Elevate Your Project Controls Game with Earned Value Management

Ellen McCurtin:

Good afternoon, and welcome to this webinar, Elevate Your Project Controls Game with Earned Value Management. This event is brought to you by Engineering News-Record and sponsored by InEight. I’m Ellen McCurtin, ENR’s custom content editor. Thanks for joining us.

Today we’ll be diving into an in-depth exploration of earned value management best practices, sharing practical insights and actionable strategies that can be used to improve your EVM process. Leading our discussion, we’ll hear from Nate St. John, vice president of product at InEight. From MasTec, who ranked number four on ENR’s top 400 contractors list in 2024, we’re excited to welcome Cliff Massey, senior principal of Technology Solutions, and Scott Valdez, director of Project Controls. After the discussion, our presenters will answer questions that have come in throughout the webinar, so don’t forget to submit them in the Q&A section of the webinar console. Now, I’ll hand things over to Nate St. John to kick off today’s conversation.

Nate St. John:

Well, thank you, Ellen, and welcome in everyone. My name is Nate St. John, I’m responsible for planning, scheduling, and risk management at InEight. In addition to my R&D responsibilities, I head up project risk services, offering clients expert guidance in their risk quantification mitigation strategies. Prior to InEight, I spent 15 years in construction on both the owner and contractor side. Most recently with Kiewit. I very much enjoy keeping connected with industry associations, so I sit on the board of advisors for CII, and I’m very active within AACE International where I hold a planning and scheduling professional certification.

But today, the stars of the show, I’m pleased to be joined by two experts in earned value management, both from MasTec. Cliff Massey, Cliff graduated from Texas A&M in 1987, majoring in construction sciences. He has accumulated over 35 years of experience in the construction industry, starting with 20 years at KBR, working primarily in manufacturing, engineering in the DoD industry. He’s been at MasTec since 2016 where he’s been implementing project management control best practices and technology. Second, we have Scott Valdez. Scott is the director of Project Controls at MasTec Industrial, where he leads the development and implementation of an integrated project controls program by leveraging advanced tools and his experience in earned value management, strategic planning, and process improvements. He’s committed to driving project success through innovative solutions, effective leadership, and a focus on quality and performance. Gentlemen, welcome and thank you for joining.

For those not familiar with InEight, real quick, we provide field-tested project management software for the owners, the contractors, the engineers, and designers who are building the physical world around us. So from pre-planning to design, from estimating to scheduling, and from field execution to turnover, InEight has powered more than one trillion in projects globally across infrastructure, public sector, energy and power, OGC, mining, and commercial construction. Over 575,000 users and more than 850 customers worldwide rely on InEight for real-time insights that help manage risk, keep projects on schedule and under budget across the entire life cycle. If you are interested in learning more about InEight, simply visit InEight.com and see the resources available at the end of the webinar.

So enough about us, real quick, we now want to hear from you all. So we have two poll questions to sort of gauge our audience today. The first question, if you don’t mind contributing, is which of the following best describes your organization? Are you an owner? Are you an owner rep, CM, a designer? Are you a general contractor, a consultant, or other? We’ll give that a moment to populate. So it looks like heavily GC, but kind of evenly scattered through a fair amount of consultants, designers, and owners. So that’s great to see a good mix.

We do have a second one real quick, and that is, which of the following best describes your role within this organization? Are you on the cost side, either as estimator or cost engineer? Are you a planner/scheduler, a PM? Are you an executive management, consultant, or other? We’ll give this one a moment as well.

Cliff Massey:

Yeah. While we wait on that, I saw a high result for GC, and that is where we reside.

Nate St. John:

Okay. Let’s see. So project management is leading the charge. And then we have a pretty even mix throughout executives, consultants, and cost engineers. So again, this is a very evenly distributed audience today, so that’s going to be fantastic for us.

So let’s dive into it. Let’s just kick this off with the basics. Scott, maybe I’ll start with you here. I mean, in your eyes, what is earned value management? Is it just as simple as “Hey, it’s percent complete times your budget”? Or is there more involved?

Scott Valdez:

You could certainly say that it is just a percent complete, but I think there’s a lot more that goes into it. I like to think about it in two terms. One is a scope management tool. So what is the project? What have we bid? What have we signed up for? So that’s the first piece which I think a lot of people lose track of, is, “Hey, what is my overall scope?” As projects continue, it gets more confusing as you have issues pop up. So I really like to think about how we can capture the scope within earned value.

