What Is an Over Target Baseline (OTB) in EVM?

<div class="ge-article-wrapper"><nav class="ge-toc" aria-label="Table of contents"><p class="ge-toc-label">In this article</p><ul class="ge-toc-list"><li><a href="#when-otb-becomes-necessary">When OTB Becomes Necessary</a></li><li><a href="#the-otb-process">The OTB Process</a></li><li><a href="#worked-example-otb-on-a-60m-infrastructure-project">Worked Example: OTB on a £60M Infrastructure Project</a></li><li><a href="#why-you-should-only-do-this-once">Why You Should Only Do This Once</a></li><li><a href="#common-mistakes">Common Mistakes</a></li><li><a href="#frequently-asked-questions">Frequently Asked Questions</a></li></ul></nav><article class="ge-article-body"><p>An Over Target Baseline (OTB) is a new performance measurement baseline set higher than the original budget because the project has acknowledged that the original budget is unachievable. It's the EVM equivalent of admitting defeat on the original plan and drawing a new line in the sand. The old variances get zeroed out, the <a href="/en/earned-value/definitions/budget-at-completion">BAC</a> increases, and the project starts measuring future performance against a revised, more realistic baseline. It's a last resort, not a routine adjustment, and if you're doing it more than once, something is fundamentally broken. </p><p>This term is part of the <a href="/en/earned-value/definitions">earned value definitions glossary</a>. For the forecasting metrics that often trigger the OTB conversation, see the <a href="/en/earned-value/eac-etc-tcpi">EAC, ETC, and TCPI page</a>. </p><h2 id="when-otb-becomes-necessary">When OTB Becomes Necessary</h2><p>Most projects never need an OTB. The <a href="/en/earned-value/definitions/cost-performance-index">CPI</a> drifts, corrective actions bring it back, and the project finishes within an acceptable range of the original budget. OTB enters the conversation when the cumulative cost variance is so large that the EVM metrics have become meaningless. </p><p>Here's the typical pattern: </p><pre class="ge-ascii-diagram ge-anim"> ORIGINAL PMB vs ACTUAL COST – The OTB Trigger Point ==================================================== Cost (£M) │ 70│ ╱ AC (Actual) │ ╱ 60│ ╱ ← £8M gap and growing │ ╱ 50│ ╱─────── ╱ │ ╱ ╱ ← EAC = £68M (original BAC = £60M) 40│ ╱ ╱ │ ╱ ╱ 30│ ╱ ╱ PMB (Original Baseline)────────── £60M │ ╱ ╱ 20│ ╱ ╱ │╱╱ 10│ │ └──┬────┬────┬────┬────┬────┬────┬────┬────┬────┬── Time M1 M3 M6 M9 M12 M15 M18 M21 M24 ▲ │ OTB DECISION POINT Month 12: CPI = 0.82 CV = -£8M cumulative TCPI = 1.34 (unachievable) After OTB: Cost (£M) │ 70│ ╱ AC (Actual) │ ╱ 60│ ╱─────── NEW PMB ──────────── £68M │ ╱ (OTB Baseline) 50│ ╱──╱ │ ╱ 40│ ╱ │ ╱ 30│ ╱ Old PMB ────────── £60M (historical) │ ╱ 20│ ╱ │╱ 10│ └──┬────┬────┬────┬────┬────┬────┬────┬────┬────┬── Time M1 M3 M6 M9 M12 M15 M18 M21 M24 ▲ │ OTB IMPLEMENTED New BAC = £68M Variances reset to zero Future CPI measured from new baseline </pre><p>The key indicators that an OTB discussion is overdue: </p><ul><li><strong>CPI below 0.85 for 3+ consecutive months</strong>: CPI rarely recovers once it drops that low. The data is clear on this: on projects that hit CPI 0.85 by the 20% completion mark, the final CPI averages 0.87. You don't recover.</li><li><strong><a href="/en/earned-value/definitions/to-complete-performance-index">TCPI</a> above 1.20</strong>: This means you'd need to perform at 120% efficiency for the rest of the project to hit the original budget. That's not realistic on any construction project I've ever worked on.</li><li><strong><a href="/en/earned-value/definitions/estimate-at-completion">EAC</a> exceeding BAC by more than 10-15%</strong>: At that point, the original baseline isn't a management tool anymore. It's a reminder of how wrong the original estimate was.</li></ul><h2 id="the-otb-process">The OTB Process</h2><p>OTB isn't just changing a number in a spreadsheet. It's a formal process that should involve the entire project leadership team. </p><p><strong>Step 1: Acknowledge the problem.</strong> The project director accepts that the original budget is unachievable. This is harder than it sounds. Nobody wants to be the person who says "we got it wrong." </p><p><strong>Step 2: Bottoms-up re-estimate.</strong> Every <a href="/en/earned-value/definitions/control-account-manager">CAM</a> re-estimates their remaining work from first principles. Not "apply a factor to the current EAC." Actually re-estimate every work package. What does it cost to finish? What resources do you need? What risks remain? </p><p><strong>Step 3: Establish the new PMB.</strong> Aggregate the re-estimates. Add contingency for remaining known risks. The result is the new BAC. </p><p><strong>Step 4: Set aside <a href="/en/earned-value/definitions/management-reserve">management reserve</a>.