor,achangeisrequiredasprovidedintheapplicableprovisionsofthecontractdocuments.
Whensignedbytheowner,aproposedchangeordermayormaynotfullyadjustcontractpriceorcontracttime,
but is evidence that the change directed by the proposed change order will be incorporated in a subsequently
issued change order following negotiations as to its effect, if any, on contract price or contract time. When
countersignedbythecontractor,aproposedchangeorderisevidenceofthecontractor'sacceptanceofthebasis
forcontractadjustmentsprovided,exceptasotherwisespecificallynoted.(11/90)
PRUDENT INVESTMENT That amount invested in the acquisition of the property of an enterprise when all
expendituresweremadeinacareful,businesslike,andcompetentmanner.(11/90)
PUNCHLISTAlistgeneratedbytheowner,architect,engineer,orcontractorofitemsyettobecompletedbythe
contractor.Sometimescalleda"but"list("but"fortheseitemstheworkiscomplete).(11/90)
PURE PRICE CHANGE Change in the price of a particular commodity which is not attributable to change in its
qualityorquantity.(11/90)
QUALIFICATIONSUBMITTALSDatapertainingtoabidder'squalificationswhichshallbesubmittedassetforthin
theinstructionstobidders.(11/90)
QUALIFICATIONS&ASSUMPTIONSItemsthatarenotcompletelydefinedintheprojectdocumentsforwhichthe
estimatorisrequiredtousejudgmentindevelopingtheestimate.(6/07)
QUALITATIVE RISK ANALYSIS Risk analysis used to screen risks wherein risk probabilities of occurrence and
impactsareexpressednarrativelyorinrankedcategoriesofseverity.Typicallyincorporatesuseofariskmatrix.
Seealso:QUANTITATIVERISKANALYSIS;RISKANALYSIS;RISKMATRIX.(12/11)
QUALITYConformancetoestablishedrequirements(notadegreeofgoodness).(11/90)
QUALITY ACCEPTANCE CRITERIA Specified limits placed on characteristics of a product, process, or service
definedbycodes,standards,orotherrequirementdocuments.(11/90)
QUALITYACTIVITIESThoseactivitiesdirectlyassociatedwithappraisal,training,andprevention.(11/90)
QUALITYAPPRAISALQualityactivitiesemployedtodeterminewhetheraproduct,process,orserviceconformsto
established requirements, including: design review, specification review, other documentation review,
constructability review, materials inspection/tests, personnel testing, quality status documentation, and post
projectreviews.(11/90)
QUALITYASSURANCEAllthoseplannedorsystematicactionsnecessarytoprovideadequateconfidencethata
product,process,orservicewillconformtoestablishedrequirements.(11/90)
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QUALITY AUDIT A formal, independent examination with intent to verify conformance with the acceptance
criteria. An audit does not include surveillance or inspection for the purpose of process control or product
acceptance.(11/90)
QUALITY CONFORMANCE Quality management activities associated with appraisal, training, and prevention
adaptedtoachievezerodeviationsfromtheestablishedrequirements.(11/90)
QUALITY CONTROL Inspection, test, evaluation or other necessary action to verify that a product, process, or
serviceconformstoestablishedrequirementsandspecifications.(11/90)
QUALITYCORRECTIVEACTIONMeasurestakentorectifyconditionsadversetoqualityand,wherenecessary,to
precluderepetition.Correctiveactionincludesreworkandremedialactionfornonconformancedeviations.(11/90)
QUALITY MANAGEMENT Concerns the optimization of the quality activities involved in producing a quality
product,processorservice.Assuch,itincludesappraisal,training,andpreventionactivities.(11/90)
QUALITY MANAGEMENT COSTS The sum of those costs associated with appraisal, training, and prevention
activities.(11/90)
QUALITY NONCONFORMANCE A deviation that occurs with a severity sufficient to consider rejection of the
product,process, or service. In some situations the product, process, or service may be accepted as is; in other
situations, it will require corrective action. It also may involve the provision of deliverables that are more than
required.(11/90)
QUALITYPERFORMANCETRACKINGSYSTEMAmanagementtoolprovidingdataforthequantitativeanalysisof
certainqualityrelatedaspectsofprojectsbysystematicallycollectingandclassifyingcostsofquality.(11/90)
QUANTIFICATION In estimating practice, an activity to translate project scope information into resource
quantities suitable for costing. In the engineering and construction industry, a takeoff is a specific type of
quantification that is a measurement and listing of quantities of materials from drawings. See also: TAKEOFF.
(1/03)
QUANTITATIVE RISK ANALYSIS Risk analysis used to estimate a numerical value (usually probabilistic) on risk
outcomes wherein risk probabilities of occurrence and impact values are used directly rather than expressing
severitynarrativelyorbyrankingasinqualitativemethods.Seealso:QUALITATIVERISKANALYSIS;RISKANALYSIS.
(12/11)
QUANTITY SURVEY In traditional terms means using standard methods of measuring all labor and material
requiredforaspecificproject,building,orastructure,anditemizingthesedetailedquantitiesinabookorbillof
quantities.Seealso:BILLOFQUANTITIES(BOQ);METHODOFMEASUREMENT.(6/07)
QUANTITY SURVEYING A formalized method of periodically (typically monthly) detailing the actual progress
accomplished on individual activities and the units of work performed or put in place. This is usually done in
accordance with an established method of measurement against a bill of quantities. Often used on unit price
contracts and on international civil works projects. See also: BILL OF QUANTITIES (BOQ); METHOD OF
MEASUREMENT;REMEASUREMENT.(6/07)
QUANTITYSURVEYORIntheUnitedKingdomandelsewhere,contractorsbiddingajobreceiveadocumentcalled
abillofquantities,inadditiontoplansandspecifications,whichispreparedbyaquantitysurveyor,accordingto
wellestablished rules. In many countries, the quantity surveyor has to undergo extensive technical training and
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must pass a series of professional examinations. In the United Kingdom and elsewhere a quantity surveyor
establishesthequantitiesforallbidders,andisprofessionallylicensedtodoso.(6/07)
RACIAcronymforachartormatrixindicatingwhichindividualsonateamresponsible,accountable,consulted
andinformedareregardingidentifiedprojectdeliverables.(12/11)
RACSIAcronymforachartormatrixindicatingwhichindividualsresponsible,accountable,consulted,supporting
andinformedareregardingidentifiedprojectdeliverables.(12/11)
RAMPAcronymforriskanalysisandmanagementforprojects.(12/11)
RANGE The absolute difference between the maximum and minimum (or some stated confidence interval)
values in a set of values; the simplest measure of the dispersion of a distribution. See also: ACCURACY RANGE.
(12/11)
RANGEESTIMATING
(1) A formalized risk analysis technology that synergistically combines Paretos law to identify the relatively few
criticalelements,heuristicsgoverningtheassignmentofprobabilisticrangestosuchelements,andMonteCarlo
Simulationtoprovidedecisionmakinginformationquicklyandatreasonableeffort.
(2) A generic term variously used to define: a) estimating a variable in the form of a probabilistic range; b)
application of Monte Carlo Simulation based on a set of probabilistic ranges applied to model variables; c) a
synonymforstochasticorprobabilisticestimating.
See also: RISK ANALYSIS; PARETOS LAW; CRITICAL ELEMENT; HEURISTIC; RANGE; MONTE CARLO SIMULATION.
(12/11)
RANGEOFACCURACYSyn.:ACCURACYRANGE.(12/11)
RATE OF RETURN The interest rate earned by an investment. See also: RETURN ON AVERAGE INVESTMENT;
RETURN ON ORIGINAL INVESTMENT, PROFITABILITY INDEX (PI); INTERNAL RATE OF RETURN (IRR); DISCOUNTED
CASHFLOW.(11/91)
RAWMATERIALSSyn.:CRUDEMATERIALS.(6/07)
RBSAcronymforriskbreakdownstructure.(12/11)
REBASELININGProcesswherebytheproject'scosts,timescaleorresourceshavetobereplanned(usuallyinan
integrated way) due to changes in objectives, deliverables to meet requirements, and/or original scope and the
baseline plan is now obsolete. A need to rebaseline often results from poor project definition and/or project
control(i.e.,rebaseliningisnotavalidsubstituteforbestpractices).Reassessmentoftheprojectcontrolprocess
goingforwardistypicallyanelementofrebaselining.Seealso:REPLANNING.(6/07)
REALDISCOUNTRATETherateofinterestreflectingthatportionofthetimevalueofmoneyrelatedtothereal
earning power of money over time. This is the discount rate used in discount formulas or in selecting discount
factorswhenfuturebenefitsandcostsareexpressedinconstantdollars.[1](11/90)
REALDOLLARSSeealso:CONSTANTDOLLARS.[1](11/90)
REAL ESTATE This refers to the physical land and appurtenances, including structures affixed thereto. In some
states,bystatute,thistermissynonymouswithrealproperty.(11/90)
REALPROPERTYReferstotheinterests,benefits,andrightsinherentintheownershipofphysicalrealestate.Itis
thebundleofrightswithwhichtheownershipofrealestateisendowed.(11/90)
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REASONABLENESSSTANDARDCoststhatdonotexceedtheamountincurredbyaprudentcontractororthose
costswhicharegenerallyaccepted.Somefactorsonwhichreasonablenessisbasedarerecognitionofthecostsas
ordinaryandnecessaryandrestraintsimposedbylaw,contractterms,orsoundbusinesspractices.(11/90)
REBASINGConversionofapriceindexfromonetimebasetoanother.(11/90)
RECOVERY SCHEDULE A special schedule showing special efforts to recover time lost compared to the master
schedule. Often a contract requirement when the projected finish date is no longer showing timely completion.
(6/07)
RECURRINGTASKAtaskthatoccursrepeatedlyduringthecourseofaproject,suchasaweeklystaffmeeting.
(6/07)
RECYCLERevisitingpartiallyorfullycompletedactivitiestoperformadditionalworkduetoachange.Seealso:
REWORK.(6/07)
REDUCE In risk management, a response strategy for threats that involves mitigating key drivers to reduce
probabilityand/orimpact.Seealso:RISKRESPONSE,MITIGATION.(12/11)
RELATIONSHIPAlogicalconnectionbetweentwoactivities.Seealso:LOGIC.(6/07)
RELATIONSHIPFLOATRelationshipfreefloatistheamountbywhichlagonthatrelationshipwouldhavetobe
increasedinordertodelaythesuccessoractivity.Relationshiptotalfloatistheamountbywhichitwouldhaveto
beincreasedinordertocauseadelayinthecompletionoftheprojectasawhole(ortheviolationofalatetarget).
Seealso:TOTALFLOAT(TF);FREEFLOAT(FF).(6/07)
RELATIVETOTALFLOATThedifferencebetweenthetotalfloatcalculationonanyactivityorpathandanother
activityorpath,regardlessofwhetherthoseactivitiesorpathsarelogicallylinked.(6/07)
REMAININGAVAILABLERESOURCESThedifferencebetweentheresourceavailabilitypoolandthelevelschedule
resourcerequirements.Itiscomputedfromtheresourceallocationprocess.(11/90)
REMAINING DURATION Estimated remaining amount of time necessary to complete an inprogress activity.
Shouldnotbebasedsolelyonactivitypercentcomplete.(6/07)
REMAININGFLOAT(RF)Thedifferencebetweentheearlyfinishandthelatefinish.(11/90)
REMEASUREMENTAtypeofcontract(usuallyusedinEurope)thatprovidesfortheuseofquantitysurveysto
measureprogress.Contractorsperiodicpaymentisfromadetailedsurveyoftheactualworkinplaceandnoton
milestone payments or other methods. Places a larger degree of cost risk on the owner than lump sum or
milestonebasedcompensationschemes.(6/07)
RENTAL(LEASED)EQUIPMENTCOSTTheamountwhichtheowneroftheequipment(lessor)chargestoalessee
for use of the equipment. The best evidence of such costs is rental invoices that indicate the amount paid for
leasingsuchequipment.(11/90)
REPLACEMENTAfacilityproposedtotaketheplaceofanexistingfacility,withoutincreasingitscapacity,caused
eitherbyobsolescenceorphysicaldeterioration.(11/90)
REPLACEMENTCOST
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(1)Thecostofreplacingtheproductivecapacityofexistingpropertybyanotherpropertyofanytype,toachieve
themosteconomicalservice,atpricesasofthedatespecified.
(2) Facility component replacement and related costs, included in the capital budget, that are expected to be
incurredduringthestudyperiod.[2](11/90)
REPLACEMENTVALUEThatvalueofanitemdeterminedbyrepricingtheitemonthebasisofreplacingit,innew
condition, with another item that gives the same ability to serve, or the same productive capacity, but which
appliescurrenteconomicdesign,adjustedfortheexistingproperty'sphysicaldeterioration.(11/90)
REPLANNING A change in the original plan necessitating reevaluation and changes. There are two types of
replanningeffort:1)INTERNALREPLANNINGAchangeintheoriginalplanthatremainswithinthescopeofthe
authorizedcontract,causedbyaneedtocompensateforcost,schedule,ortechnicalproblemswhichhavemade
the original plan unrealistic; and 2) EXTERNAL REPLANNING Customerdirected changes to the contract in the
formofachangeorderthatcallsforamodificationintheoriginalplan.Replanningissubjecttobaselinechange
control.(10/13)
REPRODUCTIONCOSTThecostofreproducingsubstantiallytheidenticalitemorfacilityatapricelevelasofthe
datespecified.(11/90)
REPROGRAMMING A comprehensive replanning of the efforts remaining in the contract resulting in a revised
totalallocatedbudgetwhichexceedsthecontractbudgetbase.(Alsodefinedasanovertargetbaseline.)Seealso:
FORMALREPROGRAMMING.(10/13)
REPUDIATIONSeealso:ANTICIPATORYBREACH.(11/90)
REQUIREDCOMPLETIONDATETherequireddateofcompletionassignedtoaspecificactivityorproject.(11/90)
REQUIREDRETURNTheminimumreturnorprofitnecessarytojustifyaninvestment.Itisoftentermedinterest,
expectedreturnorprofit,orchargefortheuseofcapital.(11/90)
REQUIREMENT
(1)Anestablishedrequisitecharacteristicofaproduct,process,orservice.Acharacteristicisaphysicalorchemical
property, a dimension, a temperature, a pressure, or any other specification used to define the nature of a
product,process,orservice.
(2)Anegotiatedsetofmeasurablecustomerwantsandneeds.(6/07)
RESALE VALUE The monetary sum expected from the disposal of an asset at the end of its economic life, its
usefullife,orattheendofthestudyperiod.[1](11/90)
RESCHEDULE
(1) In construction, the process of changing the duration and/or dates of an existing schedule in response to
externallyimposedconditionsorprogress.
(2)Inmanufacturing,theprocessofchangingorderoroperationduedates,usuallyasaresultoftheirbeingoutof
phasewithwhentheyareneeded.(11/90)
RESEARCHEXPENSEThosecontinuingexpensesrequiredtoprovideandmaintainthefacilitiestodevelopnew
productsandimprovepresentproducts.(11/90)
RESERVESyn.:MANAGEMENTRESERVE.(6/07)
RESERVEALLOWANCESyn.:MANAGEMENTRESERVE.(6/07)
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RESERVESTOCKSyn.:SAFETYSTOCK.(11/90)
RESIDENT ENGINEER The authorized representative of the engineer who is assigned to the site or any part
thereofwhosedutiesareordinarilysetforthinthecontractdocumentsand/ortheengineer'sagreementwiththe
owner.(11/90)
RESIDUALRISKThatportionofrisksthatremainafterriskresponsesareimplementedinfullorinpart.Seealso:
RISKRESPONSE.(12/11)
RESOURCE Any consumable, except time, required to accomplish an activity. From a total cost and asset
management perspective, resources may include any real or potential investment in strategic assets including
time,monetary,human,andphysical.Aresourcebecomesacostwhenitisinvestedorconsumedinanactivityor
project.(6/07)
RESOURCEAGGREGATIONSummationoftherequirementsforeachresource,andforeachtimeperiod.(6/07)
RESOURCE ALLOCATION PLAN (RAP) Scheduling of activities in a network with knowledge of certain resource
constraints and requirements. This process adjusts activity level start and finish dates to conform to resource
availabilityanduse.Seealso:RESOURCELEVELING.(6/07)
RESOURCE AVAILABILITY DATE Calendar date when a resource pool becomes available for a given resource.
(6/07)
RESOURCEAVAILABILITYPOOLTheextenttowhichresourcesareavailabletomeettheproject'sneeds.(6/07)
RESOURCECALENDAR
(1)Calendarordatabaseusedtomodelavailableresources,whichisthenusedbyprojectmanagementsoftware
forresourcelevelinganalysis.
(2)Calendardenotingwhenaresourceorresourcepoolisavailableforworkonaproject.[8](6/07)
RESOURCECODECodeusedtoidentifyagivenresourcetype.Seealso:CODE;CODEOFACCOUNTS(COA).(6/07)
RESOURCECONSTRAINTThelimitationsonavailableresources.Seealso:RESOURCECALENDAR.(6/07)
RESOURCECRITICALPATHThelongestchainofactivitiesintheschedulewhenlimitedresourcesaretakeninto
consideration in addition to CPM duration and logic considerations. This may be accomplished by adding
preferential soft logic, manual or automatic resource leveling, or just physically practiced on the field without
priorplanning.(3/10)
RESOURCEDESCRIPTIONTheactualnameoridentificationassociatedwitharesourcecode.(11/90)
RESOURCEDRIVENTASKDURATIONTaskdurationthatisdrivenbyconstrainedresources.(6/07)
RESOURCEGROUPAsetofresourcesthatsharesomecharacteristicsandthatiscategorizedbyagroupname,
suchasjobfunction,skillorcontractor.Seealso:RESOURCECODE.(6/07)
RESOURCEHISTOGRAMAgraphicdisplayoftheamountofresourcerequiredasafunctionoftimeonagraph.
Individual, summary, incremental, and cumulative resource curve levels can be shown. Syn.: RESOURCE PLOT.
(11/90)
RESOURCELEVELAspecifiedquantityofresourceunitsrequiredbyanactivitypertimeunit.(6/07)
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RESOURCE LEVELING Any form of network analysis in which scheduling decisions are driven by resource
management concerns (e.g., limited resource availability or difficult to manage changes in resource levels). See
also:RESOURCESMOOTHING.(6/07)
RESOURCE LIMITED SCHEDULING A schedule of activities so that a preimposed resource availability level
(constantorvariable)isnotexceededinanygivenprojecttimeunit.Seealso:RESOURCELEVELING.(11/90)
RESOURCELOADING/RESOURCEALLOCATIONTheprocessofallocatingordefining,throughtheuseofresource
calendars,theresourcestobeusedongivenactivities.(6/07)
RESOURCEOPTIMIZATIONSeealso:RESOURCELEVELING;RESOURCEPLANNING.(6/07)
RESOURCEPLANNING:Theprocessofascertainingfutureresourcerequirementsforanorganizationorascopeof
workanddevelopingplanstomeetthoserequirements.(6/07)
RESOURCEPLOTSyn.:RESOURCEHISTOGRAM.(11/90)
RESOURCEREQUIREMENTSPLANNINGInmanufacturing,theprocessofconvertingtheproductionplanand/or
themasterproductionscheduleintotheimpactonkeyresources,suchaslabor,machinehours,storage,standard
costdollars,shippingdollars,inventorylevels,etc.(6/07)
RESOURCE SMOOTHING Process of rescheduling activities such that the requirement for resources does not
exceedresourcelimits.Smoothingisatypeofresourceleveling,exceptthattheprojectcompletiondatemaynot
bedelayed.Activitiesmayonlybedelayedwithintheirfloat.Seealso:RESOURCELEVELING.(6/07)
RESOURCETHRESHOLDSInresourcelimitedschedulingitispossibletospecifythataparticularresourcemaybe
exceeded,ifnecessary,byanamountnottoexceedthespecifiedthresholdforthatresource.Seealso:RESOURCE
LIMITEDSCHEDULING.(6/07)
RESPONSIBLE ORGANIZATION The organization responsible for management of a work package. See also:
ORGANIZATIONALBREAKDOWNSTRUCTURE(OBS).(11/90)
RESPONSIBILITY Originates when one accepts the assignment to perform assigned duties and activities. The