The second piece is a measuring stick. So whether that be the estimate performance on actual costs versus estimated costs, whether that be schedule, whether that be system completions, I mean there’s a lot that you can use earned value management for. The last thing I’ll say is, I like to think about it as the one source of the truth. So hey, what are my current quantities? My budgeted quantities might be different from the quantities that I actually have to install, whether it be an estimated error or whatever else. So that’s how I like to think about it, Nate.

Nate St. John:

Yeah, there’s a lot of depth in there. I like that source of truth. It is almost cliche to say, but EVM kind of centers on that and ultimately can provide an end result in which you do know exactly where you’re at.

Cliff, is there anything that you would add into that from your perspective? Anything different or in addition you’d add?

Cliff Massey:

When it comes to how we’re setting up and managing the scope of the project and how we’re managing progress, all of that is data-driven compared to what I would experience in our industry. It’s like the difference between the data-driven performance and progress information and how that impacts the forecast versus how the project manager may provide input to the forecast of the project or whatnot. So it is a difference between opinion and data.

Nate St. John:

Yeah. I like that kind of contrast, and it’s a good segue into the next topic, but realizing we could probably spend the entire hour talking about just that one question alone. We will move forward, and maybe, Cliff, again, something that you had talked about and alluded to in that is kind of the setup section. So I’d like to, if we could, just spend a little bit of time discussing best practices and strategies for EVM success. In my mind, I kind of categorize those into two sort of phases. There’s like the setup phase, getting organized, how are we going to structure things, and then there’s sort of the execution phase or the practical application of EVM on the job site. So in the setup phase, Cliff, what goals or prerequisites are you looking to get in place before even thinking about implementing earned value management?

Cliff Massey:

Yep. So in regards to the setup phase, it’s understanding your scope of the project. So that’s a difference between a certified EVMS system and EVM principles. Right? So when it comes to EVM principles, we’re trying to determine our progress and performance in terms of the scope of the project, which is forecasted quantities. Right? So that’s very important and isn’t necessarily… Well, quite often underappreciated, right? So when we look at the original budget and the forecast, and we’re looking at the forecasted quantities, and as we get ISC documents and reality impacted into that, forecasted quantities is very much important to the progress of the project overall. Right? So I would say that that’s something that’s very underestimated, is total project scope, scope management, and progress on that particular scope.

Nate St. John:

Yeah. I’m sensing a theme here. I think we all have experience about, “Oh, we miss some scope and now we have to recover or adjust or something.” Those things happen in real life.

Scott, thinking about, again, just kind of setting up and getting to the basics, scope’s been mentioned three or four times already. How critical is that to the connection? And does earned value really have the ability to tie in the three points of the triangle that I call scope, costs, and schedule? How can you ensure that scope, costs, and schedule are sort of synergized through earned value management?

Scott Valdez:

Yeah. I think, I guess I’ll take a step back, Nate, because one of the most important things to me is understanding what the project goals are. Every project is unique. Really understanding the project type, the contract model, what the owner expectations are. I mean, there’s a lot of things that you can do with earned value management and how you set it up. We use the phrase here, fit for purpose. Is the juice worth the squeeze? So there’s some projects where we have very, very detailed cost and earned value management structures, and then there’s some jobs that we have very, very basic cost and earned value management.

In terms of lining up the magical three there, I hate sitting in a scheduling meeting and hearing a superintendent saying, “Hey, I’m 15% complete with this.” Well, okay, what 15% have you finished? So I like to tie it to physical installation of work, understanding, “Hey,” it’s the famous construction question, “how do you eat the elephant?” Well, one bite at a time. So how do we carve up this project in small manageable bite-sized chunks? And then align that to both earning our budgets as well as earning progress in the schedule, and measuring performance as well.

Nate St. John:

I love that delineation between I have a project over here that’s super low level of detail and I have one over here that’s higher level of detail that fit for purpose. If everyone hasn’t picked up on it already, you can immediately tell Scott is an expert in planning and scheduling as well. How do you make that determination, Scott? Is it just project characteristics that determine what level you set this thing up at? Or does it just tie back to some of the goals?

