Level of Effort (LOE)

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Level of Effort (LOE)

Level of effort (LOE) tasks consist of management or sustaining type activities that have no identifiable end products or an established relationship to other measurable effort. With LOE, the passage of time is the only measurement criteria; i.e., Budgeted Cost of Work Performed / BCWP = BCWS (at the end of the performance month, the current budget value for that month is earned). Justification for the use of LOE is generally the responsibility of the Control Account Manager (CAM) and must be approved by the project manager.

Work which does not usually produce measurable end-products (for example, Program management or engineering liaison) is usually planned in this manner. The tendency is to take the total number of hours, divide by the number of months and spread the result in those months. This is incorrect as this situation rarely occurs. Some accounting months have five weeks and others have four; the CAM must allow for holidays, summer months, vacations, etc. The CAM should spread the hours in the planned months the same way the CAM believes they will be charged based on the phase of activity, historical profiles, etc. In short, Level of Effort does not mean "Level Loaded".

Ideally, LOE effort is planned in separate control accounts. However, when necessary, control accounts may contain a mixture of LOE and Discrete Effort. In this situation, rules concerning the maximum allowable LOE should be established to prevent the LOE status from obscuring the status of the discrete effort in the control account. A typical restriction is no more than 20% of a control account's budget may be planned as LOE; otherwise, a separate control account should be required for that LOE work.

Resources:

A Discussion on the Level of Effort (LOE) Earned Value Method

How to Avoid Corrective Action Requests Related to LOE

Control Account Manager (CAM) training



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