2.4 Determine what is required for work authorization - Video Tutorials & Practice Problems

<v ->Another component of scope development</v> we talked about is the idea of work authorization. Work authorization in its simplest sense is a very formal, okay, get started. It may involve simply signing off. So you may need certain sign offs from top management. Maybe your department head has to sign off, the manager in charge of your division has to sign off, maybe the lead scientist has to sign off. Maybe nobody needs to sign off. It really comes down to an individual idea. But the work authorization in most organizations is that formal go ahead. This is the go-no go decision. This is the go. So now we say your authorized to get started. Here's what we want you to do. In order to have work authorization work well, we have to make sure that it follows the steps of scope definition, remember, what it is we're gonna do. We have to have a clear set of planning documents in place so we know what the schedules are, what the plans are, what's supposed to happen, and when it's supposed to happen. What are our management plans? Remember that responsibility assignment matrix, that's an example of a management plan. Have we put that together as well? All of these may be required, depending upon your organization, before the boss will ever say yes. Before you ever get that signature saying go ahead and get started, you better make sure you have all this. You better have contractual documents if you're working with outside parties so that you're working for an external customer or a client of some sort. What does the contract look like? What are the terms and conditions of that contract? Are they all agreed to? Is all ambiguous language ironed out? Do we clearly understand our deliverables and our expectations? Do they understand their obligations? That's all should be part of the work authorization package. Just very briefly, we're gonna talk about contractual documentation later when we get into the termination and closeout lesson, but just a couple things. Remember, contracts occur initially. We sometimes say facetiously we agree to a contract initially, we argue about the contract at the end of the process. There's a little bit of truth to that. But a contractual documentation is really intended early on to establish the critical terms and conditions that are necessary. So most contracts between parties are gonna consist of things like what is required of both parties. What is required of you, the contracting organization? What is required of us, the client? Valid consideration. Valid consideration simply means what do you and I mutually agree to are the terms of this, so that if you complete this by such and such a date, you'll receive such and such payment for it? If completion is delayed there's a certain penalty that may be involved. Maybe there isn't. But these are the valid consideration issues that have to be argued up front. Contracted terms. When you complete this, we will give you 10% upfront. We will hold back a certain percentage until such time as everything's done. These are simply contracted terms as well. Contracts range across the board. The purpose of this class is not to get into a whole bunch of legal definitions of these different ideas, so please don't misunderstand me. I'm not gonna try and explain all of the the various legal terminology here. It's really sufficient if we think about contracts ranging in simple terms from what are called lump sum or turnkey contracts. This is a kind of contract where you and I agree to all the conditions front. It's a lump sum. It's fixed. So if you have any overruns or anything continues or costs skyrocket, not my problem. That's on you because you and I agreed to this. I'm the customer. I said I'd pay you $10 million for this. And if it costs you 20 million to do, well, I guess you just lost $10 million. That's a lump sum contract. On the other hand, there's, we go all the way to cost plus contracts. The government oftentimes uses cost plus contracts in defenses contracting because they recognize that many times if I'm going to create a new state of the art electronic system or weapon system or some brand new piece of military equipment that has never been done before, my cost estimates may be just that. I really don't know until such time as I've actually completed the contract how much this ultimately ended up costing. And the government knows that. And so the government will say, Okay, we will agree to pay you a certain amount to cover your costs plus 10%, 15%, whatever above and beyond those costs. Now in that circumstance, as you can imagine, the government expects the contractor to document very carefully all costs. And the contractor has to make sure that everything is done on the up and up and very strict according to those rules because the one thing you don't want is the government to say you misled us. Your costs were much lower than you were presenting them to be. So contracts can range all the way from it's fixed, this is what you're gonna get paid, to it's sort of negotiable as we go along, and then everything in between those two. But something to consider is this contractual idea.