Scott Valdez:

I go with the Occam’s razor principle there, Nate, so the simplest answer is the right one. We don’t need to overcomplicate things. You start to break down the project. I mean, is this a short project? How long is it? What does the turnover look like? Is this progressive? Are there milestones? I mean, there’s a lot that goes into it, but really taking all of those inputs and just saying, “Okay, what is the simplest solution to meet all of these needs?” I think that’s what I like to think about at the beginning of these projects, is, “Hey, there’s all of these requirements that we have to meet, but at the end of the day, what’s the simplest way that we can meet them?”

Nate St. John:

Yeah, I love that. At InEight, my team’s sick of hearing it all the time, but I always like to say, everything you need and nothing you don’t, and that will land you at the right level of detail.

So maybe execution phase. Okay, so we’ve determined what level of detail, we’ve tried to wrap our arms around scope as a centerpiece, tie in schedule and cost into that triangle. Probably a loaded question, but I have to ask it, what’s the best level of detail to track progress?

Scott Valdez:

Cliff, you want to pick that one?

Cliff Massey:

Well, I mean, a common debate I think as project control professionals that we get into is the perception that at the EPC level and at the accounting level and at the project controls level and at SME level and at the progressing level, they’re all one and the same. It’s like, no, they all feed into each other. Right? So I think as an organization… Again, this isn’t anything revolutionary, but we need to… Organizations either determine at what level am I going to track costs and progress and rules of credit, and how those feed into schedule activities, and how those feed into cost codes for activities, in general that feed into estimating. All of those levels of detail need to be delineated within your organization. Otherwise, you’re probably going to an unnecessary level of detail in your ERP system, in your scheduling system, or project controls. Project controls typically, it’s like to the standard code of accounts. Do you need that to be broken down into areas and crews? Not necessarily, right? So organizations need to determine where the importance of that delineation of detail resides.

Scott Valdez:

Yeah, I would add to that a little bit.

Cliff Massey:

It’s always a very volatile level of discussion.

Scott Valdez:

I would just add to that a little bit, Nate. I guess the level of detail depends on what you’re measuring. So in terms of cost, the level of detail I measure cost might be different from the level that I measure progress. I can have a bigger bucket of costs that I’m measuring the overall earned value, what’s my earned budgets and actual cost performance, but I can also break it down into a deeper level when I start doing the actual quantity measurement. So if I’m measuring quantities, I like to think about quantities in terms of, “Hey, small bite-sized piece, what aligns with something physical in the field that we’re actually going to perform?”

So for me, I think of if we’re erecting steel, pieces of steel. We’ve got piece marks for steel. So that’s how I like to think about it. We have piping, we have isometrics and spools and electrical. We have cable and termination. So really from an actual cost management and earned value management, I like to think about it at a slightly higher level in terms of actual progressing and how I earn those quantities. I like to break it down into those measurable bites. I’m not going to break it down into every single bolt that goes into a steel structure, but I would think of steel members as an easy thing to do.

Cliff Massey:

Yep. To add to that, I don’t disagree with that at all. I mean that’s a very important delineation when it comes down to at what level did we expect foreman to progress. Right? For example, well, we didn’t want them to progress at the standard code of accounts level. Well, as most people can probably appreciate, that’s a very high level expectation to apply install quantities and whatnot. To actually break that down into components and rules and credit and whatnot, that makes it so much easier for the end user to say, “Well, I’m working on this piece of work and this is what I got done today.” They don’t have to go back to the drawings, they don’t have to go back to… It’s very easy for the end user to identify work that’s been completed, the value of that work, and the value of that work compared to what was budgeted for that work.

So that’s when we start to talk about installation, work packaging, all of these concepts that are very CII-oriented and whatnot, common practices and whatnot. Some people might perceive those as like, “Well, that’s getting into more and more and more detail that are difficult to track,” but they’re much easier to track for the end user. So in my opinion, that’s where we need to drive that ease of identification of work that’s been done and progress that’s been made and how that roll up to the account codes that we’re trying to track at an overall level.

Nate St. John:

Yeah. That’s a great segue, and a thought just popped in my head. I always just ran at, “Hey, what’s the lowest common denominator?” Because that’s usually going to marry up real well with what needs to be tracked out in the field.

