Effective Project Management

Section L Performance Measurement and Earned Value

Most clients need to know for certain when the project will finish and how much it will cost. Unfortunately, the more certainty that is required, the more detailed the information that will be needed.

The most commonly known technique of ‘milestone’ reporting merely tells you where you are a particular moment in time. Milestones are targets set as motivators. If you are late arriving at this milestone, it is too late to do anything about it. Consequently, we need to take corrective action before reaching the milestone. To do this, it is important to know where one is in the project and, once more, the more detail that will be required.

Measuring costs alone merely measures what has been spent, not what has been done. Similarly, measuring progress measures what has been done, not what it cost. We therefore need to combine both of these to measure performance.

Costs and programme in the design office are directly related to performance and productivity. A decline in productivity will cause a cost overrun. It will also mean that progress is not being achieved at the planned rate.

Serious progress measurement depends on good cost and time estimates. Your historical data will provide the relative magnitude of the various elements of your project to indicate where the big money is. The following are indicative for an oil and gas project⁹; other technologies will be different:

Design/Engineering including project management ...