</strong> The new CBB (Contract Budget Base) includes the new PMB plus a fresh MR allocation for unknown risks going forward. </p><p><strong>Step 5: Reset the EVM baseline.</strong> Variances reset to zero from the OTB date. Historical data is preserved for record purposes but no longer drives the CPI or SPI going forward. </p><p><strong>Step 6: Brief stakeholders.</strong> On NEC4, this may require a conversation with the Project Manager about revised forecasts, particularly on Option C where the pain/gain share calculation depends on final cost against target. </p><h2 id="worked-example-otb-on-a-60m-infrastructure-project">Worked Example: OTB on a £60M Infrastructure Project</h2><span class="ge-worked-label">Worked Example</span><div class="ge-callout ge-anim"><p><strong>Scenario:</strong> A £60M NEC4 Option C highway upgrade in the East Midlands, 40% complete at month 12 of a 30-month programme. The project has experienced persistent cost overruns across three of its eight control accounts.</p><br><p><strong>Month 12 EVM snapshot:</strong></p><br><div class="ge-table-wrap ge-anim"><table class="ge-table"><thead><tr><th>Metric</th><th>Value</th></tr></thead><tbody><tr><td>BAC (original)</td><td>£60,000,000</td></tr><tr><td>% Complete</td><td>40%</td></tr><tr><td><a href="/en/earned-value/definitions/earned-value">EV</a></td><td>£24,000,000</td></tr><tr><td><a href="/en/earned-value/definitions/actual-cost">AC</a></td><td>£29,268,000</td></tr><tr><td><a href="/en/earned-value/definitions/planned-value">PV</a></td><td>£26,000,000</td></tr><tr><td>CPI</td><td>0.82</td></tr><tr><td>SPI</td><td>0.92</td></tr><tr><td>CV</td><td>-£5,268,000</td></tr><tr><td>EAC (CPI method)</td><td>£60M / 0.82 = <strong>£73,170,000</strong></td></tr><tr><td>TCPI (to BAC)</td><td>(£60M - £24M) / (£60M - £29.27M) = 1.17</td></tr></tbody></table></div><br><p><strong>The problem:</strong> CPI has been below 0.85 for five straight months. The cumulative CV is -£5.27M. The EAC suggests a £13M overrun. The TCPI of 1.17 means the project would need to outperform budget by 17% for the remaining 60% of work. On a highway scheme with winter earthworks ahead, that isn't happening.</p><br><p><strong>The OTB decision:</strong></p><br><p>The project director convenes an OTB review. The CAMs conduct bottoms-up re-estimates:</p><br><div class="ge-table-wrap ge-anim"><table class="ge-table"><thead><tr><th>Control Account</th><th>Original BAC</th><th>Spent to Date</th><th>Re-estimated Remaining</th><th>New BAC</th></tr></thead><tbody><tr><td>Earthworks</td><td>£14,000,000</td><td>£7,200,000</td><td>£9,800,000</td><td>£17,000,000</td></tr><tr><td>Structures</td><td>£12,000,000</td><td>£5,100,000</td><td>£7,400,000</td><td>£12,500,000</td></tr><tr><td>Drainage</td><td>£8,000,000</td><td>£3,600,000</td><td>£5,200,000</td><td>£8,800,000</td></tr><tr><td>Pavement</td><td>£10,000,000</td><td>£4,800,000</td><td>£5,600,000</td><td>£10,400,000</td></tr><tr><td>Utilities</td><td>£6,000,000</td><td>£3,400,000</td><td>£4,100,000</td><td>£7,500,000</td></tr><tr><td>Traffic Mgmt</td><td>£4,000,000</td><td>£2,100,000</td><td>£2,200,000</td><td>£4,300,000</td></tr><tr><td>Landscaping</td><td>£3,000,000</td><td>£1,200,000</td><td>£1,900,000</td><td>£3,100,000</td></tr><tr><td>Prelims</td><td>£3,000,000</td><td>£1,868,000</td><td>£1,732,000</td><td>£3,600,000</td></tr><tr><td><strong>Total</strong></td><td><strong>£60,000,000</strong></td><td><strong>£29,268,000</strong></td><td><strong>£37,932,000</strong></td><td><strong>£67,200,000</strong></td></tr></tbody></table></div><br><p><strong>New budget structure:</strong></p><p>- New PMB: £67,200,000</p><p>- New MR (3%): £2,016,000</p><p>- New CBB: £69,216,000</p><br><p><strong>Post-OTB metrics (month 12, immediate):</strong></p><p>- BAC: £67,200,000 (was £60,000,000)</p><p>- CV: reset to £0 (for forward-looking management)</p><p>- CPI: reset to 1.00 baseline</p><p>- EAC: £67,200,000 (to be tracked against new baseline)</p><br><p><strong>The commercial impact on NEC4 Option C:</strong></p><p>The target Prices in the contract haven't changed, they're still £60M (plus any implemented compensation events). The OTB is an internal management tool. The pain/gain share calculation at completion will use the contractual target, not the OTB baseline. So if the project finishes at £67.2M actual Defined Cost, the contractor is bearing pain share on £7.2M of overrun against the £60M target.</p><br><p>The OTB doesn't change the contractual position. It changes the internal management baseline so the EVM system produces useful information for the remaining 60% of the project.