acceptancecreatesaliabilityforwhichtheassigneeisheldanswerableforandtotheassignor.Itconstitutesan
obligationoraccountabilityforperformance.(11/90)
RESPONSIBILITYASSIGNMENTMATRIX(RAM)DepictstheintersectionoftheWBSandtheOBS.TheOBSrelates
theworkbreakdownstructure(WBS)elementtotheorganizationandthenamedindividualwhoisresponsiblefor
theassignedscopeofacontrolaccount.(1/14)
RESPONSIBILITY CODE System of applying an alphanumeric tag to an activity for grouping, sorting and
summarization purposes. The responsibility code generally identifies the entity responsible for performing the
codedactivities.Seealso:ORGANIZATIONALCODES.(6/07)
RESTDAYAdaywherenoworkisscheduleonanactivityortheproject.Seealso:CALENDAR.(6/07)
RESTRAINTSyn.:CONSTRAINT.(11/90)
RETAINAGESyn.:RETENTION.(6/07)
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RETAINED LOGIC One of two types of logic used to handle activities that occur out of sequence. When used,
schedulingsoftwareschedulestheremainingdurationofanoutofsequenceactivityaccordingtocurrentnetwork
logicafteritspredecessors.Seealso:PROGRESSOVERRIDE.(6/07)
RETENTION Usually refers to a percent of contract value retained by the purchaser until work is finished and
testingofequipmentissatisfactorilycompleted.Syn.:RETAINAGE.(6/07)
RETIREMENT OF DEBT The termination of a debt obligation by appropriate settlement with the lender. It is
understoodtobeinfullamountunlesspartialsettlementisspecified.(11/90)
RETURNONAVERAGEINVESTMENTTheratioofannualprofitstotheaveragebookvalueoffixedcapital,withor
without working capital. This method has some advantages over the returnonoriginalinvestment method.
Depreciationisalwaysconsidered;terminalrecoveriesareaccountedfor.However,themethoddoesnotaccount
forthetimingofcashflowandyieldsanswersthatareconsiderablyhigherthanthoseobtainedbythereturnon
originalinvestment and profitability index methods. Results may be deceiving when compared, say, against the
company'scostofcapital.(11/90)
RETURNONORIGINALINVESTMENTTheratioofexpectedaverageannualaftertaxprofit(duringtheearninglife)
tototalinvestment(workingcapitalincluded).Itissimilarinusefulnessandlimitationstopayoffperiod.(11/90)
RETURNONRATEBASEForapublicutility,thatmonetarysumestablishedbytheproperregulatoryauthorityas
abasisfordeterminingthechargestocustomersandthe"fairreturn"totheownersoftheutility.(11/90)
REVERSE SCHEDULING Method in which project completion date is fixed and task duration and dependency
informationisusedtocomputecorrespondingprojectstartdate.[8](6/07)
REVISIONInthecontextofplanningandscheduling,achangeinthenetworklogic,activityduration,resources
availabilityorresourcesdemandwhichrequiresnetworkrecalculationanddrawingcorrection(s).(6/07)
REWORK
(1)Correctionofdefectivework.Maytakeplacebefore,duringorafterinspectionortesting.
(2)Actiontakentoensurethatadefectiveornonconformingitemcomplieswithrequirementsorspecifications.[8]
Seealso:RECYCLE.(6/07)
RIPPLEEFFECTThemultiplyingeffectofchange(s)and/orproductivityimpactstoupstreamworkthatmayhave
anadverseimpactonthesubsequentworktobeperformed.(4/04)
RISK
(1) An ambiguous term that can mean any of the following: a) All uncertainty (threats + opportunities); or b)
Undesirableoutcomes(uncertainty=risks+opportunities);orc)Thenetimpactoreffectofuncertainty(threats
opportunities).Theconventionusedshouldbeclearlystatedtoavoidmisunderstanding.
(2)Probabilityofanundesirableoutcome.
(3)Intotalcostmanagement,anuncertaineventorconditionthatcouldaffectaprojectobjectiveorbusinessgoal.
Seealso:OPPORTUNITY;EVENT;CONDITION(UNCERTAIN);THREAT;UNCERTAINTY.(12/11)
RISKEXTERNALArisktaxonomydesignationforariskthatisnotcausedbyand/ornotinthedirectcontrolof
thestakeholdersorprojectteam.SeeRISKINTERNAL;RISKTAXONOMY;RISKSOURCES.(12/11)
RISK INTERNAL A risk taxonomy designation for a risk that is caused by and/or in the direct control of the
stakeholdersorprojectteam.SeeRISKEXTERNAL;RISKTAXONOMY;RISKSOURCES.(12/11)
RISKPROJECTSPECIFIC
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A risk taxonomy designation used to classify project risks for the purposes of selecting a quantification method
(i.e., contingency determination). Projectspecific risks are uncertainties (threats or opportunities) related to
events, actions, and other conditions that are specific to the scope of a project. (e.g., weather, soil conditions,
etc.).Theimpactsofprojectspecificrisksaremoreorlessuniquetoaproject.Inthistaxonomyusage,itisthe
oppositeofsystemicrisks.Seealso:RISKTAXONOMY;RISKSYSTEMIC.(12/11)
RISKSYSTEMIC
A risk taxonomy designation used to classify project risks for the purposes of selecting a quantification method
(i.e.,contingencydetermination).Systemicrisksareuncertainties(threatsoropportunities)thatareanartifactof
an industry, company or project system, culture, strategy, complexity, technology, or similar overarching
characteristics. In this taxonomy usage, it is the opposite of projectspecific risks. See also: RISK TAXONOMY;
RISKPROJECTSPECIFIC.(12/11)
RISKACCEPTANCECRITERIACriteriausedtohelpdefinewhentheriskprofileofaprojectorbusinessinitiativeis
acceptabletothedecisionmakersandconsequentlyrisktreatmentcancease.(12/11)
RISKALLOCATIONInrisktreatment,theprocessoftransferringthreatsorsharingopportunitiesbetweenparties,
mostcommonlyexpressedinassociationwiththecontractingprocess.Seealso:RISKRESPONSE.(12/11)
RISK ANALYSIS A risk management process step (part of risk assessment) and methodology for qualitatively
and/or quantitatively screening, evaluating and otherwise analyzing risks to support risk treatment and control.
Seealso:RISKMANAGEMENT.(12/11)
RISKAPPETITEAcomponentoftheriskmanagementplanthatexpressestheriskmanagementobjectiveinterms
ofaconfidenceintervalorlevelforselectedoutcomemeasures.(12/11)
RISK ASSESSMENT In TCM, a risk management process step, which includes the identification and analysis of
risks.(12/11)
RISKAVERSEHavinglittleornorisktolerance.Seealso:RISKTOLERANCE.(12/11)
RISKBASEDINSPECTIONRiskmanagementasappliedtomaintenanceprojectswithafocusonriskbaseplanning
ofinspections.(12/11)
RISKBREAKDOWNSTRUCTURE(RBS)Aframeworkortaxonomytoaidriskidentificationandfororganizingand
ordering risk types throughout the risk management process. Syn.: RISK TAXONOMY; See also: PROMPT LIST.
(12/11)
RISKCONTAINMENTSyn.RISKSAFEGUARD.(8/12)
RISK CONTROL A risk management process step which includes the implementation of the risk response plan.
(12/11)
RISK (IMPACT) COMPOUNDING The concept that the combined impact of multiple risk events or condition
occurrence differs from the impact of their individual occurrence. The risk events may be dependent or
independent.(12/11)
RISKDRIVERSEventsorcircumstancesthatmayinfluenceorcauseuncertaintyinassetorprojectperformance.
Seealso:EVENT(RISKEVENT);CONDITION(RISKCONDITION).(12/11)
RISKEVENTSyn.:EVENT.(12/11)
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RISKFACTORSSyn.:RISKDRIVERS.(12/11)
RISK IDENTIFICATION A risk management process step (part of risk assessment) for identifying and describing
risksforriskanalysisandsubsequentsteps.Seealso:RISKREGISTER;RISKBREAKDOWNSTRUCTURE.(12/11)
RISKIMPACTWINDOWSyn.:EXPOSUREWINDOW.(12/11)
RISKMANAGEMENTAprocessformanagingassetandprojectrisks.InTCM,theprocessincludesriskplanning,
riskassessment,risktreatmentandriskcontrol.(12/11)
RISKMANAGEMENTAUDITAnindependentanddocumentedqualityassuranceprocesstomeasureandassess
compliancewithriskmanagementrequirementsandplans.(12/11)
RISKMANAGEMENTMATURITYReferstothestateofdevelopmentandcompetencyanorganizationhasinRisk
Managementstrategies,processes,methods,andtools.(12/11)
RISK MANAGEMENT PLAN The plan established by the asset planning or project team for carrying out risk
assessment,risktreatmentandriskcontrolefforts.(12/11)
RISKMANAGEMENTTEAMAselectgroupofprojectteammembersthatwillberesponsibleforthecompletion
andacceptanceofthequalitativeanalysisoncerisksareidentified.(4/13)
RISK MATRIX A method used in qualitative risk analysis to rate or rank the severity of risks in terms of their
combinedimpact(orconsequence)tosomeoutputmeasurethatisatriskandtherisksprobabilityofoccurrence.
Thematrixhasimpactononeaxisandprobabilityontheotherwitheachintersectingnodegivenpredetermined
severityratingdesignations(e.g.,high,moderate,low).Syn.:IMPACTVERSUSPROBABILITYRATING.(12/11)
RISK MITIGATION A somewhat ambiguous term that typically includes any risk treatment action to reduce,
transferoreliminateathreat.Seealso:RISKTREATMENT;RISKRESPONSE.(12/11)
RISKOWNERAperson(s)orentitychargedwithplanningandimplementingaspecificriskresponse.(12/11)
RISKPERCEPTIONSubjectiveattitudes,judgmentsandbiasesofanassetorprojectstakeholderconcerningthe
characteristics,probabilityand/orimpactofarisk.Thisaffectstheestablishmentorexpressionofmoreobjective
riskpolicy,appetiteand/ortolerances.SeeRISKPOLICY;RISKAPPETITE;RISKTOLERANCE.(12/11)
RISKPLANNINGInTCM,aprocessforplanningriskmanagementthroughouttheassetorprojectlifecycle.See
also:RISKMANAGEMENTPLAN.(12/11)
RISK POLICY In decision making, refers to the enterprises or decision makers established and preferably
documented risk tolerance and general approach to treatment of risk in decision analysis. See also: DECISION
POLICY;RISKAPPETITE;RISKPERCEPTION;RISKTOLERANCE.(12/11)
RISKPROFILEAgeneraltermthatreferstoeitherqualitativeorquantitativemeasuresorindicatorsthatdescribe
theriskexposureand/orseverityassociatedwithanassetorprojectalternativeorbusinessinitiative.(12/11)
RISKREGISTERAformalrecordofidentifiedrisks,typicallyincludingadditionalsummaryinformationasregards
assessment,treatmentandcontroloftherisks.Thecontentmaybequalitative,quantitativeorboth.Seealso:RISK
IDENTIFICATION;RISKBREAKDOWNSTRUCTURE.(12/11)
RISK RESPONSE Strategies or actions identified and planned in the risk treatment process to address risks.
(12/11)
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RISK SAFEGUARD An existing attribute or condition of an enterprise, asset or project scope (physical, planning or
procedural)thatmayhaverisktreatmentfunctionality.Syn.RISKCONTAINMENT.(8/12)
RISKSCREENINGInriskassessment,stepstoprioritizeidentifiedrisksforrisktreatmentand/orquantitativerisk
analysis (e.g., ranking by score or impact versus probability matrix). See also: QUALITATIVE RISK ANALYSIS; RISK
MATRIX.(12/11)
RISKSOURCESAsomewhatambiguoustermtodescribecategoriesusedinriskidentificationandriskbreakdown
structures to describe process steps, stakeholders, organizational entities, environments, or other origins of risk
causation.Seealso:RISKTAXONOMY.(12/11)
RISKTAXONOMYSyn.:RISKBREAKDOWNSTRUCTURE(RBS).(12/11)
RISK THRESHOLD A risk impact measure or indicator beyond which a risk response must be planned or a
contingentresponsetaken.Seealso:RISKRESPONSE.(12/11)
RISK TOLERANCE Refers to the ability orwillingness ofan asset orproject stakeholder to acceptpotential risk
impacts;theevaluationofrisktoleranceguidesrisktreatmentplanning.Seealso:RISKAPPETITE.(12/11)
RISK TREATMENT In TCM, a risk management process for identifying, evaluating, and selecting responses to
identifiedrisks.Seealso:RISKRESPONSE.(12/11)
RISK TRIGGER A measurable or observable event or condition that is a precursor to or indicator of a risks
occurrence.Typicallyleadstoinitiationofaplannedriskresponse.Seealso:RISKEVENT;RISKCONDITION.(12/11)
RISK TYPES A means of characterizing risk for use in risk assessment by the type of risk. See also: RISK
BREAKDOWNSTRUCTURE(RBS);RISKTAXONOMY.(12/11)
RISKADJUSTED CRITICAL PATH Undeveloped theory that proposes using nondeterministic activity durations
whenconsideringthedeterminationofthecriticalpath.(3/10)
ROLLINGWAVEPLANNINGReferstotheprocessofmaintainingdetailshortworkpackagesfortheneartermand
planningpackagesforthelongerterm.Typicallythisisaccomplishedforsetperiods(e.g.every6months)ortothe
nextprogramlevelsignificantmilestone.Thepurposeistoalwayshaveadiscreteplanforthenearterm.(10/13)
ROYALTIESpaymentsacompanyreceivestoallowotherstouseadesignorconceptthecompanyhasresearched
anddevelopedtocommercialization.Generally,oneoftwotypes:1)Paiduproyaltieswherealumpsumpayment
is made; and2) Running royalties where continuouspayments are made, usually based on actual production or
revenues.(11/90)
RUBBERBASELINEAnambiguoustermmeaninganonstableperformancemeasurementbaseline(PMB)plan.In
anegativecontextitcanreferto:
1)Abaselinethatisfrequentlysinglepointadjustedtoeliminateearnedvaluemanagementvariances.
2)Abaselinethatisfrequentlychangedtoavoidvariancesratherthanfortechnicalperformancereasons.(10/13)
RULESOFCREDITInprojectcontrol,aprocedureaccordingtowhichtheprogressonprojectactivitiesshallbe
measured.Seealso:METHODOFMEASUREMENT.(6/07)
SCURVE
(1) In the context of risk management, a cumulative distribution of the probability of values in a defined range
producedbyquantitativeriskanalysis.
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(2)Inthecontextofprojectcontrol,acumulativedistributionofcosts,laborhours,progress,orotherquantities
plottedagainsttime.
Seealso:QUANTITATIVERISKANALYSIS.(12/11)
SAFETYSTOCKTheaverageamountofstockonhandwhenareplenishmentquantityisreceived.Itspurposeisto
protectagainsttheuncertaintyindemandandinthelengthofthereplenishmentleadtime.Safetystockandcycle
stockarethetwomaincomponentsofanyinventory.Syn.:RESERVESTOCK.(11/90)
SAFETY TIME In a time series planning system, material is frequently ordered to arrive ahead of the forecast
requirementdatetoprotectagainstforecasterror.Thedifferencebetweentheforecastrequirementdateandthe
plannedinstockdateissafetytime.(11/90)
SALESOrdersbookedbycustomers.(11/90)
SALESANALYSIS(ORRESEARCH)Asystematicstudyandcomparisonofsalesforconsumptiondataalongthelines
ofmarketareas,organizationalunits,productsorproductgroups,customersorcustomergroups,orsuchother
units as may be useful. Typical analyses would include: 1) Promotion Evaluation; 2) Quota Assignment; and 3)
TerritoryAssignment.Seealso:MARKETINGRESEARCH.(11/90)
SALESFORECASTApredictionorestimateofsales,indollarsorphysicalunits,foraspecifiedfutureperiodunder
aproposedmarketingplanorprogramandunderanassumedsetofeconomicandotherforcesoutsidetheunit
for which the forecast is made. The forecast may be for a specified item of merchandise or for an entire line.
(11/90)
SALESPROFILEThegrowthordeclineofhistoricalorforecastsalesvolume,byyears.(11/90)
SALESPRICETherevenuereceivedforaunitofaproduct.Grosssalespriceisthetotalamountpaid.Netsalesare
grosssaleslessreturns,discounts,freightandallowances.Plantnetbacksarenetsaleslessselling,administrative
andresearchexpenses.Syn.:SELLINGPRICE.(11/90)
SALESREVENUERevenuereceivedasaresultofsales,butnotnecessarilyduringthesametimeperiod.(11/90)
SALVAGEVALUE
(1)Themarketvalueofamachineorfacilityatanypointintime(normallyanestimateofanasset'snetmarket
valueattheendofitsestimatedlife).
(2)Thevalueofanasset,assignedfortaxcomputationpurposes,whichisexpectedtoremainattheendofthe
depreciationperiod.(5/12)
SAVINGSTOINVESTMENT RATIO (SIR) Either the ratio of present value savings to present value investment
costs,ortheratioofannualvaluesavingstoannualvalueinvestmentcosts.[1](11/90)
SCALINGFACTORSeealso:CAPACITYFACTOR.(5/12)
SCENARIOAdescriptionofspecificeventsandconditionsandtheirprobableoutcomes.Usuallylimitedtolikely
orprobablescenariosversusallpossibleones.Frequently,mostlikely,bestcase,andworstcasescenarios
areusedtodefinethemostprobableoutcomeandtherangeofoutcomes.(12/11)
SCENARIO ANALYSIS Methods to assess a range or events, conditions, and outcomes employing specific
scenarios. An alternative to simulation methods for assessing ranges. Syn.: SENSITIVITY ANALYSIS. See also:
RANGE;SCENARIO;SIMULATION.(12/11)
SCHEDULE
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(1) A description of when each activity in a project can be accomplished and must be finished so as to be
completedtimely.Thesimplestofschedulesdepictinbarchartformatthestartandfinishofactivitiesofagiven
duration.Morecomplexschedules,generalinCPMformat,includeschedulelogicandshowthecriticalpathand
floatsassociatedwitheachactivity.
(2) A time sequence of activities and events that represent an operating timetable. The schedule specifies the
relativebeginningandendingtimesofactivitiesandtheoccurrencetimesofevents.Aschedulemaybepresented
onacalendarframeworkoronanelapsedtimescale.(6/07)
SCHEDULE BASELINE In earned value, the baseline start and completion dates used for integration with work
authorization and costs. It is considered the time element of the performance measurement baseline (PMB).
(10/13)
SCHEDULEBUFFERSyn.:SCHEDULECONTINGENCY.
SCHEDULECOMPRESSIONAmethodofscheduleanalysisusedtoshortenthecriticalpathoftheschedule.This
may be accomplished by resequencing work, employing greater resources to accomplish more work in a given
time,orotherwisereducingthedurationofcriticalpathactivities.Theneedforschedulecompressionmaycome
about because of the owners desire to complete early, make up for delays, or to accommodate added work.
(6/07)
SCHEDULECONTINGENCY
(1)Durationaddedtoascheduleactivitytoallowfortheprobabilityofpossibleorunforeseenevents.Useinthis
mannerisnotrecommendedasthecontingencyishiddenandmaybemisused.
(2)Auniqueactivityusedtomodelspecificfloatavailabletoaprojectphase.Usedinthismannergivesownership
offloattothoseactivitiesandorresponsibilityentity.
(3)Theamountoftimeaddedtospecificactivitiesofaproject(orprogram)scheduletomitigate(dampen/buffer)
the effects of risks or uncertainties identified or associated with specific elements of that schedule. Syn.:
SCHEDULEBUFFER.Seealso:SCHEDULEMARGIN.(10/13)
SCHEDULEDECOMPRESSIONTheoppositeofschedulecompressionandresultsinlengtheningthecriticalpath.
Theneedtoreducecosts,workwithinlimitedresourceconstraints,andeliminatetheuseofovertimearesomeof
thereasonsforscheduledecompression.(6/07)
SCHEDULE GRAPHICS Presentation charts and images used to communicate schedule progress and highlight
areasofconcern.Usuallysupplementstheschedulereport.Schedulegraphicscanincludebarcharts,timescaled
logicdiagrams,fragnets,etc.Seealso:SCHEDULEREPORT.(6/07)
SCHEDULE MARGIN (SM) Schedule margin or schedule reserve are interchangeable terms meaning duration
addedtoascheduleactivitytoallowfortheprobabilityofpossibleorunforeseenevents.Itistypicallybasedona
schedule risk assessment and is measured in the unit of the schedule (typically days). For earned value
management,schedulemarginisusuallylimitedtologicalendpointswithintheschedule.Schedulemarginactsas
abufferbetweenthebaselineactivitiesandtheprojectenddate.Itmaybeconsideredmanagementreserve(MR)
intimeunits.Syn.:SCHEDULERESERVE.Seealso:SCHEDULECONTINGENCY;MANAGEMENTRESERVE.(10/13)
SCHEDULEMODELAmathematicalrepresentationofaschedulethatcanbeusedinmodeling.ACPMschedule
networkisthemostcommonschedulemodel.Seealso:CRITICALPATHMETHOD(CPM);MODELING;NETWORK.
(6/07)
SCHEDULE OF VALUES A detailed statement furnished by a construction contractor, builder, or others,

