21.3 Writing the CCP Exam Memo: A Worked Domain 7 Walkthrough

21.3 Writing the CCP Exam Memo: A Worked Domain 7 Walkthrough

Section 16.3 set out what Domain 7 is and the format AACE prescribes. This section does the thing itself: a realistic scenario, the arithmetic worked first, a model response inside AACE's one-page four-paragraph structure, and the ways candidates lose marks.

Keep the source guidance in view throughout. AACE's CCP Memo Writing Guidance says the exercise tests communicating "with a project manager, project executive, or another stakeholder regarding a summary analysis of a problem" and making "a recommendation based on incomplete or conflicting information," and that the finished memo "should be no longer than a full typewritten page."

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1. The Scenario

Exam prompt (representative form). You are the Lead Cost Engineer on the construction of a 60,000 m2 distribution centre for Meridian Logistics. Report to Alison Reyes, Project Manager. At the end of Month 9 of a 16-month programme:

• BAC $84,000,000; PV $47,600,000; EV $43,200,000; AC $49,100,000
• Contingency: $6,300,000 original, $4,900,000 drawn
• 22 approved change orders totalling $2,100,000, all priced at direct cost only
• Craft productivity factor has fallen from 1.03 to 0.81 since Month 5
• The critical path runs through mechanical fit-out; completion is forecast 5 weeks beyond the contract date
• Liquidated damages are $45,000 per week
• The construction manager's field report states productivity "recovered in Month 9," but the timesheet summary for the same period shows no improvement

Write a memo to the Project Manager summarising the problem, its impact, and your recommended action.

Note the deliberate conflict in the last bullet. AACE states that dealing with "potentially imperfect and conflicting data" is part of the exercise. A memo that quietly ignores it has failed a graded element.

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2. Work the Numbers First

Three minutes of arithmetic before writing saves ten minutes of vague prose.

Four findings fall straight out, and they are the memo:

1. Contingency is 77.8% consumed at 51.4% complete — risk is being realised faster than work is being retired.
2. TCPI 1.169 against a CPI of 0.880 means the original budget is not recoverable by performance improvement.
3. 22 changes priced at direct cost only, with productivity falling from 1.03 to 0.81, is the cumulative-impact pattern of Section 18.3 — an unrecovered disruption cost.
4. The conflicting productivity evidence must be flagged, with a stated basis for which source you relied on.

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3. A Model Memo

The response below follows AACE's prescribed structure exactly: business header with titles, then four paragraphs — stand-alone problem and impact, option analysis, recommendation led by its first sentence, and a closing handoff.

MEMORANDUM

To: Alison Reyes, Project Manager, Meridian Logistics From: [Candidate name], Lead Cost Engineer (AACE ID 000000) Date: Month 9 reporting cycle Project: Meridian Logistics 60,000 m2 Distribution Centre Subject: Urgent — forecast $11.5M overrun and 5-week delay; decision required on re-baseline and change pricing

At the Month 9 data date the project is 51.4% complete by earned value and is forecast to overrun the $84.0M budget by approximately $11.5M and to complete five weeks beyond the contract date, exposing $225,000 in liquidated damages. Cumulative cost performance is 0.880, giving a $5.9M cost variance and an estimate at completion of about $95.5M on the assumption that current performance continues. Contingency is 77.8% drawn with 48.6% of the work remaining, leaving $1.4M of cover. Recovering the original budget would require the remaining work to be executed at an efficiency of 1.169 against the 0.880 achieved to date, which is not an achievable planning assumption. I should note that the Month 9 field report describes productivity as recovered, but the timesheet summary for the same period shows no improvement; this memo relies on the timesheet data, and I recommend the discrepancy be reconciled before the next report.

Three responses are available. Re-sequencing the mechanical fit-out path carries no productivity penalty and is the lowest-cost option, but on its own it does not close the cost gap. Pursuing a disruption claim addresses the principal cause: the 22 approved change orders were each priced at direct cost only, and craft productivity has fallen from 1.03 to 0.81 since Month 5, indicating a cumulative impact on work that was not itself changed and for which no recovery has been sought. Preliminary indication is $2M to $3M recoverable, subject to a measured-mile analysis against the pre-Month 5 productivity baseline. The third option is to reduce scope, and the second mezzanine fit-out is assessed at $4.6M; this saves cost and schedule but changes the delivered asset and requires the client's agreement.

I recommend that all future change orders be priced with their time-related and disruption components rather than direct cost alone, that a disruption submission for the 22 approved changes be prepared immediately, and that the project be re-baselined to a revised authorization of approximately $95.5M unless the second mezzanine fit-out is de-scoped. Pricing changes fully stops further margin loss at source and costs nothing to implement. The disruption submission is time-critical because entitlement weakens as contemporaneous records age, and it is the only route to recovering cost already incurred. Re-baselining has the disadvantage of formally recording an overrun, but continuing to report against a budget that cannot be met misstates the project's position and delays the funding decision the overrun requires.

In summary, I recommend immediate adoption of full change pricing, preparation of the disruption submission, and a re-baseline to approximately $95.5M or an equivalent de-scope. The decision on funding and scope rests with you and the steering committee, and I would ask that it be tabled at the next meeting. I will provide the quantified disruption figure within three weeks and am available to discuss any element of this analysis.

That memo fits one typewritten page. Every paragraph does the job AACE assigns it, the recommendation stands alone, the conflicting data is disclosed with the basis stated, and the final decision is explicitly handed to the recipient.

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4. Where Candidates Lose Marks

[!TIP] Draft paragraph 1 and paragraph 3 first. They are the two AACE requires to stand alone, and they carry the memo. If you can write a complete statement of problem-and-impact and a complete statement of the recommendation from the prompt's numbers, paragraphs 2 and 4 are straightforward expansion. If you cannot, the analysis is not finished — and no amount of prose will conceal that from a grader who is a practising cost professional.