So Scott, question for you here, how important is precision and accuracy tracking at that level? And is there any give and take between getting down to that fourth decimal place versus just moving the process forward? We had a good conversation in the prep call for this, and I loved your thought process on it, so I wanted to ask you in front of the group.

Scott Valdez:

That’s fair. So I think to answer your question, it really depends on what the end goal is. If I’m on a project and it’s Monday morning and I just want to know how I did last week, then accuracy, I don’t need to be to the nth decimal to figure that out. If I’m talking to an owner and trying to bill, then that’s a very different situation. Or if I get in the legal issues, then accuracy becomes critical at that point. So I like to think about it as, “Hey, accuracy depends on…” Well, you’re going to get more value the sooner you have an answer. Right?

So if I know that I was running roughly a 0.7 last week, and that’s on preliminary productivity, well, that could be plus or minus a couple of decimal points, but it’ll give me the places that I need to look to understand was I accurately claiming? Was I accurately charging time? And then once you get further down the road to a billing, or if you’re in a legal situation, then you have to start really drilling down, saying, “Hey, is this accurate? Did I install everything? What step in the claiming scheme was I on?”

Nate St. John:

Yeah, I like that approach, and it leads into just the practical application of something that can get very complicated. So it’s finding that balance of what’s most beneficial, what level is most beneficial for the team.

EVM can do a lot of good, and I’m a huge proponent of it, but there are certainly challenges in implementing EVM. So I’d like to ask you, especially a company like MasTec, in your deep bench of experience, Cliff, maybe we’ll start with you, what are the most common pitfalls or drawbacks in tracking earned value management? And are there any?

Cliff Massey:

I think you hit on it a few seconds ago. What level of detail are you going to at the level at which you track costs in terms of what are our common code of account versus what level of detail we’re tracking, schedule activity IDs, versus what level of details were progressing components and rules of credit? Again, some people may consider that, “Well, that’s a lot of detail that I have to…” Well, you’re probably doing that on spreadsheets or on whiteboards.

I mean, I visited projects where they’ll go out, and foreman come in, and they put their progress on the whiteboard, and then some field engineer comes in, and they take what’s on the whiteboard, and put it in their spreadsheet. It’s like all of these things are detail components and rules of credit that need to drive not only the progress and performance data for project controls, but that’s also feeding the schedule progress information. So all of that integration, these aren’t like new concepts. Right? So I think a lot of people are dependent on software to define all of this information and how all this stuff integrates, but it takes some industry experience to determine where those lines of delineation are effective.

Nate St. John:

Yeah. Scott, maybe back over to you, I mean is there anything that jumps off your desk there in terms of just common pitfalls in earned value management? Anything in addition to Cliff?

Scott Valdez:

I think we hit on the beginning overcomplicating an issue. I’m a detail-oriented person. I like understanding the details, I like understanding… But just because that’s my personality, doesn’t mean that’s what the project needs. So I think one of the things that I see is, make sure that you are getting involved with that project team to understand, “Hey, what are the needs of not just the owner, not just whether it be MasTec or whatever company you work for, but what are the needs of the project team? What is going to make sense to them?” There might be something that makes perfect sense to me, but that project team doesn’t understand it and doesn’t want to track it that way. So really getting that understanding up front and not working in a silo, and making sure that you don’t over-complicate it. That’s where I see a long jump straight up.

Nate St. John:

Great. Well, thank you. Maybe put you both on the spot, and if you can’t think of something this quick on your feet, that’s totally fine, but I would love to know, I mean, can either of you think of a real-world scenario where there was a success story of how EVM significantly improved a project outcome or identified a potential issue early that you were able to adjust and get back on track? Scott, I see you kind of nodding your head. Is there anything that you can think of or you’d be happy to share with us?

Scott Valdez:

Yeah. I mean one of the areas I see EVM being very valuable is on our progressive turnover type projects. So we do a lot of big complicated work in the industrial sector. We don’t just flip a switch when everything is done and completed. There’s commissioning. A lot of times engineering’s behind, and maybe there’s three process trainings, and they want to get one running, then the other, then the other. So one of the best uses of EVM that I’ve seen is through the use of metadata and understanding, “Hey, what turnover packages are these things associated with? How am I progressing against those? Am I working on the right things?”

