(EVM-3389) Tiered Earned Value Assessments and Ramifications: Questioning the Achieved Quality for New-Technology Products
Author(s)/Presenters(s): Dr. Mohamed-Asem U. Abdul-Malak; Farah S. Demachkieh; Abed El Khalek T. Jaber
The inability to meet the specified quality requirements for the executed work would typically result in temporarily withholding a part of a contractor's requested interim payment. In today's projects where specialty-work subcontracting is very common, if not necessary, the impact of withholding such sums further propagates down the supply chain, thereby affecting the cash inflow of even the suppliers of construction materials and products. That said, this paper aims at investigating the effect of payment withholding practices on the integrated time-cost earned value analyses when performed at the various supply-chain tiers starting with the project owner, down to the general contractor, his subcontractors, and ultimately the concerned suppliers. In this regard, the followed methodology involves a thorough analysis of a recent dispute case dealing with tiered payment withholdings affecting multiple international participants engaged in the construction of a major shopping mall project. The payment withholding was primarily in connection with the questioned quality of the installed new-technology glass panels, necessitating forensic testing and analysis. The interaction of these conditions with a persistent requirement to maintain planned progress rates is fully investigated, and the difficulties that arose in managing the glass-related procurement plans are highlighted.
(EVM-3396) Effective EV Measurements under Owners' Payment Facility for Materials Shipped or Delivered
Author(s)/Presenters(s): Farah S. Demachkieh; Dr. Mohamed-Asem U. Abdul-Malak
The advancement by owners of payments for plant and materials that are yet to be incorporated in the works, but they are either on the way to the site or delivered and properly stored on site, is not untypical. Such payment facility is aimed at minimizing the contractor's financing costs during the course of work execution. However, it would typically lead to incompatibilities between the quantities used in assessing the total value earned to date and those that are reflected in the construction time schedule updates generated by the contractor. To this end, this paper aims at investigating the implications of such owners' payment facility on the computation of the effective earned value. The adopted methodology involved (1) examining the relevant payment provisions under standard forms of contracts, (2) developing the respective scenarios for the earned value analyses that may be conducted by the project owner when payment facility for materials shipped or delivered is adopted, and (3) using data from a real-world project to validate the practicability of the hypothesized scenarios. The work contribution lies in offering industry practitioners a framework under which the application of such credit-like facility may properly be exercised and administrated.
(EVM-3425) Developing & Implementing Earned Value Analysis Over Engineering Services on a Refinery CAPEX Portfolio
Author(s)/Presenters(s): Pat M. Kelly
In the 21st century, the downstream oil and gas industry has been impeded by poorly planned and delivered engineering services, experiencing high rework coupled with poor owner oversight of
engineering delivery. Front End Engineering and Design (FEED) costs have increased, schedule delays have soared, and quality has decreased, with little understanding of the drivers and resulting impact on construction readiness. As the price of oil has fallen, owners have shifted focus to reducing business support for project controls staffing, often resulting in a lack of visibility into engineering progress and the resultant impact to construction schedules and delivery methodologies. Projects now suffer from a lack of application of the basic premises and practices as defined by AACE International's Recommended Practices and Total Cost Management (TCM) Framework.
Implementing earned value management and analysis across a large'scale CAPEX portfolio faces challenges in garnering the required business support to implement fit for purpose solutions. Fear of the unknown, coupled with high expectations for project delivery often leaves owners unable or unwilling to change project delivery processes and tools.
Through the implementation of owner'managed earned value analysis in the FEED process, projects experience greater transparency from engineering service providers, often resulting in reduced cost, reduced schedule slippage, and better preparedness for construction. As data is accumulated, owners are better prepared to predict engineering costs, manage and select engineering vendors, and identify areas for continuous improvement. This paper will use a recent portfolio example to describe how one owner improved the as'is organizational state to current capability through implementation of a right'sized Earned Value Management system.
(EVM-3431) Definite Earned Schedule and Construction Project Completion Forecasting
Author(s)/Presenters(s): Rick Stassi
Forecasting a reliable and reasonable completion date for a delayed construction project is possible by calculating a definite Earned Schedule date. With a schedule performance assessment, consisting of planned and earned values, precise Earned Schedule is derived. It can be shown that in instances where a Contractor cash-flow is not available, estimating a planned cash flow can be an effective substitute. After completing the Earned Value with Earned Schedule analysis, a forecast with a solid basis is concluded. Establishing Earned Value metrics with a precise Earned Schedule, leads to a forecast calculation that is both defensible and reasonable for understanding the health of the project work plan. Earned schedule also serves as a viable check against optimistic schedule completion dates while accounting for historic production levels.
(EVM-3443) Application of Earned Schedule: a Highway case study
Author(s)/Presenters(s): Ajay Raman; Sevcan Agdas
The Earned Schedule (ES), an extension to the Earned Value Management System (EVMS),provides a better outlook by transforming the schedule performance metrics to be expressed in terms of time. This is a clear benefit over the traditional EVMS approach to schedule management as shortcomings of cost based schedule management is well-documented. This case study focuses on a portion of the construction of a multi lane tolled highway section to highlight benefits of ES method. It uses ES performance metrics in order to calculate the impact of a major weather event and compares the results with the 'as built' schedule information. The time associated with the suspended work and the time spent for re-work was inserted into the schedule before this analysis was carried out. The comparison is also extended to the schedule metrics calculated using the EVMS to further support the relevance of ES.