apportioningthecontractvalueintoworkpackages.Itisusedasthebasisforsubmittingandreviewingprogress
payments.(6/07)
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SCHEDULE PERCENT COMPLETE The proportion of an activity or all the projects activities that has been
completed.(6/07)
SCHEDULE PERFORMANCE INDEX (SPI) Ratio of work performed (earned value or BCWP) to work scheduled
(planned value or BCWS). See also: SCHEDULE PERFORMANCE INDEX [SPI(t)]; EARNED VALUE (EV); PLANNED
VALUE(PV).(6/07)
SCHEDULEPERFORMANCEINDEX[SPI(t)]Atimebasedperformanceindexdeterminedbyearnedschedule(the
accomplishedvalueintimeincrements)dividedbytheactualtimeincrementsthathaveelapsed.Seealso:
SCHEDULEPERFORMANCEINDEX(SPI).(11/14)
SCHEDULEREFINEMENTRework,redefinitionormodificationofthelogicordatathatmayhavepreviouslybeen
developed in the planning process as required to properly input milestones, restraints and priorities. See also:
SCHEDULEREVISION.(6/07)
SCHEDULE REPORT A periodic report outlining progress, highlighting significant progress of activities on the
critical path and areas of concern that may require corrective action. A schedule report typically includes a
narrative,tabularlistingsbyvarioussorts,andtimescaledCPMdiagrams.(6/07)
SCHEDULERESERVESyn.:SCHEDULEMARGIN.Seealso:SCHEDULECONTINGENCY.(10/13)
SCHEDULEREVISIONInthecontextofscheduling,achangeinthenetworklogicorinresourceswhichrequires
redrawingpartortheentirenetwork.(6/07)
SCHEDULERISKTherisks(threats,opportunities,orboth)theteammightencounterinmeetingthedeadlinesfor
thefinaldeliverableoraffectinganyactivity,milestoneorelementofthescheduleplan.(12/11)
SCHEDULESLIPSlippageinthefinalcompletiondateofaproject.Seealso:SLIPPAGE.(6/07)
SCHEDULETRACEABILITYAbroadtermmeaningthecodingnecessaryinthescheduletoshowintegrationwith
work authorization, budgeting, accounting, and other earned value management components. Traceability
demonstratesthecompletenessoftheschedulecontent.(10/13)
SCHEDULEUPDATEProcessofupdatingprogressasofadatadateandreportingthatprogress.(6/07)
SCHEDULEVARIANCE(SV)
(1)Differencebetweenprojectedstart/finishdatesandactualorrevisedstart/finishdates.
(2) The difference between the earned value and scheduled value. Schedule variance = budgeted cost of work
performed (BCWP) budgeted cost of work scheduled (BCWS). A negative cost variance indicates that the
activity(ies)isrunningbehindschedule.Seealso:SCHEDULEVARIANCE[SV(t)].(6/07)
SCHEDULEVARIANCE[SV(t)]Thetimedifferencebetweentheearnedschedule(theaccomplishedvalueintime
increments through a planned period) and the actual time increments that have elapsed. See also: SCHEDULE
VARIANCE(SV).(11/14)
SCHEDULEWORKUNITAcalendartimeunitwhenworkmaybeperformedonanactivity.(6/07)
SCHEDULED COMPLETIONDATE A dateassigned for completion of activity or accomplishment of an event for

