Wondering what Earned Value is and how to apply it? Here's a presi that makes it simple

1. YOU
CLIENT

2. EARNED
VALUE
IN A NUTSHELL

3. IFRS15*
“…recognise revenue only when
performance obligations have been
fulfilled ie the customer has received
the benefits associated with the
performance obligation…”
*International Financial Reporting Standard by the International Accounting Standards Board

4. EARNED VALUE MANAGEMENT - Benefits
1. Improve entitlement
2. Reduced effort to:
- Prove progress/achievement/claim
- Get payment/variation
- Forecast cost to complete

5. EARNED VALUE MANAGEMENT - Definition
“…Measuring project performance and
progress in an objective manner…”

6. WHAT IS EARNED VALUE?
How much of the budget $ + time should have been spent, considering
the amount of work done so far
We don’t care about the route, the number of drivers or fuel
Just give us the lowest price to get it right 1st time
Optioneering
Outsource
“Being helpful”
Rework
A B
A B
Delay

7. WHAT IS EARNED VALUE?
How much of the budget and time should have been spent, considering
the amount of work done so far
10 drawings selling for AED 10 each
AED 10 effort
AED 100 effort
AED 20 rework
A B
A B
8dwgsdelivered
Fee = AED 100
Progress = 8 dwgs delivered = 80%
Earned value = AED 80
Effort = AED 130
Revrec = Earned value = AED 80
Variance = AED 50

8. WHAT IS EARNED VALUE?
How much of the budget and time should have been spent, considering
the amount of work done so far
Control scope.
Spot warning signs
before goes too far.
Seek variation
before burning
Budget for workshare
setup in bid or draw
down on contingency
Budget for contingency in the bid
A B
A BVariance = AED 50
Negotiate variation before
starting work + WIP limit
clause in contract
Negotiate
extension of time

9. BEST PRACTICE PROJECT CONTROL
Profitable project behavior How? Who? Tools?
Profitable contract conditions Contract review Commercial/legal team
Well defined baseline Deliverables list + schedule of activities Project Controls team
Budget accurately during bid
• Monitor project profit Margin (not NLM!!!!)
• Price project setup and control activities
• Price risk: Non BAU + things we can’t control
Previous bids / Estimating norms
Risk workshop
Work productively Cost performance index “speedo” (need min 1) Project controls team
Deliver on time Schedule performance index “speedo” (need min1 ) Project controls team
Anticipate, capture and communicate change
• ID what’s been requested outside of scope
• File evidence record of request
• Evaluate impact on cost + schedule
• Notify and agree with client
Project Lead:
• Weekly/daily change ID meet
• Notify Project Controls + commercial team
Agree variation/EOT before starting the work Prepare and agree well substantiated variation before starting work Commercial team + controls team