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  • Question

    Are there situations where it is permissible for contractors to include fee amounts in the PMB and ACWP (ultimately the EAC automatically accounts for fee)? thank you


    Answer

    No.  Contract fees or profits are not included in the performance measurement baseline (PMB).  Earned Value Management is always at the cost level and not price level.  Price includes profit or fee while cost does not. All EVM metrics, such as EAC and ACWP, are at cost level and do not include fee/profit. 

    The figure at https://acc.dau.mil/CommunityBrowser.aspx?id=439830 breaks out the contract into two elements. The first element is profit or fee; fixed price contracts include profit, cost reimbursement contracts include fee.  The second element is the total allocated budget (TAB) which represents the contract cost. Note that  the PMB is a subset of TAB which is free of profit or fee.


    Once EAC has been calculated, one can compute price at complete (PAC) using the EAC as the starting point and adding appropriate fee or profit based on contractual agreement.


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