purposesofmeetingspecifiedschedulerequirements.(11/90)
SCHEDULEDDATESThestart,intermediate,orfinaldatesimposedbycontractorothermeansthatimpactthe
projectschedule.Seealso:CONTRACTDATES.(6/07)
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SCHEDULEDEVENTTIMEInPERT,anarbitraryscheduletimethatcanbeintroducedatanyeventbutisusually
onlyusedatacertainmilestoneorthelastevent.(11/90)
SCHEDULESENSITIVITYidentifiesandranksthetasksmostlikelytoinfluencetheprojectduration/finish.(12/11)
SCHEDULING
(1)Assignmentofdesiredstartandfinishtimestoeachactivityintheprojectwithinoveralltimecyclerequiredfor
completionaccordingtoplan.
(2) Process of converting a general or outline plan for a project into a timebased schedule based on available
resourcesandtimeconstraints.
Seealso:PLANNING.(6/07)
SCHEDULING RULES Basic rules that are spelled out ahead of time so that they can be used consistently in a
schedulingsystem.(11/90)
SCHEDULINGTECHNIQUESSystemsandprocessesavailablefordeterminationandpresentation(modeling)ofa
projectplan.Examplesinclude,arrowdiagramming,logicnetworks,barcharts,PERT,trending,etc.usingavariety
ofsoftware.Seealso:SCHEDULEMODEL.(6/07)
SCOPEThesumofallthatistobeorhasbeeninvestedinanddeliveredbytheperformanceofanactivityor
project.Inprojectplanning,thescopeisusuallydocumented(i.e.,thescopedocument),butitmaybeverballyor
otherwisecommunicatedandreliedupon.Generallylimitedtothatwhichisagreedtobythestakeholdersinan
activityorproject(i.e.,ifnotagreedto,itisoutofscope).Incontractingandprocurementpractice,includesall
thatanenterpriseiscontractuallycommittedtoperformordeliver.Syn.:PROJECTSCOPE.(1/03)
SCOPECHANGESyn.:CHANGEINSCOPE.(4/07)
SCOPECREEPGradualprogressivechange(usuallyadditionsto)oftheproject'sscopesuchthatitisnotnoticed
byproject management team or customer. Typically occurs when thecustomer identifies additional, sometimes
minor,requirementsthat,whenaddedtogether,maycollectivelyresultinasignificantscopechange,resultingin
costandscheduleoverruns.[8](6/07)
SCOPEDEFINITIONDivisionofthemajordeliverablesintosmaller,moremanageablecomponentsto:1)Improve
the accuracy of cost, time, and resource estimates; 2) Define a baseline for performance measurement and
control; and 3) Facilitate clear responsibility assignments. See also: FRONT END; FRONT END LOADING (FEL). [8]
(6/07)
SEASONALCOMMODITIESCommoditieswhicharenormallyavailableinthemarketplaceonlyinagivenseason
oftheyear.(11/90)
SEASONALVARIATIONThatmovementinmanyeconomicsserieswhichtendstorepeatitselfwithinperiodsofa
year.(11/90)
SECONDARY FLOAT (SF) Same as total float, except that it is calculated from a schedule date upon an
intermediateevent.(11/90)
SECONDARYRISKSRisksthatoccurfromactionstakentotreatotherrisks.Seealso:DYNAMICRISK.(12/11)
SECULARTRENDThesmoothorregularmovementofalongtermtimeseriestrendoverafairlylongperiodof
time.(11/90)
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SELLINGEXPENSEThetotalexpenseinvolvedinmarketingtheproductsinquestion.Thisnormallyincludesdirect
sellingcosts,advertising,andcustomerservice.(11/90)
SELLINGPRICESyn.:SALESPRICE.(11/90)
SENSITIVITY The relative magnitude of the change in one or more elements of an engineering economy,
estimate,schedule,riskorotherplanninganalysisthatwillreverseadecisionamongalternatives.Moregenerally,
itisthedegreetowhichachangeinanelementofamodelaffectstheoutcome.(12/11)
SENSITIVITYANALYSISAtestoftheoutcomeofananalysisbyalteringoneormoreparametersfromaninitially
assumedvalue(s).[1](11/90)
SENTIMENTALVALUEAvalueassociatedwithanindividual'spersonaldesire,usuallyrelatedtoapriorpersonal
relationship.(11/90)
SEQUENCEOrderinwhichactivitieswilloccurwithrespecttooneanother.Establishespriorityanddependencies
between activities. Successor and predecessor relationships are developed in a network format. Allows project
participantstovisualizeworkflow.Seealso:NETWORK.(6/07)
SERVICEABILITYAmeasureofthedegreetowhichservicingofanitemwillbeaccomplishedwithinagiventime
underspecifiedconditions.(11/90)
SERVICINGThereplenishmentofconsumablesneededtokeepaniteminoperatingcondition,butnotincluding
anyotherpreventivemaintenanceoranycorrectivemaintenance.(11/90)
SERVICEWORTHVALUEEarningvalue,assumingtheratesand/orpriceschargedarejustequaltothereasonable
worthtocustomersoftheservicesand/orcommoditiessold.(11/90)
SHALLUseoftheword'shall'incontractlanguagemeansthat'youmust',asopposedtomay.(6/07)
SHAREInTCMriskmanagement,ariskresponsestrategyforopportunitiesthatinvolvessharingtheriskwitha
thirdpartywhoisbetterabletomanageit.Seealso:RISKRESPONSE.(12/11)
SHIFTINGBASE Changing the point of reference of an index numberseries from one time reference period to
another.(11/90)
SHOPDRAWINGSAlldrawings,diagrams,illustrations,schedulesandotherdatawhicharespecificallyprepared
byorforthecontractortoillustratesomeportionoftheworkandallillustrations,brochures,standardschedules,
performance charts, instructions, diagrams and other information prepared by a supplier and submitted by the
contractortoillustratematerialorequipmentforsomeportionofthework.(11/90)
SHOPORDERNUMBERSyn.:ACCOUNTNUMBER.(11/90)
SHOPPLANNINGThecoordinationofmaterialhandling,materialavailability,thesetupandtoolingavailabilityso
thatajobcanbedoneonaparticularmachine.(11/90)
SHORTINTERVALSCHEDULINGTheprocessofupdatingCPMschedulesweeklyorevendaily,andgenerallyusing
activityduration'sinhoursanddays.Shortintervalschedulingisemployedinplantshutdowns/turnaroundsorfor
verytimecritical/shortdurationsubprojects.Seealso:PRODUCTIONSCHEDULE.(6/07)
SHORTTERMACTIVITIESSeealso:MONTHLYGUIDESCHEDULE.(11/90)
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SHUTDOWNPOINTTheproductionlevelatwhichitbecomeslessexpensivetoclosetheplantandpayremaining
fixedexpensesoutofpocketratherthancontinueoperations;thatis,theplantcannotmeetitsvariableexpense.
(11/90)
SIGNIFICANTVARIANCESThosedifferencesbetweenplannedandactualperformancewhichexceedestablished
thresholdsandwhichrequirefurtherreview,analysisandaction.(11/90)
SIMPLEINTEREST
(1) Interest that is not compounded is not added to the incomeproducing investment or loan.
(2) The interest charges under the condition that interest in any time period is only charged on the principal.
(11/90)
SIMPLEPAYBACKPERIOD(SPB)Thetimerequiredforthecumulativebenefitsfromaninvestmenttopayback
theinvestmentcostandotheraccruedcosts,notconsideringthetimevalueofmoney.[1](11/90)
SIMULATIONApplicationofaphysicalormathematicalmodeltoobserveandpredictprobableperformanceof
the actual item or phenomenon to which it relates. See also: MODELING; MONTE CARLO METHOD; LATIN
HYPERCUBEMETHOD.(12/11)
SINGLEPOINTESTIMATESeealso:BASEESTIMATE.(12/11)
SINKINGFUND
(1)Afundaccumulatedbyperiodicdepositsandreservedexclusivelyforaspecificpurpose,suchasretirementofa
debtorreplacementofaproperty.
(2)Afundcreatedbymakingperiodicdeposits(usuallyequal)atcompoundinterestinordertoaccumulateagiven
sumatagivenfuturetimeforsomespecificpurpose.(11/90)
SITEPREPARATIONAnactinvolvinggrading,landscaping,drainage,installationofroadsandsiding,ofanareaof
ground upon which anything previously located had been cleared so as to make the area free of obstructions,
entanglementsorpossiblecollisionswiththepositioningorplacingofanythingneworplanned.(6/07)
SLACKSyn.:FLOAT.(11/90)
SLACKPATHSThesequencesofactivitiesandeventsthatdonotlieonthecriticalpathorpaths.(11/90)
SLACK TIME The difference in calendar time between the scheduled due date for a job and the estimated
completion date. If a job is to be completed ahead of schedule, it is said to have slack time; if it is likely to be
completedbehindschedule,itissaidtohavenegativeslacktime.Slacktimecanbeusedtocalculatejobpriorities
usingmethodssuchasthecriticalratio.Inthecriticalpathmethod,totalslackistheamountoftimeajobmaybe
delayedinstartingwithoutnecessarilydelayingtheprojectcompletiontime.Freeslackistheamountoftimeajob
maybedelayedinstartingwithoutdelayingthestartofanyotherjobintheproject.(11/90)
SLIPCHARTApictorialrepresentationofthepredictedcompletiondatesofmilestones.Alsoreferredtoastrend
chart.(6/07)
SLIPPAGE Amount of time a task has been delayed from its original baseline plan. Slippage is the difference
between scheduled start or finish date for a task and baseline start or finish date. Slippage can occur when a
baseline plan is set and actual dates subsequently entered for tasks are later than baseline dates, or actual
durationsarelongerthanbaselinedurations.Seealso:SCHEDULESLIP.(6/07)
SMOOTHING In resourcescheduling, refers to an option that modifies the way timelimited (and resource
limited with thresholds) scheduling works. Objective is to minimize the extent that each resource availability is
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exceeded. Standard algorithm gives itself the maximum flexibility to achieve this by making use of any excess
already incurred. Smoothing option modifies this so that it will not use excess for a particular activity unless
necessaryinordertoschedulethatactivitywithinitstotalfloat.(6/07)
SOFT LOGIC Activity(ies) and logic that with current knowledge cannot be modeled in detail. As design and
constructionevolves,softlogicistransformedintodetailedorhardlogic,withactivitiesbeingsplitintocomponent
partsandlogictiesrefined.Seealso:DISCRETIONARYDEPENDENCY.(6/07)
SPECIFICATION, DESIGN A design specification providing a detailed written and/or graphic presentation of the
requiredpropertiesofaproduct,material,orpieceofequipment,andprescribingtheprocedureforitsfabrication,
erection,andinstallation.(6/07)
SPECIFICATION, PERFORMANCE A statement of required results, verifiable as meeting stipulated criteria, and
generallyfreeofinstructionastothemethodofaccomplishment.(11/90)
SPECIFICATION(S)
(1)Adetailed,exactstatementofparticulars,especiallyastatementprescribingmaterials,dimensions,andquality
ofworkforsomethingtobebuilt,installed,ormanufactured.
(2)Adocumentthatprescribestherequirementswithwhichtheproductorserviceshastoconform.(6/07)
SPECIFICATION TREE A graphic portrayal arranged to illustrate interrelationships of hardware and/or software
performance/design requirements specifications. Normally, this portrayal is in the form of a family tree
subdivision of specifications, with each lower level specification applicable to a hardware/software item that is
partofahigherlevelitem.[7](6/07)
SPLIT TASK A task divided into two or more portions, with time gaps between one portion and another that
indicateaninterruptioninworkonthetask.(6/07)
SPLITTABLE ACTIVITY Activity that can be interrupted in order to allow temporary transfer of its resources to
anotheractivity.(6/07)
SPLITTINGInresourcescheduling,itispossibletospecifythatanactivitymaybesplitifthisresultsinanearlier
scheduled finish date. This means that the specified duration may be divided into two or more pieces, while
retainingthespecifiedprofileforresourcerequirementsrelativetothissplitduration.(6/07)
SPOTMARKETPRICEINDEXDailyindexusedasameasureofpricemovementsofsensitivebasiccommodities
whosemarketsaretobepresumedtobeamongthefirsttobeinfluencedbychangesineconomicconditions.It
servesasoneearlyindicatorofimpendingchangesinbusinessactivity.(6/07)
STAGEOFPROCESSINGAcommodity'sintermediatepositioninthevalueaddedchannelofproduction.(11/90)
STAKEHOLDERDecisionmakers,peopleororganizationsthatcanaffectorbeaffectedbyadecision.(12/11)
STAKEHOLDER ANALYSIS A process used to determine the degree of interest, influence and attitude of
stakeholderstowardaparticularasset,projectorbusinessobjective.(12/11)
STAND ALONE A system that performs its function requiring little or no assistance from interfacing systems.
(6/07)
STANDARDAspecificstatementoftherulesandconstraintsgoverningthenaming,contents,andoperationsof
deliverables.Therulesandconstraintsaredesignedtosupportspecificobjectives.(6/07)
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STANDARD NETWORK DIAGRAM A predefined network intended to be used more than one time in any given
project.(11/90)
STANDARD OPERATING PROCEDURE Detailed stepbystep instructions for repetitive operations. Examples are
aircrafttakeoffandlandingprocedures.(6/07)
STANDARDTIMEAmeasureofthetimeitshouldtakeaqualifiedworkertoperformaparticulartask.(6/07)
STARTINGEVENTSyn.:BEGINNINGEVENT.(11/90)
STARTEVENTOFA PROJECT Event withsucceeding,but no preceding activities. There may be more thanone
startevent.(6/07)
STARTFLOATAmountofexcesstimeanactivityhasbetweenitsearlystartandlatestartdates.Seealso:FREE
FLOAT.(6/07)
STARTTOFINISH(SF)Arelationshipinwhichthesuccessoractivitydependsuponandcanfinishonlyafterthe
predecessoractivitystarts.Thepredecessormuststartfirstandthenthesuccessorcanfinish.(6/07)
STARTTOSTART(SS)Arelationshipbetweenactivitiesinwhichthestartofasuccessoractivitydependsonthe
startofitspredecessor.Thepredecessormuststartpriortothesuccessorstarting.(6/07)
STARTTOSTARTLAGMinimumamountoftimethatmustpassbetweenthestartofoneactivityandthestartof
itssuccessor(s).Maybeexpressedintermsofdurationorpercentage.(6/07)
STARTUP The project activities (or phase) that take place between commissioning and the achievement of
steadystate operation. In some usage, the term startup may include both commissioning (i.e., testing after
mechanicalcompletion) and startup (it may then be referred toas startupand testing); one must take care to
ascertainwhattheuserofthistermmeans.Productionmaynotbeatplannedcapacityorqualityattheendofthe
phase.Seealso:COMMISSIONING;MECHANICALCOMPLETION.(6/07)
STARTUP COSTS Extra operating costs to bring the plant on stream incurred between the completion of
