EVMS Guideline 24 Design Considerations - Indirect Cost Analysis

ANSI Standard 748 Guideline 24 requires the organization to identify budgeted and actual indirect cost for the determination and analysis of significant indirect cost variances. Forecasting of indirect rate variances is critical to ensuring the attainment of project performance objectives. The organization is required to monthly perform indirect cost analysis by persons responsible for indirect cost management. Indirect cost analysis provides program managers much needed forecasting capability for predicting the impact of indirect costs upon the program's Estimate at Completion (EAC).

In developing its Guideline 24 system description document, the organization should author procedures ensuring:

1. Cost control system capability  to identify the existence and causes of cost variances resulting from:
   • Incurrence of actual indirect costs in excess of budgets, by element of expense
   
   
   • Changes in the direct base to which overhead costs are allocated
   
   


2. Support of management actions taken to reduce indirect costs when there are significant adverse variances


3. Identification and analysis of variances between budgeted and actual indirect costs at the level of assigned responsibility (indirect pool, department, etc.)