Blog

29thMarch
How can you build control points in your project?

A few tips to help you on your way when setting up methods to control your projects for earned value, metrics, performance indicators and breakdown structures:

Earned value

It is relatively easy to keep track of your spent costs and hours. Comparing this to your planned spending will give you a rough idea of your progress. The problem is that some hours are burned on less important activities than others. 

For example, when determining the progress of your concrete works you will find that pouring a large slab of concrete takes much less effort than a large amount of small pours for equipment or walls. In other words: each spent hour you register is not producing the same amount of work in the field. 

You will want to give a weighing factor to your activities to get a more realistic indication of the work performed. This allows you to translate a sheet of reported hours into the actual work performed, also called the Earned Value. 

Metrics and performance indicators

Metrics provide a powerful means to measure the performance and health of your project. A wide range of metrics could be defined for every project. Metrics should encourage improvement, effectiveness and help you to spot possible risks and productivity losses before they happen. Compare metrics against an expected baseline that is either according to the planned progress. This will give an indication of the performance of the project. 

For example, a common metric is the Cost Performance Indicator (CPI). It is the ratio of your budget and the actual spending, indicating the over- or underrun of your project budget. When you measure this metric each time you setup a cost report, you get an idea of how the project is performing.

Another helpful metric is the Schedule Performance Indicator (SPI). It is the ratio of your budgeted work and the actual work performed (the earned value). This indicates how far you are ahead or behind schedule.

Breakdown structures

You will very likely encounter long lists of materials, commitments, actuals and other data that needs to be processed during execution. To ease the job of structuring this data, breakdown structures can help you. They allow otherwise flat data to be viewed under many angles. You are probably familiar with the Cost Breakdown Structure (CBS) or Work Breakdown Structure (WBS). It has become a common practice for a WBS to be a required project management tool on most contracts and the CBS is often used for cost accounting and reporting. 

Breakdown structures can also be used to filter out data to measure our earned value and metrics only over specific parts over the project. This way, we can focus on important parts that drive the schedule and cost of the total project. Even if the overall CPI and SPI are don’t show any deviations, this might be because of multiple positive and negative developments. By breaking down the scope and activities you achieve much more realistic performance indicators. 

Something to add to this article or got a question? contact@costengineering.eu