construction and beginning of normal operations. In addition to the difference between actual operating costs
during that period and normal costs, it also includes employee training, equipment tests, process adjustments,
salariesandtravelexpenseoftemporarylabor,staffandconsultants,reportwriting,poststartupmonitoringand
associated overhead. Additional capital required to correct plant problems may be included. Startup costs are
sometimescapitalized.(11/90)
STATEMENTOFWORKAnarrativedescriptionoftheworktobeperformed.(6/07)
STATICRISKSRisksforwhichthecharacteristics,probabilityand/orimpactdonotchangeovertimeorwiththe
occurrenceofprecedingevents.Seealso:DYNAMICRISKS.(12/11)
STATUS
(1)Comparisonofactualprogressagainsttheplantodeterminevarianceandcorrectiveaction.
(2)Aninstantaneoussnapshotofthethencurrentconditions.
Seealso:PROGRESS.(6/07)
STATUS DATE The date that the schedule is statused through, earned value is calculated through, and actual
costsareintegratedwith.Inearnedvalue,isalsothedatethatvarianceanalysisandbaselinecontrolismaintained
against.Seealso:TIMENOW;DATADATE.(10/13)
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STATUSLINEAverticallineonatimescaledscheduleindicatingthepointintime(date)onwhichthestatusof
theprojectisreported.Oftenreferredtoasthetimenowline.Seealso:DATADATE.(11/90)
STATUSREPORT
(1)Descriptionofwheretheprojectcurrentlystands;partoftheperformancereportingprocess.
(2)Formalreportontheinput,issues,andactionsresultingfromastatusmeeting.
Seealso:PROGRESSREPORT.[8](6/07)
STATUSINGIndicatingontheschedulethemostcurrentprojectstatus.Seealso:UPDATE.(11/90)
STOCK AND BOND VALUE A special form of market value for enterprises, which can be owned through
possessionoftheirsecurities.Stockandbondvalueisthesumof:1)Theparvaluesindollarsofthedifferentissues
ofbondsmultipliedbythecorrespondingratiosofthemarketpricetotheparvalue;and2)Thenumberofshares
ofeachissueofstockmultipliedbythecorrespondingmarketpriceindollarspershare.(11/90)
STOP WORK ORDER Request for interim stoppage of work due to nonconformance, or funding or technical
limitations.Seealso:SUSPENSIONOFWORK,DIRECTED.(6/07)
STRAIGHTLINE DEPRECIATION Method of depreciation whereby the amount to be recovered (written off) is
spreaduniformlyovertheestimatedlifeoftheassetintermsoftimeperiodsorunitsofoutput.(11/90)
STRATEGIC ASSET Any unique physical or intellectual property that is of long term or ongoing value to the
enterprise.Asusedintotalcostmanagement,itmostcommonlyincludescapitalorfixedassets,butmayinclude
intangible assets. Excludes cash and purely financial assets. Strategic assets are created by the investment of
resourcesthroughprojects.(1/02)
STRATEGICASSETMANAGEMENTAsubprocessofthetotalcostmanagement(TCM)processthatincludesthe
management of the total life cycle cost investment of resources in an enterprises portfolio of strategic assets.
Excludes,butintegratedwith,theprojectcontrolprocess.Seealso:PROJECTCONTROL;STRATEGICASSET;TOTAL
COSTMANAGEMENT(TCM).(6/07)
STRATEGICRISKS
(1)Ariskforwhichthepotentialimpactthreatensaprojectobjective,eveniftheprobabilityofoccurrenceislow
orriskmatrixseverityratingiswithinscreeningthresholds.Inprojects,theserisksaregenerallyfundedthrough
managementreserves.
(2)Ariskthathasasignificantpotentialimpactonenterprise,portfolioorotherhigherobjectivesorplansbeyond
theprojectlevel.
Seealso:TACTICALRISK.(12/11)
STRATEGY Action plan to set the direction for the coordinated use of resources through programs, projects,
policies,procedures,andorganizationaldesignandestablishmentofperformancestandards.[8](6/07)
STRETCHING In resource scheduling it is possible to specify that an activity duration may be stretched if this
results in an earlier scheduled finish date. This means that the specified duration may be increased, while the
specifiedresourceprofileisreducedproportionally.(6/07)
STUDYPERIODThelengthoftimeoverwhichaninvestmentisanalyzed.Seealso:LIFECYCLE;TIMEHORIZON.[1]
(11/90)
SUBCONTRACTAcontractthatassignssomeoftheobligationsofapriorcontracttoanotherparty.(6/07)
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SUBCONTRACTOR One that enters into a subcontract and assumes some of the obligations of the primary
contractor.(6/07)
SUBINDEXApriceindexforasubaggregateofagivenbasketofcommodities.(11/90)
SUBNETWORKSyn.:FRAGNET.
SUBNETWORKFLOATTotalfloatonafragnetwhenitisextractedfromtheoverallnetwork.Thisisrelevantin
dealing with delay issues particular to a certain subcontractor or a supplier responsible for only a part of the
overallproject.(6/07)
SUBPROJECT
(1)Asmallerprojectwithinalargerone.Oftenusedtosegregateintocomponentsthataremoremanageable.
(2) Component of a project. Often contracted out to an external enterprise or another functional unit in the
performingorganization.[8](6/07)
SUBSTANTIALCOMPLETION
(1)Work(oraspecifiedpartthereof)whichhasprogressedtothepointwhereintheopinionoftheengineer,as
evidenced by the engineer's definitive certificate of substantial completion, it is sufficiently complete, in
accordancewiththecontractdocuments,sothatthework(orspecifiedpart)canbeutilizedforthepurposesfor
whichitisintended;oriftherebenosuchcertificateissued,whenfinalpaymentisdueinaccordancewiththe
general conditions. Substantial completion of the work, or specified part thereof, may be achieved either upon
completion of preoperational testing or startup testing, depending upon the requirements of the contract
documents. The terms substantially complete and substantially completed as applied to any work refer to
substantialcompletionthereof.
(2)Foranactivity,whentheworkisgenerallycompletedwiththeexceptionofminorremedialwork,thusallowing
any successor activities to start unimpeded. For a project this is the point where the work is complete and the
owner can start using the project for its intended purpose. The only remaining work would be categorized as
punchlistwork.
(3)Thetimewhenthefacilityisavailabletooperatesafelyfortheintendedpurpose.(6/07)
SUBSTANTIALPERFORMANCEConsideredtobereachedwhen:1)Theworkorasubstantialpartofitisreadyfor
useorisbeingusedforthepurposeintended;2)Theworktobedoneunderthecontractcanbecompletedor
correctedatacostofnotmorethan,say,1%to3%ofthecontractpricedependingonthesizeofthecontract;and
3) Is so certified by a certificate of substantial performance issued by client or its consultant. See also:
SUBSTANTIALCOMPLETION.(6/07)
SUBSYSTEM An aggregation of component items (hardware and software) performing some distinguishable
portion of the function of the total system of which it is a part. Normally, a subsystem could be considered a
systeminitselfifitwerenotanintegralpartofthelargersystem.(11/90)
SUBTASKPortionofataskorworkelement.[8](6/07)
SUCCESS TREE ANALYSIS (STA) A risk analysis methodused to evaluate risk opportunities employing a success
tree which shows the combination of successful events leading to the success of parent event. See FAULTTREE
ANALYSIS.(12/11)
SUCCESSORAnactivitythatimmediatelysucceedsanotheractivity.(3/04)
SUCCESSOR ACTIVITY An activity, which logically follows the accomplishment of part or all of a given activity.
(6/07)
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SUCCESSOREVENTTheeventthatsignifiesthecompletionofanactivity.(11/90)
SUMOFDIGITSMETHODAmethodofcomputingdepreciationinwhichtheamountforanyyearisbasedonthe
ratio:(yearsofremaininglife)/(1+2+3+...+n),wherenisthetotalanticipatedlife.Syn.:SUMOFTHEYEARSDIGITS
METHOD.(11/90)
SUMOFTHEYEARSDIGITSMETHODSyn.:SUMOFDIGITSMETHOD.(6/07)
SUMMARYITEMAnitemappearingintheworkbreakdownstructure.(11/90)
SUMMARYLEVELPLANNINGPACKAGE(SLPP)Anoptionalbudgetlevelabovethecontrolaccountandbelowthe
reporting level to the owner. SLPPs have scope, schedule, and budget and are limited to significant outer year
periods. They are allocated to control accounts and converted to planning packages at the earliest opportunity.
(10/13)
SUMMARY NETWORK A summarization of the CPM network for presentation purposes. This network is not
computed.(11/90)
SUMMARYNUMBERAnumberthatidentifiesanitemintheworkbreakdownstructure.(11/90)
SUMMARY SCHEDULE A single page, usually timescaled, project schedule. Typically included in management
levelprogressreports.Inearnedvalue,itcanbereconciledwiththeperformancemeasurementbaseline(PMB)
schedule.Seealso:MILESTONESCHEDULE;MASTERSCHEDULE.(10/13)
SUMMARY TASK A task that consists of a logical group of tasks, called subtasks. Primarily used for reporting
purposes.Seealso:HAMMOCK.(10/13)
SUNK COST A cost that has already been incurred and which should not be considered in making a new
investmentdecision.[2](11/90)
SUPERCRITICAL ACTIVITY An activity that is behind schedule is considered to be supercritical. It has been
delayedtoapointwhereitsfloatiscalculatedtobeanegativevalue.Seealso:HYPERCRITICALACTIVITIES.(6/07)
SUPERIORKNOWLEDGESeealso:MISREPRESENTATION.(11/90)
SUPPLEMENTARYCONDITIONSThepartofthecontractdocumentswhichamendsorsupplementsthegeneral
conditions.(11/90)
SUPPLIERAmanufacturer,fabricator,distributororvendor.(11/90)
SURETYAbondingcompanylicensedtoconductbusinesswhichguaranteestheownerthatthecontractwillbe
completed(performancebond)andthatsubcontractorsandsupplierswillbepaid(paymentbond).(11/90)
SURVEILLANCE A term used in an earned value management system (e.g. EVMS or C/SCSC) to mean the
monitoringofcontinuedcompliancewithanapproved/validatedmanagementcontrolsystem.(6/07)
SUSPENSION OF WORK, CONSTRUCTIVE An act or failure to act by the owner, or the owner's representative,
whichisnotadirectedsuspensionofworkorworkstoppage,butwhichhastheeffectofdelaying,interrupting,or
suspendingalloraportionofthework.(11/90)
SUSPENSIONOFWORK,DIRECTEDActionsresultingfromanorderoftheownertodelay,interrupt,orsuspend
anyorallportionsoftheworkforagivenperiodoftime,fortheconvenienceoftheowner.(11/90)
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SWOT Acronym for a qualitative risk identification and assessment technique that reviews strengths,
weaknesses,opportunitiesandthreats.(12/11)
SYSTEMCONCEPTDOCUMENTSyn.:CONCEPTDEFINITIONDOCUMENT.(6/07)
SYSTEMSDYNAMICSMethodsforstudyingthebehaviorofcomplexsystemswithfeedbackloops(e.g.,chainsof
causeandeffect).SeeDYNAMICRISKS.(12/11)
SYSTEMS STUDIES The development and application of methods and techniques for analyzing and assessing
programs, activities and projects to review and assess efforts to date and to determine future courses and
directions. These studies include cost/ benefit analysis, environmental impact analysis, assessment of the
likelihood of technical success, forecasts of possible futures resulting from specific actions, and guidance for
energyprogramplanningandimplementation.(11/90)
TACTICALRISKSRiskforwhichthepotentialimpactdoesnotsignificantlythreatenanoverallprojectobjectiveor
haveasignificantpotentialimpactonenterprise,portfolioorotherhigherobjectivesorplansbeyondtheproject
level.Seealso:STRATEGICRISK.(12/11)
TAKEOFF A takeoff is a specific type of quantification that is a measurement and listing of quantities of
materials from drawings in order to support the estimate costing process and/or to support the material
procurementprocess.Seealso:QUANTIFICATION.(1/03)
TANGIBLES Things that can be quantitatively measured or valued, such as items of cost and physical assets.
(11/90)
TARGETAtargetisameasurementsetforperformance.Inaprojectmanagementsenseittypicallyreferstoa
projectgoalexpressedintimeorcost.(10/13)
TARGETDATEDateimposedonanactivityorprojectbytheuserorclientthatconstrainsorotherwisemodifies
thenetworkanalysis.Therearetwotypes:targetstartdates,andtargetfinishdates.(6/07)
TARGETFINISHDATEAtargetdatewherethedateimposedisonthefinishdate.Seealso:TARGETDATE.(6/07)
TARGETPLANThetargetplanprioritizedbycriticaltotalfloattakenfromthecurrentschedule.(6/07)
TARGETREPORTINGAmethodofreportingthecurrentscheduleagainstsomeestablishedbaselinescheduleand
thecomputationsofvariancesbetweenthem.(11/90)
TARGET SCHEDULE A schedule devised or selected as an objective measure against which actual performance
canbegauged.Seealso:BASELINESCHEDULE.(8/07)
TARGETSTARTDATEAtargetdatewherethedateimposedisonthestartdate.Seealso:TARGETDATE.(6/07)
TASK
(1)Acohesive,individualunitofworkthatispartofthetotalworkneededtoaccomplishaproject.
(2)Welldefinedcomponentofprojectwork;adiscreteworkitem.Thereareusuallymultipletasksforoneactivity.
[8]
(6/07)
TASK MONITOR The individual assigned the monitoring responsibility for a major effort within the program.
(11/90)
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TASKTYPESCharacterizationoftaskbyresourcerequirement,responsibility,discipline,jurisdiction,function,etc.
(6/07)
TAXESPAYABLETaxaccrualsduewithinayear.(11/90)
TECHNICALPERFORMANCEMEASUREMENTAgeneraltermreferringtothetechnicalplanmeasurementsofthe
program/project.ExamplesincludeSoftwareEngineeringInstitute(SEI)metrics,technicalplans,andspecifications.
Thesemaybeusedinearnedvalueastheintegrationpointswiththeschedule.(10/13)
TEMPLATE
(1) A guideline for a document outline and its contents. A template is used to record the work activities,
discussions,findings,andspecificationtohelpachieveacommonunderstanding.Inadditionitisusedtoprovidea
consistentlookandfeeltotheprojectdocumentation. [8]Caremustbetakenwiththeuseoftemplatestoensure
thatnormalplanningandschedulequalityanalysisandcontrolprocessesarenotbypassedorshortchanged.
(2)Adocumentwhoserequiredcontentispredeterminedandformatisprestructured,usuallyinsomemeasure
ofdetail,inordertospeeditscompletiontoahigherlevelofaccuracyanduniformity.(8/07)
