The most popular metric used to track a project’s progress is earned value management (EVM). This is because EVM is a mathematical tool that relies on a project’s actual evolving data to measure how much work has been completed, the costs incurred and the schedule performance of a project. The result is a truly objective assessment of the project’s status at any point in time.
The challenge with EVM, however, is that it can be difficult to apply in practice, as it often relies on manually recording data and reporting it back to the client or stakeholder. This approach can be very time-consuming and can lead to errors in reporting. In addition, bottlenecks in communication can result between stakeholders who need immediate access to up-to-date information about their projects’ status.
Automated EVM software helps solve these problems by automatically collecting, analyzing and reporting on a project’s data from various sources so that everyone involved has access to real-time information about their projects’ status.
Construction projects benefit measurably from the real-time performance tracking — and therefore actionable insights — enabled by automating EVM. Let’s take a look at what these benefits include.
Improved accuracy of performance metrics
For earned value management to produce accurate performance metrics, it has to start with precise source data. Educated guesses won’t work as they’ll lead to skewed assessments of actual project status and progress going forward. Rather, this data comes from similar past projects or industry averages that are entered into the EVM software. With this as a foundation, automated EVM can provide more accurate metric data because it doesn’t rely on human input or calculation for ongoing tracking. This means reports will be a lot more reliable when it comes time to share project financial and schedule performance throughout the project.
Quicker responsiveness to developing issues
With project performance being automatically tracked, it allows contractors and other stakeholders to respond promptly as project-impacting conditions and risks cause EVM metrics to venture outside the boundaries of their established operating range. Think of the unexpected supply chain glitches that impact material delivery, the last-minute scope creep or a spike in labor overtime that are reflected in EVM’s schedule performance index (SPI) or cost performance index (CPI) values. Essentially your automated EVM metrics become a warning system for risks that demand attention and resolution. The sooner issues are identified, the sooner they can be addressed.
Faster issue resolution to avoid delays and cost overruns
One challenge in construction is keeping one of those developing risk factors from doing too much damage to the budget or schedule once it’s been discovered. Seeing EVM metrics react so immediately means contingency plans or real-time problem-solving decisions can be made before a situation worsens. The immediacy of automated EVM ensures there’s enough time to answer the resolution-related questions that naturally surface. Does the schedule need to be adjusted and, if so, how? Should labor or budget resources be reallocated? Will the related contingency plans created before construction began work in this situation? If not, how do they need to be augmented or adapted in any way? Is there an issue with any processes that need tweaking?
Enable proactive contingency planning using EVM-supported forecasting
So, we’ve seen how automated EVM can help contractors, project managers and other stakeholders react in a time-sensitive way to fluctuating metrics values. It can also help in a more proactive way. For example, if you were to revisit your EVM from past projects, specifically the SPI, notice the deviations that occurred. What risk factors caused them? When did they occur within the project’s timeline? What was their ultimate impact? If there’s a likelihood those risk factors could repeat here, relying on automated EVM can help in forecasting the potential effect of those risks on a current project so appropriate contingency plans can be developed that are ready to launch if and when needed.
Greater visibility into project status
Even though earned value management is a critical aspect to managing any construction project, it’s often underutilized. Without real-time visibility into the budget and schedule, it’s difficult to manage any large-scale capital project effectively. Turning to automation ensures that earned value management is performed continually throughout the project, rather than periodically or when curiosity strikes. Visibility into the story the metrics are telling at any given moment is delivered through cloud-based EVM dashboards. These can be configured to deliver alerts to the appropriate project team members when something begins impacting cost and/or schedule metrics. The benefit? Issues that otherwise would have gone undiscovered until too late can then be identified in the early stages or even before they happen through trends in EVM metrics, affording enough time to course-correct before the project goes over budget or a critical deadline is missed. Just as important, it can provide assurance of which phases are going according to plan.
Increased productivity
For construction companies that have relied on paper-based or computer spreadsheet-based EVM methods, they may not realize the full impact of the lost time it takes to compile the necessary data and then perform all the calculations, especially for large-scale, complex projects. And because it’s a tedious process, by the time the metrics are determined they’re likely out of date. That makes forecasting, cost containment and schedule adherence a bit more challenging. Automating the EVM process markedly increases productivity levels by eliminating the inefficiencies, discrepancies and errors that inevitably occur from manual data entry. The result is measurable in terms of saved manual hours and the associated costs.
Want to begin exploring a fully automated earned value management tool? One such option, InEight earned value management, produces that higher accuracy, predictability, certainty and confidence in the performance data that today’s capital projects require. A brief tour of this technology can show how it can deliver the kinds of insights that give more control over project performance.
