Retroactivate Resource Rate

[RTucker]

I have a situation where the wrong Resource Rate was used, but not discovered
until halfway through the project completion. We are running EVM. We will
apply a credit to the client's account for the overcharge.

What is the best way to address this situation? Do we change the rate to
retroactivate the BCWP? Being halfway through the project, how do we
re-baseline?

I thought about adding a negative fixed cost equal to the credit at the top
of the project (timephased to the date the credit will be issued, and
changing the resource's rate moving forward, but not sure that this is the
correct approach.

Ideas?

 

[aaren]

Am replying to this as a thought rather than as the 'correct' answer.
Experienced people like Julie or Mike should be able to either validate
my viewpoints and / or provide a better solution.

Am dividing my answer into 2 parts :

a. Why rebaselining should be done : Because the original resource
rate is wrong (am assuming that everything else is as per the agreed
sign off conditions). As I read in a few articles, due to compliance
requirements (it may or may not be applicable in your case),
rebaselining would be necessary because the cost of the project now is
going to change.

b. To rebaseline, develop the new baseline with the new cost.
However, what you need to do is, save the original baseline as baseline
1. Then save the new baseline as baseline 0 and also save this new
baseline as baseline 2. This will enable an audit trail and also meet
your configuration management requirements / guidelines.

While doing this, take the stakeholders' sign off as well and go
through your change control process.

In my opinion, this method will enable you to give the correct EV
rather than other methodogies. Over to Julie and / or Mike.

Thanks.