TEMPORARY CONSTRUCTION COST Includes costs of erecting, operating, and dismantling nonpermanent
facilities,suchasoffices,workshops,etc,andprovidingassociatedservicessuchasutilities.(6/07)
TERMINATIONActionsbytheowner,inaccordancewithcontractclauses,toend,inwholeorinpart,theservices
ofthecontractor.Terminationmaybefortheconvenienceoftheownerorfordefaultbythecontractor.(11/90)
TERMSOFPAYMENTDefinesaspecifictimescheduleforpaymentofgoodsandservicesandusuallyformsthe
basisforanycontractpriceadjustmentsonthosecontractsthataresubjecttoescalation.(11/90)
THEORYOFCONSTRAINTS(TOC)AfourstepmanagementphilosophydevelopedbyDr.EliGoldrattthatinvolves:
1)Identifyingthesystem'sconstraints;2)Workingtoexploitthoseconstraints(eitherthroughstrengtheningthe
constraint or getting maximum performance out of the key constraint); 3) Subordinating everything else to the
above decision (given the key constraint, all operational decisions involve improving the processes as much as
possible relative to this controlling constraint, e.g., a bottleneck in a production process); and 4) Working to
elevate the constraint (improve or eliminate the bottleneck and then reexamine the system). Once the critical
constraintiseliminated,anewconstraintwillarisetotakeitsplace.Sotheprocesscontinuesuntilthesmallest
level constraint is identified that can impact on the whole system. In project management, the key constraint
(usingTOCideas)isthecriticalpathoftheprojectsinceitdeterminesthelengthoftheprojectandhenceisthe
key constraint. TOC is used in the critical chain approach as an alternative to CPM or PERT for determining the
lengthofaprojectbyusingcriticalresourcecontrolandapplication.(6/07)
THIRD PARTYCLAIM Aclaim against either or both the owner or the contractor by members of the public, or
otherparties,usuallyforpropertydamageorpersonalinjury.(11/90)
THREATInTCMriskmanagement,anuncertaintythat,ifitoccurs,willhaveanadverseordownsideimpactonan
objectiveorobjectives.Insomeusage(butnotall),risksareconsideredsynonymouswiththreats.(12/11)
TIED ACTIVITY An activity that must start within a specified time or immediately after its predecessor's
completionorstart.(11/90)
TIMEEXTENSIONAnincreaseincontracttimebymodificationorchangeordertocompleteanitemofwork.An
excusable delay generally entitles a contractor to a time extension. Depending upon contract terms, the time
extensionmayormaynotbecompensable.(6/07)
TIMEHORIZONSyn.:STUDYPERIOD.[1](11/90)
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TIMEISOFTHEESSENCEContractrequirementthatcompletionoftheworkwithinthetimelimitsinthecontract
isessential.Failuretodosoisabreachforwhichtheinjuredpartyisentitledtodamages.(6/07)
TIMELINESchedulelineshowingkeydatesandplannedevents.(6/07)
TIME NOW Current calendar date from which a network analysis, report, or update is being made. See also:
SCHEDULEDDATES;PROGRESSDATE;DATADATE.(6/07)
TIMENOWLINEThepointintimethatthenetworkanalysisisbasedupon.Mayormaynotbethedatadate.See
also:STATUSLINE.(11/90)
TIMEPHASINGStrategicpacingofprojectandoverlappingbetweendifferentactivitiesorblocksofactivities.For
example, with the decision on whether or not to use rapid application development prototyping, concurrent
engineering,simultaneousdesign,fasttrack,phasedhandover,etc.Phasingandoverlappingofactivitiesisalsoan
important aspect of management team's skills. Properly done, it can have a significant positive impact on
performance.(6/07)
TIME UNIT A unit of measure used in a scheduling calendar when modeling an activity duration, usually
expressedinhours,daysorweeks,butcanalsobeshiftsorevenminutes.Seealso:CALENDARUNIT.(6/07)
TIMEVALUEOFMONEY
(1)Thetimedependentvalueofmoneystemmingbothfromchangesinthepurchasingpowerofmoney(thatis,
inflationordeflation),andfromtherealearningpotentialofalternativeinvestmentsovertime.
(2) The cumulative effect of elapsed time on the money value of an event, based on the earning power of
equivalentinvestedfunds.
(3)Theexpectedinterestratethatcapitalshouldorwillearn.
Seealso:FUTUREWORTH;PRESENTWORTH.[2](11/90)
TIMECONSTRAINED SCHEDULING The network schedule calculations are constrained by the time allowed to
completetheprojectasopposedtotheresourcesavailabletodothework.(6/07)
TIMELIMITED RESOURCE SCHEDULING Production of scheduled dates in which resource constraints may be
relaxedinordertoavoidanydelayinprojectcompletion.(6/07)
TIMELIMITED SCHEDULING The scheduling of activities so predetermined resource availability pools are not
exceededunlessthefurtherdelaywillcausetheprojectfinishtobedelayed.Activitiescanbedelayedonlyuntil
theirlatestartdate.However,activitieswillbeginwhenthelatestartdateisreached,evenifresourcelimitsare
exceeded.Networkswithnegativetotalfloattimecannotbeprocessedbytimelimitedscheduling.(11/90)
TIMESCALED CPM A plotted or drawn representation of a CPM network where the length of the activities
indicatesthedurationoftheactivityasdrawntoacalendarscale.Floatisusuallyshownwithadashedlineasare
dummyactivities.(11/90)
TIMESCALEDLOGIC/NETWORKDRAWING(ORDIAGRAM)Anyprojectnetworkdiagramdrawninsuchawaythat
thepositioningoftheactivityrepresentsitsexpectedstartandfinishdate.Essentially,aGanttchartthatincludes
depictionofnetworklogic.(6/07)
TO COMPLETE PERFORMANCE INDEX (TCPI) A metric that calculates the future efficiency necessary to meet a
target. When compared with the cost performance index (CPI) it provides and assessment of the realism of
obtainingthetarget.Absolutevaluevariancesof.1orhigherbetweentheTCPIandtheCPIindicatethetargetis
notachievable.TherearetwovariationsofTCPI:
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1)BudgetedBase=(budgetatcompletionbudgetedcostofworkperformed)/(budgetatcompletion actualcost
ofworkperformed).Thisratioisverylimitedandunrealisticwhentheestimateatcompletion(EAC)isnotequalto
thebudgetatcompletion(BAC).ThiscalculatestheefficienciesneededtomeettheBAC.
2)EACBase(morecommon)=(budgetatcompletionbudgetedcostofworkperformed)/(estimateatcompletion
actual cost of work performed). This calculates the efficiencies necessary to achieve the EAC. This ratio is
comparablewiththeCPI.(10/13)
TORNADOCHARTInriskmanagement,agraphicalbarchartofquantitativeriskanalysisdatathatranksthekey
riskdriversindescendingorderofimpactorseverity.(12/11)
TOTAL ALLOCATED BUDGET (TAB) The TAB is the total budget for the project. In earned value management
according to the ANSI EIA 748 standard, it is always equal to performance measurement baseline (PMB) +
management reserve (MR). In the absence of an over target baseline (OTB), TAB will equal the contract budget
base(CBB).(10/13)
TOTAL COST BIDDING A method of establishing the purchase price of movable equipment. The buyer is
guaranteed that maintenance will not exceed a set maximum amount during a fixed period and that the
equipmentwillberepurchasedatasetminimumpricewhentheperiodends.(11/90)
TOTALCOSTMANAGEMENT(TCM)Theeffectiveapplicationofprofessionalandtechnicalexpertisetoplanand
control resources, costs, profitability and risks. Simply stated, it is a systematic approach to managing cost
throughout the life cycle of any enterprise, program, facility, project, product, or service. This is accomplished
throughtheapplicationofcostengineeringandcostmanagementprinciples,provenmethodologiesandthelatest
technologyinsupportofthemanagementprocess.Canalsobeconsideredthesumofthepracticesandprocesses
thatanenterpriseusestomanagethetotallifecyclecostinvestmentinitsportfolioofstrategicassets.(1/02)
TOTALFLOAT(TF)
(1)Themaximumnumberofworkperiodsbywhichanactivitycanbedelayedwithoutdelayingprojectcompletion
orviolatingatarget(milestone)finishdate.
(2)Thenumberofworkperiodsthestartorfinishofanactivitycanbedelayedwithoutaffectingtheprojectfinish
date.Floatismeasuredinhours,days,weeks,ormonthsdependingontheproject'splanningunit,andcanhave
negative,zero,orpositivevalues.[14]
(3)Theamountoftimeataskcanbedelayedwithoutdelayingthefinishdateoftheproject.[15](6/07)
TOTAL QUALITY MANAGEMENT (TQM) The consistent integrated orchestration of the total complex of an
organization's work processes and activities to achieve continuous improvement in the organization's processes
andproducts.(11/90)
TRACEABILITYInearnedvalue,traceabilityconsistsoftworequiredrelationshipsintheschedule;horizontaland
verticaltraceability.Thesearedefinedasfollows:
1)HORIZONTALTRACEABILITYThelogiclinksintheschedulethatinsurethatdiscreteworkislinkedtotasksthat
impactprojectcompletion.
2)VERTICALTRACEABILITYAschedulingtermindicatingthattasksatlowerlevelswillbeshownconsistentwith
higherlevels.Alltasksatthelowestschedulelevelshouldbeconsistentwiththehigherlevelscheduletimeframes.
Typicallythisisinsuredwithrelationshipsorspecificintegrationmilestones.(10/13)
TRACKINGFormofmonitoringapplied.(6/07)
TRANSFERInTCMriskmanagement,ariskresponsestrategythatinvolvestransferringathreat(s)toacompetent
thirdpartywhoisbetterabletomanageit.(12/11)
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TRANSFERPRICEAtermusedineconomicanalysisinthemineralprocessingindustries.Usedtoassignavalueto
raw materials when the same company does the miningand processing, Usually equal to the fair market value.
(11/90)
TRENDInprojectcontrol,ageneraltendencyofevents,conditions,performance,etc.Inachangemanagement
system,atrendisthefirstindicationofpotentialchangethatmustbetrackedandproperlydealtwith.Atrend
maylaterbeidentifiedasadeviation(notnormallyreimbursable)orachange(whichistypicallyreimbursablein
timeandormoney).(6/07)
TREND ANALYSES Mathematical methods for studying trends based on past project history allowing for
adjustment, refinement or revision to predict cost. Regression analysis techniques can be used for predicting
cost/scheduletrendsusinghistoricaldata.(6/07)
TRENDLINEAlineonascheduleorchartshowingthepatternofprogressthatisbeingsetovertime,i.e.from
measurementperiodtomeasurementperiod.(6/07)
TREND MONITORING A system for tracking estimated costscheduleresources of a project vs. those planned.
(6/07)
TRENDREPORTSIndicatorsofvariationsofprojectcontrolparametersormeasuresagainstplannedobjectivesor
measures.(6/07)
TRENDINGAreviewofcurrentprogresscomparedtolastreportedprogresswhich,whendisplayedgraphically,
showswhetheracoursecorrectionisnecessarytoachievethebaselineplan.(6/07)
TURNOVERSyn.:DELIVERY.(6/07)
TURNOVER RATIO The ratio of annual sales to investment. Inclusion of working capital is preferable, but not
alwaysdone.Turnoverratioisconsideredbysometobereasonablebasisforaguesstimateoffacilitiescost,for
newproductssimilartoexistingproducts.Itrangesaround1.0formanychemicalplants.Theproductofturnover
ratioandprofitmarginonsalesgivesareturnoninvestmentmeasure.(11/90)
UNBALANCINGAtechniqueusedinthepricingprocesstoallocateestimatedcoststoaccountswhosedefinitions
do not fully reflect the nature of the cost being allocated. The purpose of unbalancing is to achieve a desired
business result such as improved cash flow. For example, a disproportionate amount of overhead costs may be
allocatedinacontractbidtoearlyprojectactivitiessothatearlyincomeismaximized.(1/03)
UNCERTAINTY
(1) The total range of events that may happen and produce risks (including both threats and opportunities)
affectingaproject.(Uncertainty=threats+opportunities.)
(2)Allevents,bothpositiveandnegativewhoseprobabilitiesofoccurrenceareneither0%nor100%.Uncertainty
isadistinctcharacteristicoftheprojectenvironment.
Seealso:OPPORTUNITY;EVENT;CONDITION(UNCERTAIN);RISK;THREAT.(6/07)
UNDERGROUNDFACILITIESAllpipelines,conduits,ducts,cables,wires,utilityaccessways,vaults,tanks,tunnels
orothersuchfacilitiesorattachments,andanyencasementscontainingsuchfacilitieswhichhavebeeninstalled
underground to furnish any of the following services or materials: electricity, gases, steam, liquid petroleum
products, telephone or other communications, cable television, sewage and drainage removal, traffic or other
controlsystemsorwater.(11/90)
UNDERRUNSeealso:OVERRUN.(12/11)
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UNDISTRIBUTED BUDGET (UB) In earned value management according to the ANSI EIA 748 standard, it is the
amountofbudgettemporaryheldbeforedistributiontolowerlevelsoftheperformancemeasurementbaseline
(PMB).UBisapartofthePMBandheldforchangesnotabletobeadequatelyplannedatthecontrolaccountor
summary planning package levels. UB is not scheduled however has scope, schedule and budget integration.
(10/13)
UNIONAnorganizationofwageearnersformedforthepurposeofservingthemembersinterestswithrespect
tocompensationandworkingconditions.(6/07)
UNITCOSTThecostofagivenunitofaproductorservice.(6/07)
UNITHOURSWorkhoursperunitofproduction.(6/07)
UNJUST ENRICHMENT DOCTRINE The belief in law that one person should not be allowed to profit or enrich
himselforherselfunfairlyattheexpenseofanotherperson.(11/90)
UNKNOWNUNKNOWNAquantity,valueorconditionthatcannotbeidentifiedorforeseen,otherwisereferred
toasunknowable.(12/11)
UNLIMITEDSCHEDULEInfiniteschedule,scheduleproducedwithoutresourceconstraint.(6/07)
UNUSUALLYSEVEREWEATHERThatkindofweather,whichisinitselfsevereandcanbeofviolentnature.Ifthe
average weather over time is significantly different from the normal then it is said to be other than normal. In
either case, if such weather affects the job and causes a delay, it may be excusable and form the basis for a
contractadjustmentfortimeandpossiblymoneyonceallrelevantcontractclausesareconsidered.(6/07)
UPDATING The regular review, analysis, evaluation, and reporting of progress of the project, including
recomputationofanestimateorschedule.Seealso:STATUSING.(11/90)
