Anticipation and the Project Bottom Line

Projecting the Final Results

The big question everyone – including all project managers and stakeholders – wants to know is, “How long and how much.” That’s a reasonable and typical question; and it’s a question that resonates for the project as a whole, as well as every piece and subsection within a project.

When it comes to actually using the information collected when adopting Earned Value Management, you need to know the full value of that information. And a big part of the value of that is in getting a handle on what the final numbers will be – and then communicating that information to other project stakeholders.

Earned Value and Cost Performance IndexConstruction project software

When we discuss things like Earned Value (EV) and Cost Performance Index (CPI), while these are important indicators as to the current health of the project, they additionally serve as stepping stones to get to the bottom line numbers. The ultimate bottom line numbers are: Estimate At Complete and Variance.


Estimate At Complete is essentially the projected final cost. It’s ultimately what everyone wants to know, and it’s really what makes news. Whether you’re talking about the project as a whole or any section within the project, everyone wants to know, “What’s the final cost looking like?” Forecasting the results of a project not only enables a project team on any construction project to communicate project outcomes, it delivers the power to anticipate. Being able to anticipate what’s going to happen is the ultimate control weapon. It’s why we all check the weather before we leave the house in the morning – we want to be prepared.

The second key Bottom Line indicator is Variance. Variance is one of those words that sounds like a scary technical term, but really it isn’t. Variance simply represents how much over or under budget a project is. If you were to say, “We’re over budget”, the natural response would be, “How much over budget?”  If you were to respond with, “By 14%.” That’s stating the percentage of project cost variance.

Early Identification of Project Performance Issues

The important thing about earned value management is more than just knowing that you’re over or under budget: it’s also about uncovering that information early enough in the project so that you can apply corrective action to improve project performance towards a successful project result.  Additionally, the other key component of earned value tracking is understanding why the project is struggling with performance issues or cost overruns. And being able to pinpoint the areas that need to be addressed. For a complex project, details are imperative for uncovering the what, where and why of project performance issues.

Because you’re tracking a lot of information about your project, you should be able to easily drill-down into the details to uncover where the source of any performance issues are. The details of the corrective measures will depend on the nature of the issue and the project, but isolating the problem-source addresses a good chunk of the effort required in determining what corrective measures are needed.  When utilizing a construction project software solution that supports EVM, you’ll be able to defer all the calculations as well as all the heavy lifting of data gathering, reporting and streamlined workflows to support exactly what you need to do.  Earned Value Management is about smart management of successful projects.

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