Schedules are great, but they don’t always have the level of detail that you need to understand that. There certainly are some schedules that break out that level of detail. But at the end of the day, it just gives one more metric for you to understand, “Hey, how am I progressing against this turnover package or this system or this area?” It is that second level of data. It’s great to understand my earned value, my earned budget versus my actual cost, but when you start understanding that next level down, you can actually use it as a tool to make those data-driven decisions while you’re in the field.

Nate St. John:

I like that. Cliff, punt the same question over to you. Any real-world success stories here with EVM that turned a project around or had an early warning indicator?

Cliff Massey:

I mean, again, these aren’t like groundbreaking concepts, right? It’s more, I guess, in tune to an organization’s ability to balance what the project manager or assistant project manager or whatever, their forecast for that project or those activities on the project order compared to the data. So it’s not us versus them mentality, it’s them versus the data mentality and our ability to add credibility to the data. So if you have a good grasp of the scope of the job and the progress of that job and the performance against that work compared against whatever measures you have into the forecast for that job, that’s a good comparison. It should never come down to… This is something… I mean, quite frankly, here recently, I worked with several of the MasTec companies and whatnot, and it comes down to, “Well, this is what the project manager is saying and here’s what the data is saying.”

All we can do from a project control’s perspective is add credibility to how we arrived at the project data. Right? Scope performance measurement progress, and that progress compared progress to date, progress based off the last three months, whatever that metric is, projected out to the EAC for the project, compared to what the PM or assistant PM might be saying that, “Well, this is what the…” That is where EVM provides value outside the certified EVMS system certification process for government contracting, which I’ve dealt with in my past experience. But a lot of those EVM principles certainly apply to a secondary database. Look at how the project is performing.

Nate St. John:

Yeah. Those are good points. You’ve got the data over here. You’ve got the maybe human bias or hubris or motivation over here. How do you bring those two together? I think it’s a great plug into the role of technology. There’s a lot of moving pieces. There’s field staff that are claiming quantities. There are engineers in the office that are crunching those quantities and forecasting things out. There are stakeholders surrounding that, looking at their view of what they believe progress is. And then there’s the data piece. So there’s a lot of moving parts. There’s also a lot of data generated on these jobs, particularly the jobs that you all take on. How does software improve or how does technology improve EVM efficiency, accuracy, and reporting?

Cliff Massey:

Go ahead, Scott.

Scott Valdez:

I think, Nate, for me, it’s making sure that you only have to hit a button once. So whether you’re tracking progress in Excel spreadsheet or a Big Chief notepad, you’ve still got to track your costs, you still got to track your earned value, you still got to update your schedule. So if you can use a system that ties these things together, it definitely makes life easier. Really, that interconnected data, I think, gives you some valuable insights to how the projects are performing.

Even me, as I said, a cold eyes, when I go out to a project, I might not know that much about the day-to-day operations of that project. But when I could start looking at some of the earned value metrics and the schedule and understand how that ties to their short interval planning and their daily goal cards, I think that’s where I see the value in it, is just, hey, life’s hard enough. I don’t need a foreman to have to enter things in six different places. He’s already got to deal with all of the HR forms and everything else in life, material requisition. So I like that centralized aspect and how everything’s interconnected.

Cliff Massey:

Yep. To add to that, I mean when it comes to software, I mean if I’m a foreman and I got a crew working in a particular area today, and of course, obviously to get people paid, well, here are the people on my crew, here’s where we charge time. But to compare that to here is the progress that we made in this particular component of work that we did as opposed to trenching, for example, or cable installation, or 10- to 14-inch pipe installation, which all have… If I’m working on this little particular piece of work which has so many feet of pipe, for example, I don’t have to go back to the drawings and whatnot, this is how much is budgeted, and I got this step done, and I got this step half done.

At the end of the day, that makes it very easy for that end user foreman or field engineer to identify what work was been done by that crew, and the earned man-hours. Without having to go up and create cost codes for all these different areas or crews or whatnot, I can identify performance level, metrics for the crew and for the area, whatnot, without having to take my work breakdown structure to a lower level, which is unmanageable, which everybody on this call knows what I’m talking about. Right?