UPDATETorevisetheestimate,scheduleorotherplanningdeliverabletoreflectthemostcurrentinformation
ontheproject.(6/07)
UPDATEDATESeealso:DATADATE.(6/07)
USEVALUESeealso:FUNCTIONALWORTH.(11/90)
USEFULLIFETheperiodoftimeoverwhichaninvestmentisconsideredtomeetitsoriginalobjective.[1](11/90)
USERTheconsumerofaserviceorproduct,sometimesbutnotalwaysaprojectowner.Seealso:CUSTOMER.
(8/07)
VALIDATION Testing to confirm that a product or service satisfies user or stakeholder needs. Note difference
fromverification.(8/07)
VALUATIONORAPPRAISALTheartofestimatingthefairexchangevalueofspecificproperties.(11/90)
VALUE, ACTIVITY That portion of the contract price which represents a fair value for the part of the work
identifiedbythatactivity.(11/90)
VALUEADDEDBYDISTRIBUTIONTheportionofthevalueofaproductorservicetotheconsumeroruserwhich
resultsfromdistributionactivities.Thisvalueincludessuchcomponentsastimeutilityandplaceutility.(11/90)
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November14,2014
VALUEADDEDBYMARKETINGThatportionofthevalueofaproductorservicetotheconsumeroruserwhich
results from marketing activities. This value includes such components as price reduction through economies of
scaleandbuyerawarenessofmoredesirableinnovationsinproductsorservices.(11/90)
VALUE OF PERFECT INFORMATION In decision or risk analysis, a measure of what a decision maker should be
willingtoinvesttoreducetheamountofuncertaintyassociatedwithoneormoredecisionorriskdrivers.Seealso:
PERFECTINFORMATION;RISKDRIVER;DECISIONDRIVER.(12/11)
VALUEOFWORKPERFORMEDTODATETheplannedcostforcompletedwork.(11/90)
VALUEEFFECTIVEGenerallyusedtodescribedecisionswhichhaveacostimpact;valueeffectivedecisionstend
tooptimizethevaluereceivedforthedecisionmadeandtomaximizereturnoninvestments.(11/90)
VALUEENGINEERINGApracticefunctiontargetedatthedesignitself,whichhasasitsobjectivethedevelopment
of design of a facility or item that will yield least lifecycle costs or provide greatest value while satisfying all
performanceandothercriteriaestablishedforit.(11/90)
VALUEENGINEERINGCOSTAVOIDANCEAdecreaseintheestimatedoverallcostforaccomplishingafunction.
(11/90)
VALUE ENGINEERING COST REDUCTION A decrease in the committed and/or established overall cost for
accomplishingafunction.(11/90)
VALUEENGINEERINGJOBPLANAnaidtoproblemrecognition,definition,andsolution.Itisaformal,stepby
stepprocedurefollowedincarryingoutavalueengineeringstudy.(11/90)
VARIABLECOSTSThosecoststhatareafunctionofproduction,e.g.,rawmaterialscosts,byproductcredits,and
thoseprocessingcoststhatvarywithplantoutput(suchasutilities,catalystsandchemical,packaging,andlabor
forbatchoperations).(11/90)
VARIANCE The difference between what was originally expected and what actually happened. See also:
SCHEDULEVARIANCE;COSTVARIANCE.(6/07)
VARIANCEANALYSISAnalysisofthefollowing:(1)Costvariance=BCWPACWP;(2)Percentover/under=100x
(ACWPBCWP)/BCWP;(3)Unitvarianceanalysis;(4)Laborrate;(5)Laborhours/unitsofworkaccomplished;(6)
Material rate; (7) Material usage; and (8) Schedule variance = BCWP BCWS. See also: SCHEDULE VARIANCE.
(6/07)
VARIANCE AT COMPLETION (VAC) The schedule or budget at completion less the estimate at completion. A
negative result indicates that the project is exceeds schedule or budget contractual obligations. See also:
VARIANCEATCOMPLETION[VAC(t)].(10/13)
VARIANCEATCOMPLETION[VAC(t)]Thedifferencebetweenthebaselineprojectdurationandtheestimated
projectdurationintimeincrements.Seealso:VARIANCEATCOMPLETION(VAC).(11/14)
VARIANCE THRESHOLD In earned value, it is the schedule, cost, and atcomplete variance amounts at which
formalvarianceanalysisandtypicallyavarianceanalysisreport(VAR)isrequired.Belowthethresholdistypically
notreportable.(10/13)
VARIATIONINESTIMATEDQUANTITYThedifferencebetweenthequantityestimatedinthebidscheduleandthe
quantityactuallyrequiredtocompletethebiditem.Negotiationoradjustmentforvariationsisgenerallycalledfor
whenanincreaseordecreaseexceeds15percent.(11/90)
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VELOCITY DIAGRAM A graphical presentation of production schedules, which shows the relationship of the
outputofworkcrews/equipmentspreadsasafunctionoftime.(6/07)
VENTURE LIFE The total time span during which expenditures and/or reimbursements related to the venture
occur.Venturelifemayincludetheresearchanddevelopment,construction,productionandliquidationperiods.
Seealso:FINANCIALLIFE.(11/90)
VENTUREWORTH Present worth ofcash flows above an acceptableminimum rate, discounted at the average
rateofearnings.(11/90)
VERIFICATIONTestingtoconfirmthataproductorservicemeetsspecifications.(8/07)
VERTICALEVENTNUMBERINGAssigningeventnumbersinverticalorder.(11/90)
WAGERATESeealso:LABORCOST.(5/12)
WATCHLISTInriskcontrol,alistofrisktriggersand/orriskstobetrackedormonitored.Mayrefertooneusage
ofariskregister.Seealso:RISKTRIGGER;RISKREGISTER.(12/11)
WBSDICTIONARYAdocumentthatdescribeseachelementintheworkbreakdownstructure(WBS)includinga
statement of work (SOW), describing work content of each WBS element, and a basis of estimate (BOE),
documenting each elements budget. Additional information may include responsible organization, contract
number, etc. The WBS dictionary will often result in a project or contract statement of work (SOW). See also:
WORKBREAKDOWNSTRUCTURE(WBS).(6/07)
WEIGHTSNumericalmodifiersusedtoinferimportanceofcommoditiesinanaggregativeindex.(11/90)
WORK Any and all obligations, duties, responsibilities, labor, materials, equipment, temporary facilities, and
incidentals, and the furnishing thereof necessary to complete the construction which are assigned to, or
undertakenbythecontractor,pursuanttocontractdocuments.Inaddition,theentirecompletedconstructionor
variousseparatelyidentifiablepartsthereofrequiredtobefurnishedunderthecontractdocuments.Workresults
from performing services, furnishing labor, and furnishing and incorporating materials and equipment into the
construction,allasrequiredbycontractdocuments.(6/07)
WORKBREAKDOWNSTRUCTURE(WBS)
(1)Frameworkfororganizingandorderingtheactivitiesthatmakesupaproject.Systematicapproachtoreflecta
topdownproductorientedhierarchystructurewitheachlowerlevelprovidingmoredetailandsmallerelements
oftheoverallwork.
(2) A productoriented family tree division of hardware, software, facilities and other items which organizes,
defines and displays all of the work to be performed in accomplishing the project objectives. Some variations
includethefollowing:
1) PROJECT WORK BREAKDOWN STRUCTURE (PWBS) A summary WBS tailored by project management to the
specificprojectwiththeadditionoftheelementsuniquetotheproject.
2)CONTRACTWORKBREAKDOWNSTRUCTURE(CWBS)Aworkbreakdownstructureoftheproductsorservices
tobefurnishedundercontract.ItiscomprisedofselectedPWBS(program/projectWBS)elementsspecifiedin
thecontractualdocumentandthecontractorslowerlevelextensionsofthoseelements.[7](10/13)
WORK BREAKDOWN STRUCTURE ELEMENT Any one of the individual items or entries in the WBS hierarchy,
regardlessoflevel.(11/90)
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WORK BREAKDOWN STRUCTURE LEVELS The arrangement or configuration of a work breakdown structure,
whichestablishesanindentureofprojectstoprograms,systemstoprojects,subsystemstosystems,etc.[7](6/07)
WORKCATEGORYAdivisionofworkaccordingtosomedistinctcharacteristics,suchasthetradeinvolved,e.g.,
mechanical,electrical,etc.Seealso:CODEOFACCOUNTS(COA).(6/07)
WORK DIRECTIVE CHANGE A written directive to the contractor, issued on or after the effective date of the
agreementandsignedbytheownerandrecommendedbytheengineerorderinganaddition,deletionorrevision
inthework,orrespondingtodifferingorunforeseenphysicalconditionsoremergenciesunderwhichtheworkis
tobeperformedasprovidedinthegeneralconditions.Aworkdirectivechangemaynotchangethecontractprice
orthecontracttime,butisevidencethatthepartiesexpectthatthechangedirectedordocumentedbyawork
directivechangewillbeincorporatedinasubsequentlyissuedchangeorderfollowingnegotiationsbytheparties
astoitseffect,ifany,onthecontractpriceorcontracttime.(11/90)
WORKFLOW Relationship of the activities from start to finish. Work flow takes into consideration all types of
activityrelationships.(6/07)
WORKITEM
(1)Theprecedencenotationequivalentofanactivity.
(2)Aportionoftheprojectthatcanbeclearlyidentifiedandisolated.
Seealso:ACTIVITY.(6/07)
WORKPACKAGE
(1)Asegmentofeffortorworkscoperequiredtocompleteaspecificjobwhichiswithintheresponsibilityofa
singleunitwithintheperformingorganization.
(2)Aunitwithinaworkbreakdownstructure(WBS)atthelowestlevelofitsbranch,notnecessarilyatthelowest
levelofthewholeWBS.
(3) In earned value management, it is the level at which EV (or BCWP) is assessed and schedule variance is
calculated.Aworkpackagehasschedule,andresources.(10/13)
WORKPATTERNAnestablishedandrecognizableflowofwork.(6/07)
WORKPOWERLEVELINGSyn.:LOADLEVELING.(11/90)
WORKSAMPLINGAdirectmethodofmeasuringandmonitoringlaborproductivitysothatlaborresourcescanbe
minimizedandwastedefforteliminatedfromworkprocesses.Worksamplingprovidesinformationaboutthework
process(i.e.,howworkisdone)inawaythatsupportsstatisticalassessmentofsuchprocessesinordertooptimize
productivity.(1/04)
WORKSITETheareadesignatedinthecontractwherethefacilityistobeconstructed.(11/90)
WORKUNITAunitoftimeusedtoestimatethedurationofactivities.(11/90)
WORKINPROCESS
(1)Inmanufacturing,productinvariousstagesofcompletionthroughoutthefactory,includingrawmaterialthat
has been released for initial processing and completely processed material awaiting final inspection and
acceptance as finished product or shipment to a customer. Many accounting systems also include semifinished
stockandcomponentsinthiscategory.
(2)Inprojects,productordeliverablesinvariousstagesofcompletionthroughoutthedurationofaproject.(6/07)
Syn.:INPROGRESSINVENTORY.
WORKAROUND
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November14,2014
(1) An alternative solution to a potential problem. An unplanned response (that requires its own plan) to a
negativeeventthatmaybeaccomplishedinlessthanoptimalconditionsleadingtoproductivitylosses.
(2) Ad hoc action to overcome an unexpected condition or situation that would otherwise delay completion, in
ordertoenabletheworktobetimelyfinishedorfinishedsoonerthancouldoccurwithouttheaction.
Seealso:REWORK;RECYCLE.(8/07)
WORKDAYAnydayswhenworkcanbescheduled(i.e.,thatarenotrestdaysorholidays).(1/12)
WORKERAdefinitionofthebehaviorandresponsibilitiesofanindividual.Theworkerrepresentsaroleplayedby
individualsonaproject,anddefineshowtheycarryoutwork.(6/07)
WORKHOURSyn.:LABORHOUR.(6/07)
WORKHOUR ANALYSIS An analysis of planned versus actual staffing of the project used to determine work
progress,productivityrates,staffingoftheproject,etc.(6/07)
WORKINGCALENDARThetotalcalendardatesthatcoverallprojectactivities,fromstarttofinish.(6/07)
WORKLOADFACTORTheamountofworkassignedtoorexpectedfromaworkerduringaspecifiedtimeperiod
expressed as a multiplier of the standard crews productivity with 1.0 equal to the same productivity; and 2.0
equaltoonehalfofthestandardproductivity.(1/12)
WORKWEEKThecalendarthatdescribesthenumberofworkdaysinatypicalweek.(6/07)
WORTH The worth of an item or groups of items, as in a complete facility, is determined by the return on
investmentcomparedtotheamountinvested.Theworthofanitemisdependentupontheanalysisoffeasibility
oftheentireitemorgrouporitemsunderdiscussion(orexamination).(11/90)
WRITTENAMENDMENTAwrittenamendmentofthecontract,executedbythepartiesonoraftertheeffective
dateoftheagreementandnormallydealingwiththenonengineeringornontechnicalratherthanstrictlywork
relatedaspectsofthecontract.(6/07)
YIELDTheratioofreturnorprofitovertheassociatedinvestment,expressedasapercentageordecimalusually
onanannualbasis.Seealso:RATEOFRETURN.(11/90)
ZERO FLOAT A condition where there is no excess time between activities. An activity with zero float is
consideredacriticalactivity.Ifthedurationofanycriticalactivityisincreased(theactivityslips),theprojectfinish
datewillslip.Anactivityhaszerofloatwhentheearlyandlatestart/finishdatesequaleachother.Activitieswith
zerofloatareconsideredtobeonthecriticalpath(s)oftheprojectevenwhenthereareactivitieswithnegative
float.(6/07)
REFERENCES
1. ASTM Standard No E833. (Reprinted, with permission, from the Annual Book of ASTM Standards, copyright
AmericanSocietyforTestingandMaterials,1916RaceStreet,Philadelphia,PA19103.ASTMterminologymay
notbereproducedinanyformwhatsoeverwithouttheexpressedwrittenconsentofASTM.)
2. BasedinpartuponASTMStandardNo.E833withmodifications
3. USDepartmentofDefense
4. PMIRepresentative
5. VariousBechtelprojectcontrolspresentationsandpublications
6. InternationalAssociationforProfessionalManagementofConstruction
7.
8.
9.
10.
11.
12.
13.
14.
15.
119 of119
November14,2014
NASAWorkBreakdownStructureReferenceGuide,May,1994
OregonDepartmentofHumanServicesPMOGlossary
WestinghouseSavannahRiverCompanyEVMSPocketGuide
ConstructionDelayClaims,ThirdEdition,BarryB.Bramble,Esq.,MichaelT.Callahan,Esq.,AspenPublishers,
NewYork,NY,2006
Construction Scheduling: Preparation, Liability & Claims, Second Edition, Jon M. Wickwire, Esq., Thomas J.
Driscoll,StephenB.Hurlbut,Esq.,ScottB.Hillman,Esq.,AspenPublishers,NewYork,NY,2006
SCLDelayandDisruptionProtocol,SocietyofConstructionLaw,Oxon,UnitedKingdom,2002
HowtoGetPaidforConstructionChanges:PreparationandResolutionToolsandTechniques,StevenS.Pinnell,
McGrawHill,NewYork,NY,1998
PrimaveraProjectPlannerDocumentation
MicrosoftProjectDocumentation

