Change Control on a Firm-Fixed-Price Contract with a Scope Creep Pattern
A firm-fixed-price contract for a data migration has a PMB of $2.5M over 12 months. Over four months, the customer has issued 14 informal 'can you also…' requests through the technical lead. The CAMs have absorbed them into existing work packages without change requests because 'they're small'. Cumulative EV is $900K against PV $1.0M and AC $1.1M. The technical lead estimates the absorbed requests represent about $180K of unbudgeted effort already performed and another $120K of remaining effort. The customer's contracting officer is unaware of any of this. The PM wants to 'catch up' by adding the $300K to the baseline as an internal management reserve draw.
1. Assess the change control failures and explain why the PM's proposed fix is wrong.
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Failures:
- No change control on scope changes. 14 informal requests were executed without change proposals, impact assessment, or customer authorization - a textbook scope-creep pattern. On FFP, unauthorized scope is unpriced and unrecoverable.
- Absorbed work corrupts EVM data. Work performed outside the PMB means EV is being earned against work that was never baselined; the $900K EV is not comparable to the $1.0M PV, so SPI/CPI are unreliable.
- CO not informed. The contracting officer is the only party who can authorize changes; routing around them is a contract compliance issue.
Why the PM's fix is wrong: Management reserve is not a slush fund for unbudgeted customer scope. MR is held for unknown-unknowns within the authorized scope and is controlled above the CAM level. Using MR to fund out-of-scope work hides the change, misstates the baseline, and still leaves the firm unpaid for $300K of customer-requested work.
2. What is the correct path forward, and how should the current performance data be treated?
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Correct path:
- Stop work on unauthorized requests pending authorization; document each of the 14 requests with dates, requesters, and effort.
- Prepare change proposals for the $180K performed and $120K remaining, with cost/schedule impact, and submit to the contracting officer for negotiation and funding.
- Do not draw management reserve for this; if the changes are authorized and funded, they become a baseline change (new scope, new budget) with customer agreement.
- Disclose the situation to the CO and oversight - the sooner, the better; concealment compounds the problem.
Treatment of current data: the $900K EV is overstated relative to the authorized baseline because it includes earned value on unbudgeted work. For reporting, either (a) restate EV to exclude out-of-scope work and disclose, or (b) clearly footnote that EV includes ~$180K of unauthorized scope. Do not present SPI/CPI as clean measures of authorized performance. The $1.1M AC includes real costs that must be recovered through the change process, not written off.