So that’s where software can really have an impact, is if I can have on my time sheet, “This is my crew. This is what I worked on. Here’s the cost code for what I worked on. Here is the man-hours that were spent. Here is the man-hours that were earned.” And then that information can be reviewed and approved on the time card level before that information gets processed through payroll. We don’t want to wait a week or two weeks later to go, “Well, we have progress and whatnot in this area, and I have no man-hours. And I have man-hours in this area for which there was very little progress.” So that is where technology, in my opinion, really… That and all the things we’ve been talking about, being able to break the work down into what am I working on today? I’m working right here in this area on this piece of work. What are the quantities associated with that area? What step have I completed? What percentage? And then what earned man-hours are associated with that?

These are principles that go back decades in time. Right? So there are many software applications. To some degree, even Excel, right? I mean, some people use Excel to try to track this information, but man, if you can track, it’s very important, the work I did today, the hours I’ve expended today, and very easily identify the work that I did today and the earned man-hours associated with that work, and compare that to performance or progress at the end of every day for every crew, and review and approve that information, that is an exponential improvement over “Well, we’ll wait until the end of the month where all this information comes in through the accounting system and we see what progress has been made and what costs have been made.” And then we try to move the cost around to where we think it should have hit.

Nate St. John:

It’s 2025. What is a webinar in 2025 without talking about AI? So maybe I’ll push this over to Scott. How do you see these principles that have been around for a while, EVM principles, evolving in the future with more advanced technologies like AI or automation or connected platforms? Where do you see it going? Is there a brighter future than today?

Scott Valdez:

I don’t think the Wright brothers quite knew that we were going to be flying to the moon in the same century that they built a plane. So I can’t tell you where AI is going to go. Honestly, there’s some easy things that I think AI will end up picking up on. I think one of the things that really excites me is actual video capture, either through a drone or a three-camera, and then lining that up to physical percent complete and actual installed units. That’s one thing that’s always an exciting thought for me. The technology’s not quite there yet. It’s getting close. But on our type of work, when you’ve got lots of different things in a very small area, it becomes more of a challenge. But I think that’s one place that’s a natural fit. I mean, we already have most projects that don’t even do anything in our industry without a 3D model of some type. So it’s a nice transition for us when the AI technology does come available.

Nate St. John:

Cliff, any thoughts on where future technology could take earned value management? Can it make it more efficient? Can you automate anything? Can it do the job for you?

Cliff Massey:

Yeah. A lot of the conversations I have around AI when it comes to progress and performance management and whatnot. Really, really they’re referencing algorithms and formulas that we’ve been applying since the ’90s. Right? Where I think true AI comes into place is at the level at which we’re managing costs. For performance measurement, it ties back to estimating activities and whatnot, and the level of detail from which we are scheduling, and for which the level of detail that we are progressing in, and determining progress. So those are very different levels of detail. I mean, I’ve been involved with projects that had 6,000 scheduled activity IDs because they’re trying to managing that work down to what we would describe as components and rules of credit. It’s like AI, to me, would come in, it’s like, “Well, these things would better be managed at this level of detail over here and whatnot.”

So again, that’s where my AI opinion value comes into play, not in that, “Well, it’s going to just do our job for us.” It’s going to take all this data and it’s going to tell us what our forecast is. So that is going to be based off of our internal practices and experience and whatnot. But again, AI, in my opinion, it will be valuable in like, “Well, you are at too much detail up here. That detail needs to be here.” You know what I mean? The amount of effort and whatnot that… It’s to say you have a work breakdown structure that has like 7,000 activity ID, 7,000 cost codes for a $2 billion job. Those things really need to be schedule activity IDs, those things would be areas. Those need to be components. So that’s where I can expect AI to contribute to how a project is set up and configured at levels of detail and delineation.

Scott Valdez:

We’re a publicly traded company, so we can’t just go and throw our financial data into ChatGPT and have it analyze that. That would be very frowned upon. So I do think there’s a lot of potential with AI in terms of data analytics and really providing humans with a faster end result. So the things that would take me a couple hours to sort through data, I think we can definitely condense that, but security is always a big issue with AI. I don’t want to be training ChatGPT with MasTec financial data. But I do think, just like any tool, it’s going to make our lives easier eventually, but you got to train it, you got to understand what the tool is used for, and you got to use the tool the right way.