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AACEInternationalRecommendedPracticeNo.

ALLOCATED REQUIREMENTS Requirements apportioned to the elements of a system by applying applicable

AMBIGUITY An uncertainty in the meaning of provisions of a contract, document or specification. Mere

CONSTRUCTIVE ACCELERATION An owners action or inaction, in absence of a specific direction to accelerate,

d. BONUSPENALTY a special contractual arrangement usually between a client and a contractor

FASTTRACK(ING) Scheduling activities to run simultaneously instead of consecutively as much as possible, in

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) Principles established by a Financial Accounting

GUIDELINE A recommended or customary method of working to accomplish an objective. A guideline is not

INTERFACE MANAGEMENT The management of communication, coordination and responsibility across a

KNOWNUNKNOWN An identifiable quantity or value having variability or an identifiable condition lacking

ORGANIZATION BREAKDOWN STRUCTURE (OBS) A hierarchical relationship of the organization, including

PROBABILITYOFUNDERRUNOROVERRUNInriskanalysisandcon ngencyes ma ng,thechancethatthecost

PROGRESSMEASUREMENT Measurement of thecurrent amount of work completed for purposesof assessing

SCHEDULE OF VALUES A detailed statement furnished by a construction contractor, builder, or others,

SCHEDULED COMPLETIONDATE A dateassigned for completion of activity or accomplishment of an event for

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