(EVM-3456) You Can't Get There From Here. Real World Application of RP 80R-13: Estimate at Completion (EAC)
Author(s)/Presenters(s): James E. Krebs, PE CCP FAACE; Brennan P. Cagney, CCP
Have you seen a project experiencing poor Earned Value performance yet the team continues to report a forecast on target due to improvements expected from mitigation efforts? The inability to recover may happen sooner than you think due to the compounding effect of poor performance. Recommended Practice 80R-13 shows several accepted formulas to determine Estimate at Completion (EAC). This paper applies actual project data to the various EAC methods at points in time, which will yield a comparison of the varied project outcomes. Not choosing the correct EAC calculation at the appropriate time, will guarantee your project 'can't get there from here.'
(EVM-3478) The theory and use of the pending result technique and the measured mile by earned value for early identification of deviations in costs and time in construction contracts.
Author(s)/Presenters(s): Manuel Antonio Cano Urrego; Stephania Grajales
The use of the earned value technique in project management has been widely disseminated despite the challenges related with data collection and processing and accounting control. However, from the point of view of the executive control of a project, it is essential for a contractor to have tools that synthesize in a reliable way the general status of the contract involving the variables of income, costs, margin, changes and progress and productivity. The techniques of the pending result and the measured mile by earned value provide concrete results and of extraordinary utility for the executive administration of a construction project, so that early deviations and changes that can significantly affect the Contract and the expected margin, could be promptly identified. This paper presents those tools in a very comprehensive but simple way, including practical examples of application and results.
(EVM-3508) Analysis of the Earned Schedule Forecasting Accuracy
Author(s)/Presenters(s): Keight Charles Navarro Hurtado, PSP
The Independent Estimate at Completion (time-based) (IEAC(t)) is an Earned Schedule (ES) method that allows it to estimate the duration of a project according to the information available in a period of time. The purpose of this paper is to know which of the 02 equations of the IEAC(t) is more accuracy to estimate the final duration of a project. In the analysis the average absolute percentage error, completed percentage, seriality of the network diagram and Productivity Index (PI) have been used to evaluate the accuracy of both equations. In the study of 08 real projects with early and late completion resulted that 05 projects were more accurate with the equation of the IEAC(t) where the PF=1 and 02 projects resulted with the equation where the SPI(t) is used. The conclusion on the difference where el IEAC(t) with PF=1 has 05 projects and the IEAC(t) with SPI(t) has 02 projects is resulted of the days of delay in the project, it means that while more delay occurs in a project the IEAC(t) equation with the SPI(t) has less error and with the equation of the IEAC(t) where the PF=1 its error rises, it is observed in the calculations.
(EVM-3517) USER DEFINED EARNED VALUE MANAGEMENT SYSTEM: WHAT ARE THE USER NEEDS?
Author(s)/Presenters(s): Charles F. Lappenbusch, Jr. CCP EVP PSP
Earned value management is one of the most widely used project cost control methodologies, and if used correctly, is one of the most accurate. The earned value processes associated with data acquisition, data processing, and project reporting can vary significantly from one organization to another as a result of accounting and other internal requirements as well as that of client requirements. Therefore, it is important to create an earned value management system that is flexible and meets the needs of all project stakeholders. This paper proposes a framework for developing a User Defined Earned Value Management system. It outlines the methodology for identifying the user's specific requirements to enhance their project and financial controls. It is based upon solid earned value concepts and AACE's Recommended Practices (RPs) [AACEÂ® International Recommended Practice No. 10S-90 COST ENGINEERING TERMINOLOGY TCM Framework: General Reference (All Sections), (2019)]; as well as the Total Cost Management Framework [Total Cost Management Framework, An integrated Approach to Portfolio, Program and Project Management, Second Edition, (2015)].
(EVM-3520) Effectiveness of the Earned Schedule vs the Earned Value
Author(s)/Presenters(s): Keight Charles Navarro Hurtado, PSP
The earned value method (EVM) is a method that measures the amount of work actually made in a project. The purpose of this paper is to know about the technique of the earned schedule (ES) as a tool additional to manage the schedule in construction projects, see its effectiveness compared with the EVM and determine the amount of delay when the project does not finish at the planned date. The results on a real case have showed a difference between both, when the project has finished the SV=0 of the EVM. This represents the EV=PV=BAC and the SV(t) of the ES represents a negative value it indicates the amount of delay in the project meanwhile when the project has also finished the SPI=1 it indicates that the EV=PV=BAC and the SPI(t) of the ES can have different values from 1, this represents the rate of progress per period towards the completion. Another difference is the SPI trend towards 1, which starts at 2/3 of the progress. The calculations made of the ES(t) on the SV and SPI are more reliable than the EVM and its effectiveness of the ES(t) is observed in the projects with late completion.
(EVM-3544) Earned Schedule as a tool to forecast indirect costs
Author(s)/Presenters(s): Mostafa AbdelRazik, EVP PSP
Earned Value Management (EVM) is utilized world-wide to measure work progress, compare it against a baseline and evaluate cost and schedule variances. Furthermore, EVM is used to 'predict the future' by assuming a future performance, to generate an Estimate at Completion (EAC) for a project.
Applying EVM to calculate EAC has been discussed in many literatures. These literatures detailed the process, requirements and steps needed to have an adequate EV. However, there was not enough mention of indirect costs and how they can be evaluated. Estimating cost at completion for indirect costs can be cumbersome, especially that indirect costs are directly linked to time and not cost performance. Since EVM's schedule performance indicators are not a true reflection of a project's schedule performance, especially at late stages of the project where there is a slight to no change to the planned value. Earned Schedule technique was deemed to provide a better indication of a project's schedule performance. Moreover, Earned Schedule can provide a more accurate estimate of the expected finish date of a project.
This paper will discuss the use of Earned Schedule technique as a tool to predict the estimate at completion of indirect costs.