</p></div><h2 id="why-you-should-only-do-this-once">Why You Should Only Do This Once</h2><p>OTB is a reset button. It exists because the original estimate was wrong, risks materialised that weren't anticipated, or the delivery approach fundamentally changed. It restores the EVM system's usefulness by giving the team a baseline they can actually manage against. </p><p>But if you do it twice? That tells a different story. It tells you the project team can't estimate, can't control costs, or both. A second OTB destroys credibility with the sponsor, the client, and the commercial team. I've seen it happen once, on a £120M defence facility where the first OTB was at month 18 and the second at month 30. By the second reset, nobody trusted any number the project controls team produced. The EVM system became decoration. Monthly reports were generated, filed, and ignored. </p><p>One OTB is pragmatism. Two is a pattern. </p><h2 id="common-mistakes">Common Mistakes</h2><ol><li><strong>Doing OTB too late</strong>: If you wait until CPI is 0.70 and the project is 60% complete, there's barely enough remaining work to make the new baseline meaningful. The best time for OTB is when it's clear the original baseline is broken but there's still substantial work remaining. Typically, that's the 30-50% completion window.</li><li><strong>Not doing a genuine re-estimate</strong>: Some teams just take the EAC and call it the new BAC. That's lazy and dangerous. The EAC is a mathematical projection. The new BAC should be a bottoms-up re-estimate of every remaining work package by the people who'll actually deliver it. The difference matters.</li><li><strong>Using OTB to hide poor performance</strong>: OTB resets the CPI to 1.00. Some project directors see that as an opportunity to make the dashboard green again. But the stakeholders who approved the OTB will want to see genuine improvement against the new baseline. If the CPI drops below 0.95 within three months of OTB, the conversation gets very uncomfortable very quickly.</li><li><strong>Forgetting the contractual position</strong>: On NEC4 Option C, OTB changes the internal management baseline. It does not change the contractual target. The pain/gain calculation still uses the original Prices (adjusted for implemented CEs). Teams that confuse the two end up in trouble at final account.</li><li><strong>No root cause analysis</strong>: Before resetting, understand why the original baseline failed. Was it a pricing error at tender? Scope growth? Unforeseen conditions? If you don't identify the cause, the same problem will eat into the new baseline.</li></ol><div class="ge-product-note ge-anim"><p><strong>How Gather helps.</strong> Gather's AI reads your site diaries daily and maps progress against your cost-loaded programme, giving you accurate earned value data without manual spreadsheet updates. <a href="https://gatherinsights.com/contact">Book a demo</a> to see it working on a live NEC4 project.</p></div><h2 id="frequently-asked-questions">Frequently Asked Questions</h2><h3>Does OTB require client approval?</h3><p>For internal contractor EVM, no. It's an internal management decision. The client doesn't need to approve it because it doesn't change the contract. However, on client-mandated EVM (common on MoD, Network Rail, and Highways England frameworks), the client's project controls team typically needs to approve the OTB and the new baseline. They'll want to see the bottoms-up re-estimate, the root cause analysis, and the recovery plan. </p><h3>What happens to the historical CPI data after OTB?</h3><p>It's preserved but separated. Most EVM reporting tools maintain a "pre-OTB" dataset and a "post-OTB" dataset. The pre-OTB CPI shows how the project performed against the original plan. The post-OTB CPI shows performance against the revised baseline. For lessons learned and tender feedback, you want both. For managing the remaining work, you use the post-OTB figures. </p><h3>Is OTB the same as re-baselining?</h3><p>Technically, OTB is a specific type of re-baseline, one where the new baseline exceeds the original <a href="/en/earned-value/definitions/management-reserve">Contract Budget Base</a>. You can re-baseline without going "over target", for example, redistributing budget between control accounts while keeping the overall BAC the same. That's a baseline change, not an OTB. OTB specifically means the total budget has increased because the original was insufficient. </p><h3>How does OTB relate to Over Target Schedule (OTS)?</h3><p><a href="/en/earned-value/definitions/over-target-schedule">OTS</a> is the time equivalent. OTB resets the cost baseline. OTS resets the schedule baseline. They often happen together, if the project is over budget, it's usually late too, but they're separate decisions. You can do an OTB without an OTS (if the overrun is purely cost, not time) or an OTS without an OTB (if you're on budget but behind programme). </p></article></div>