Nate St. John:

Well, I had one more question for both of you, and then we can try to leave, excuse me, five minutes or left or so for some audience questions. But I wanted to ask each of you kind of the same question. So stepping back from the AI conversation and going back just to the basics so we go full circle, if I was running a small construction company and I had no concepts of earned value management, I’m not tracking my work very well, I’m kind of flying blind, I’m using antiquated systems, if you came in as an EVM expert, what advice would you have to me to get going in incremental steps to implement proper effective earned value management procedures?

Scott Valdez:

Yeah. I think I’ve worked for a small startup construction company, and I think the key is to start slow and make it relevant to the folks in the field. When we don’t have earned value management, you use the term flying blind. We’ll go ahead and figure out if we make money when we finish the project. That’s never a good way to operate, in my opinion. You can’t change anything if you get to the end and you lost money. So take it in small bite-sized chunks. Maybe you’re at a higher level of detail to start and you’re just tracking linear feet of pipe or cubic yards of dirt or something larger in scope before you start getting into some of the more advanced things like tying it into schedules and detail component management with metadata. Just start slow and keep it simple.

Nate St. John:

I think we have time for maybe one question. I’m just going to take the top one. How do we track subcontractors when we’re not contractually obligated to see any kind of information month end? So I guess maybe just broader, since this kind of disappeared on me, how do you all manage subcontractors? And do you incorporate them into your earned value management?

Cliff Massey:

Go ahead, Scott. I’ll follow you up.

Scott Valdez:

So I guess that depends on the subcontractor, right? We’re probably not going to use earned value management necessarily for our x-ray tech who comes and shoots welds. The security guy that we’re subbing our security to, he’s not going to get measured. But there’s stuff that they contribute to the physical progress of the work. We absolutely track their progress. Even if they’re a lump sum subcontract, we want to know where they are with the work. The other nice thing is, when you do track that, it makes invoice approval super easy. I can go and say, “Hey, does this invoice match what the earned value says?” If yes, then we go ahead and pay it. If not, you know specific items to ask of what’s been done.

Cliff Massey:

Yep. To add to that, specifically focusing on fixed price subcontracts. You’re not going to get their actual hours and how that contributes to the overall performance and progress of the… We don’t need to know that subcontractors’ performance. We need to know their contribution to the overall progress of the job. So sometimes you might have to apply a man-hour rate or whatever associated with that subcontractor. So that rolls up the work breakdown structure for the work that we’re performing and the work that subcontractors are performing to a total earned man-hours, which translate to total earned percent complete or whatnot. But that’s very different than performance. Right? Progress and performance are two very separate things.

So that’s something we deal with quite a lot. I think a lot of the debates and whatnot that I’m engaged with, “Well, we’re not going to get their actual hours.” We don’t need their actual hours. I just need to know how much of the total scope of the direct work that that subcontractor contributes. So if you get installed quantities and we track their progress, just like we track our own progress. So when we track our own progress, we get total earned man-hours, and when we track the subcontractors’ progress, we get a total earned man-hours, and all that contributes up to the total progress for the job overall. Again, when it comes to the fixed price subcontractors, the hours per unit or whatever is very subjective because they’re providing not only sometimes incidentals, but equipment and all that stuff. At the end of the day, we don’t need to really overcomplicate this too much.

Nate St. John:

Yeah, great. Well, at the top of the hour here, I just want to mention that there were quite a few questions that came through, so we will follow up with all of those in the coming days. I want to say huge thank you to both Cliff and Scott from MasTec for sharing your knowledge with us today. MasTec has been a fantastic partner with us here at InEight, and I just want to thank you both. So with that, I will put the ball back over to Ellen to wrap us up.

Ellen McCurtin:

Well, thank you so much, everyone. Please join me in thanking Nate St. John, Cliff Massey, and Scott Valdez, as well as our sponsor, InEight. If you have any additional questions or comments, please don’t hesitate to click the Email Us button on your console, and we’ll share them with our presenters so they can respond directly to you. If you didn’t have a chance to fill it out earlier, you’ll be redirected to the post-event survey. We look forward to hearing how to make our programs work better for you. Please visit ENR.com/webinars for the archive of this presentation as well as information about our upcoming events. Thank you again for trusting us with your time. Have a great day.