Statement of Work and Key Performance Parameters Handbook for Capital Asset Projects

STATEMENT OF WORK AND KEY PERFORMANCE PARAMETERS HANDBOOK

Guidance for Capital Asset Acquisition Projects

Office of Acquisition and Project Management

U.S. Department of Energy

Washington, DC

September 30, 2014

FOREWORD

This handbook was developed by the Department of Energy (DOE) Office of Acquisition and Project Management (OAPM) for use on DOE capital asset projects by federal project directors (FPDs) and contractors. It provides suggested guidance and best practices for developing a complete statement of work (SOW) in support of contracts for capital asset projects, and the development of key performance parameters (KPPs) for capital asset projects within DOE.

This handbook is not a requirements document. It is intended to provide a consistent approach based on best practices to support the development of comprehensive and effective SOWs and KPPs for capital asset projects. DOE programs could further issue more specific/applicable guidance tailored to their particular needs. DOE programs may also use alternate methodologies or tailored approaches more suitable to their projects and technologies, as appropriate.

This handbook will be revised or augmented periodically with pertinent data that may be useful in improving its utility.

SECTION 1.0: INTRODUCTION

1.1 Overview

The execution of capital asset projects within the originally approved scope, cost and schedule baseline remains a priority within the Department of Energy (DOE). Achieving this objective for capital asset projects under the DOE acquisition contract process requires clear and concise statements of work (SOWs) and robust key performance parameters (KPPs).

1.2 Background

The SOW describes in clear, understandable terms the work to be done in developing or producing the products to be delivered or services to be performed by a contractor. KPPs define a characteristic, function, requirement or design basis that, if changed, would have a major impact on the system or facility performance, schedule, cost and/or risk for the project.

1.4 Scope and Objective

This handbook is limited to providing guidance only for developing SOWs and KPPs for DOE capital asset projects. It focuses on how to develop SOWs and KPPs to help ensure that project scope is defined in a manner that permits accurate assessment of project performance.

SECTION 2.0: STATEMENT OF WORK DEVELOPMENT

2.1 Purpose of Statement of Work

The purpose of an SOW is to provide a formal narrative description of products or services to be supplied by a contractor based on mission need.

2.2 Defining the Statement of Work

A good SOW exhibits the following characteristics:

• Clear and concise high level definition of scope of work to be performed.
• Defines performance requirements in measurable, mission-related terms.
• Descriptive and not prescriptive; results-oriented.
• Becomes a standard for measuring contractor performance.
• Limits the opportunities for contractor scope creep.

2.2.1 Relationship between Statement of Work and Specification

The SOW defines all work performance requirements for the contractual effort. Technical specifications are typically referenced in the SOW.

2.2.2 Relationship between Statement of Work and Work Breakdown Structure (WBS) Alignment

The WBS is a direct representation of the work scope defined in the SOW and is an essential element of an Earned Value Management System (EVMS).

2.2.3 Relationship between Statement of Work and Contract

The level of detail, clarity, and identification of performance objectives and expectations in the SOW contribute to contract pricing structure and administration.

2.3 SOW Written Format

A good SOW should try to include the following sections:

• SOW Section Title
• Scope
• Applicable Documents
• Requirements

2.4 SOW Development Approach

A systematic process is essential to SOW development. The team should ensure that only those tasks which add value to the product are included in the SOW.

SECTION 3.0: KEY PERFORMANCE PARAMETER DEVELOPMENT

3.1 Purpose of a Key Performance Parameter

The purpose of a KPP is to establish a measurable benchmark for completing project scope.

3.2 Defining a Key Performance Parameter

KPPs embody the critical attributes of a project mission and are finalized at CD-2.

3.3 Identifying Key Performance Parameter Characteristics

The quality of a good KPP can be measured by the SMART test:

• Specific
• Measurable
• Attainable
• Realistic
• Timely

3.4 Establishing Key Performance Parameter Values

KPPs should state the desired objective value and the associated minimum threshold value succinctly and in quantitative terms, if possible.

3.5 Determining the Appropriate Number and Specificity of Key Performance Parameters

The total number of KPPs should be the minimum number needed to characterize the major drivers of project performance.

3.6 Key Performance Parameters and Critical Decisions

KPPs are key elements in the critical decision process and are inherent in establishing the initial PB and subsequent changes thereto.

SECTION 4.0: KPP DOCUMENTATION AND CHANGE CONTROL

4.1 Overview

KPPs are integral to the PB approved at CD-2 and adjustments after CD-2 may have significant impact to the project TPC, scope and schedule.

4.2 Documentation of Key Performance Parameters

KPPs are documented in the PEP and project data sheets (PDSs), and are captured in the Project Assessment Reporting System (PARS II).

4.3 Revising Key Performance Parameters

A BCP is required for any change to a project that affects its ability to satisfy the mission need or does not meet the approved PB.

APPENDIX A: KEY PERFORMANCE PARAMETERS EXAMPLES

Facility Construction (e.g., office building)

KPP #1. The facility will be a 3-story Class A office building providing 250,000 sf of usable space.

KPP #2. The facility will provide a Class A office building that meets the minimum certification requirements for LEED.

KPP #3. Provide a facility that includes a cafeteria of a minimum of 12,000 sf.

Processing Operation (e.g., nuclear construction)

KPP #1. Include high-bay area that includes 50% open space to accommodate additional equipment in the future.

KPP #2. Provide a processing capability of at least 5 gpm.

KPP #3. Provide above-ground storage capacity of 50,000 gallons of feedstock.

KPP #4. All gloveboxes will be designed and fabricated to NQA-1 standards.

KPP #5. The reactor will be capable of attaining 1400 °F within 12 hours.

APPENDIX B: ACRONYMS

AE - acquisition executive

BCP - baseline change control

CD - critical decisions

DOE - U.S. Department of Energy

EVMS - earned value management system

FAR - Federal Acquisition Regulation

FPD - federal project director

IPT - integrated project team

KPP - key performance parameter

PARS - Project Assessment Reporting System

PB - performance baseline

PDS - project data sheet

PEP - project execution plan

PPEP - preliminary project execution plan

PWS - Performance Work Statement

RLS - resource-loaded schedule

SOW - statement of work

TPC - total project cost

WBS - work breakdown structure

APPENDIX C: REFERENCES

GAO Cost Estimating and Assessment Guide – Best Practices for Developing and Managing Capital Program Costs.

DOE O 413.3B, Program and Project Management for the Acquisition of Capital Asset Projects.

DOE G 413.3-5A, US Department of Energy Performance Baseline Guide.

Work Breakdown Structure Handbook, US Department of Energy.

Document Information

Form Fields

Project Name:

Project Location:

Federal Project Director:

Contractor Name:

Effective Date:

Completion Date:

Scope Summary

Requirements Summary

Applicable Documents

KPP Objective

KPP Threshold

Include LEED Certification

Include Contractor Management Reserve

Include DOE Contingency

Include Performance Baseline

Signature