Opening the EVM ‘Black Box’ for Greater Project Transparency
June 22, 2022
Understanding your project’s performance during the execution of said project is critical in any attempt to fully grasp its past, current and future performance in terms of work hours, schedule performance and cost. The ability of project management to readily access the performance of the project while ensuring that schedule, cost and safety measures are continuously met is directly linked to having a robust earned value management (EVM) methodology.
As a parent with a young one, I have seen Disney’s Moana maybe 268 times, and what I find absolutely mind blowing is the ability of the Polynesian voyagers trained in wayfinding to navigate the Pacific Ocean by using the sun, stars and other natural cues. One of the natural cues that voyagers used for navigation relied on reading the waves and swells. Such experienced navigators could see and feel the subtle changes in the refraction and reflection of waves to understand far off in the distance which direction islands were located.
Not to equate construction project management to navigating the Pacific Ocean, but in a similar vein, project managers must utilize the subtleties of EVM and the distinct reporting across an entire project to understand where the project is at presently and where the project is going in the future. In previous posts, we have covered a wide variety of earned value metrics.
But what are those very important measurements that a project manager must maintain a firm grasp upon? The first one that comes to mind is earned value (EV). EV quantifies the work that has been done to a certain point in the form of percent complete. Getting that well-defined EV figure relies on the consistency of how work is counted and how each step of progress is measured. The EV metric can easily translate into dollars using established budget figures. Another important metric is “earned vs. burned” or more commonly referred to as productivity factor (PF). PF compares the amount of progress generated versus the amount of work to get to that progress. PF is a direct reflection on your ability to estimate and execute scope.
Having a PF factor outside of acceptable bounds can be indicative of numerous issues. The last metric any good project manager should have a firm grasp on is schedule performance and cost performance. Both schedule and cost performance measure the amount of progress in relation to planned timeline or cost, respectively. Reviewing how your performance stacks up against your current plans and budget is foundational to keeping your project on schedule and on budget.
Claim your Claiming Schemes
First, the way you quantify and progress your job must be done at a level of detail that lends itself to accurate reporting. Progressing a single line item of 10,000 cubic yards of concrete versus progressing individual foundations with their distinctive volumes of concrete provides a sufficient level of clarity as to what work was done.
Second, claiming schemes or commonly referred to as rules of credit (RoC) allows for incremental progress capture that aligns with the steps required to perform the work. Standardizing around claiming schemes allows for more defined progress capture and lends itself to better real-time progress capture. Continuing with our foundations example, a typical RoC structure would allow for the following:
- Setting formwork
- Tie/place rebar
- Embed installation
- Pour concrete
- Strip formwork
The incremental percentages associated with each step in the claiming scheme is derived from past benchmarks. It is key to understand that the percentages should equitably distribute the weight to force completion of all steps. Imagine in our example that 80% of the progress value is associated with excavation of the foundations. Knowing that the bulk of the progress is associated with that as our first step would negatively incentivize the excavation portion of the scope and you would end up with a job with lots of open holes and no concrete placed. Understanding your quantification methods and how you capture progress directly impacts your ability to collect data and make proper inferences when evaluating project performance.
Understanding Your Performance Metrics
Productivity Factor is the comparison of how much work typically measured in work hours has been earned against how much was spent to earn those gains. Let us put some numbers to this. Continuing with our concrete example, imagine our work crew earned through progress claiming an equivalent of 20 hours of progress but they expended 60 hours to earn that work. That would give the crew a PF of 20/60=0.333. This is objectively not good and cannot be sustained over the duration of the job if you want to maintain schedule and cost. This indicates you are forecasted to expend three times your budget for concrete labor. This is where the nuance in numbers helps you “read the waves.”
Typically, incremental progress by foundation is swept up into larger reporting numbers. Thinking about levels of reporting, there is a traditional full project percent complete that considers all works completed during the reporting period.
This is a solid, full project reporting metric but can hide poor performance in isolated areas. Peeling back percent complete and looking at percent complete by discipline, by sub-disciplines (i.e., foundations, paving, ditches and culverts), by work area, by work crews, etc. can help. By reviewing the performance metrics at this lower level of detail, one can get a true grasp of project performance and can make the necessary adjustments before things get too far along. A project could report an on-target project percent complete but be falling drastically behind in concrete foundation progress which, left unattended, will negatively impact your civil plans and downstream activities.
Numbers Tell the Whole Story
There is a running joke in the construction industry that alludes to project controls having the ability to slice and dice the numbers a million ways for the numbers to look good. After spending the bulk of my professional career as a project controls manager, it is truly amazing the shear amount of data that is collected on a daily, weekly and monthly basis to support all sorts of project reporting. This data is collected to such a granular level of detail that via inclusion and exclusion of different data sets overall performance numbers can be polished up to make not-so-flattering numbers shine.
This is not to say that the project representatives are “cooking the books” to ensure all reporting is positive, but it is totally plausible that numbers can be used at the collector’s discretion. The benefit of a strong EVM process is that it offers a level of transparency at all levels of data collection and prevents the presentation of favorable data sets and omission of negative ones. The benefit of presenting both the positive and negative metrics allows for open communication and understanding of the success and failures; how success can be promoted throughout the organization and the failures can be learned from and hopefully avoided in the future.
Better Earned Value Management = Better Project Management
Understanding how project performance is measured though your earned value management process not only provides an effective means for monitoring construction progress, but it also is the foundation to the rest of your project management tools. It provides those early warning signs that potential danger is on the horizon.
EVM can serve as a mechanism to provide enough advanced warning that any potential impacts to the project can be understood and mitigated before these items grow into project derailing measures. Robust EVM processes provide an opportunity to develop contingency plans before performance related items worsen.
Project managers rely on the most complete data to make timely decision. The data provided by EVM is essential to the ability to collaboratively make decisions. This real-time data from the field feeds cost, schedule and scope. Robust EVM processes provide a reporting transparency that promotes more trust and accountability from all stakeholders, which in turn provides for far better aligned insights and decisions between the stakeholders. Because everyone has access and visibility into the same facts, collaborations become more possible and productive.
Earned value management is tool that provides timely insights into your project, offers predictability, and helps ensure certainty in the performance data which can lead to better outcomes in the future. Collecting the data and performing the necessary calculations and using this data to glean insights via analytics is becoming a trend in the industry.
Robust technology tools such as InEight Connected Analytics provide these insights and offer a great deal of easy-to-digest reports and dashboards to support all your project management needs. Request a demo to see how investing in an EVM system can make you more competitive and your projects more successful.