Over Target Baseline (OTB)

Normally the two are equal. The Total Allocated Budget is the Performance Measurement Baseline plus Management Reserve; the Contract Budget Base is the Negotiated Contract Cost plus the estimated cost of any Authorized Unpriced Work. The justification for an OTB is that the existing baseline is no longer a valid yardstick against which to measure performance, so the Cost Variance and Schedule Variance calculated against it lose their value. Under an OTB the historical variances are typically set to zero, the remaining work is replanned, and a new, more valid baseline is established against which to measure performance on the work that remains. The same replanning mechanics are used whether or not the resulting Total Allocated Budget exceeds the Contract Budget Base; it is an OTB specifically when it does. An OTB requires agreement with the customer and is not something a contractor implements on its own, and establishing one does not change the contract's negotiated cost.

Why it matters

A baseline that no longer reflects how the work will actually be performed produces Cost and Schedule Variances that tell management nothing it can act on. Replanning the remaining work against a valid baseline restores the measurement, while the visible gap between the Total Allocated Budget and the Contract Budget Base keeps the overrun on the record rather than buried in a reset.

See also

FAQ