Article #110 Using Earned Value Management to Monitor, Evaluate and Report Resources

Efficiency Involved in Delivering Capital Projects

For Engineering Consultants, General Contractors, EPC Contractors, Design-Build Contractors, Subcontractors and
other entities whom their project profitability depends on the efficiency of their planned resources, labor and non-
labor, in delivering the project’s scope of work. They need this information to enable them to monitor, evaluate and
report on any variances, the reasons that have caused those variances and the actual performance efficiency
achieved to date to enable them to implement the needed corrective measures to improve the efficiency of
resources for delivering the remaining scope of work to avoid resources overrun which will result in project loss.

The Earned Value Method (EVM) is one of the proven project management techniques used for monitoring,
evaluating and reporting the performance of deployed resources as well as provide a trusted technique to forecast
the expected resource hours at completion. The concept of EVM is based on managing four variables, the project
approved resource quantities (BAC), the planned resources quantities for scheduled scope of work (BQWS) also
known as Planned Quantity (PQ), the actual resource quantities for performed scope of work to date (AQWP) also
known as Approved Quantity (AQ) and the budget quantities of resources for performed scope of work to date
(BQWP) also known as Earned Value (EV)

Determining the Budget at Completion and Planned Resources Quantities for Scheduled Scope of Work (BQWS)

Usually Oracle Primavera P6 or MS Project will be used to plan to determine and plan the resources requirements
during the project’s execution period. Each project schedule activity will be loaded with the labor and non-labor
resources needed to deliver the scope of work associated with the activity. The total resources hours per activity is
the Budget at Completion (BAC) for that specific activity for which when all project schedule activities are summed,
the project’s Budget at Completion (BAC) will be calculated. The project schedule’s resources requirement will be
levelled to the extent possible to avoid having resources overload. Upon completion of this analysis, Oracle
Primavera P6 or MS Project will automatically generate the Planned Resources Quantities for Scheduled Scope of
Work (BQWS) at the end of each period which is usually be on weekly basis. The resources assignment report
displayed below is an example of this output report.
Budget Quantities of Resources for Performed Scope of Work to Date (BQWP)

The Oracle Primavera P6 or MS Project schedule needs to be updated on weekly basis to provide the status of all
activities that have started, progresses or completed. This will enable determining the physical percent complete of
those activities. By multiplying the approved percent complete by the resources Budget at Completion (BAC) value
for each activity, Oracle Primavera P6 or MS Project will calculate the Budget Quantities of Resources for Performed
Scope of Work to Date (BQWP) value.

This will enable the planning and scheduling tool to calculate the first earned value metric which is the Schedule
Variance (SV) which the difference between the Budget Quantities of Resources for Performed Scope of Work to
Date (BQWP) and the Planned Resources Quantities for Scheduled Scope of Work (BQWS). A negative Schedule
Variance (SV) value will indicate a delay in spending the planned resources which is not favorable as this might also
indicate a delay in the project schedule. In addition, the Schedule Performance Index (SPI) which reflects the
efficiency in spending the planned resources as of today will be also calculated by dividing the Budget Quantities of
Resources for Performed Scope of Work to Date (BQWP) over the Planned Resources Quantities for Scheduled Scope
of Work (BQWS). A Schedule Performance Index (SPI) value that is higher than one is considered favorable.

Actual Resource Quantities for Performed Scope of Work to Date (AQWP)

To ensure that the actual resource hours for the progressed activities are trust-worthy, auditable and traceable, the
actual resource hours need to be captured directly from the data source which could be a daily report for on-site
activities or timesheets for office related activities. Using a Project Management Information System (PMIS) like
PMWeb where those two modules are available by default, this can be achieved. But before achieving this, there are
steps that need to be done once. The first is to populate PMWeb Labor and Equipment Resource modules with the
resources that are used in the project schedule. Since those resources designation and types will be the same for all
projects managed by the organization, this task needs to be performed once.
The second requirement is to import the Oracle Primavera Project P6 or MS Project schedule activities into PMWeb
using the default project schedule function. This enable having the detailed project schedule activities list that will
be used in PMWeb Daily Report and Timesheets modules.

The above will ensure that PMWeb and the planning and scheduling software used has the same project name, WBS
levels, project schedule activities and labor and equipment resources designations. Using PMWeb Daily Report
module, the different project team members who are responsible to report the actual performance of work
completed on site, the timesheet tab in the daily report will be used to record the actual resource, labor and
equipment, hours spent on daily basis. Resource hours will be captured in detail, that is to say the start and finish
time. In addition, PMWeb allows assigning if those resource hours were regular working hours, overtime, weekend
or holiday charged hours. In addition, a cost breakdown structure can be assigned for each resource entry.
Nevertheless, the most important of all is that the project team members need to assign the project schedule
activities that those resource hours were spent against.
If the actual resource hours are for office activities, PMWeb Timesheet module will be used. On weekly basis, the
timesheet, which could be for a single resource or for all resources that are part of the project team, the actual
resource hours spend on daily basis will be reported. Each resource line entry will also have the relevant project
schedule activity assigned to it. The reported resource hours could be regular working hours, overtime hours,
weekend hours and/or holidays hours. A workflow will be assigned to the submission, review and approval the
reported actual resource hours.

Using a business intelligence reporting (BI) reporting tool like MS Power BI, for each project in the planning and
scheduling software, the list of project schedule activities, resources assigned to each activity and the relevant
Budget at Completion (BAC), Planned Resources Quantities for Scheduled Scope of Work (BQWS), Budget Quantities
of Resources for Performed Scope of Work to Date (BQWP), Schedule Variance (SV) and Schedule Performance Index
(SPI) values will be imported into the BI reporting tool. In addition, and for each project in PMWeb, the list of
activities and resources assigned to each activity along with Actual Resource Quantities for Performed Scope of
Work to Date (AQWP) captured in daily reports and timesheets will be imported to the same file in BI reporting tool.
Since the two imported tables share the same project name, activities number and resource names, the BI reporting
tool will automatically create the integration between the two tables even if they are coming from two different
data sources.
Using the same BI reporting tool, formulas will be created to calculate the additional earned value management
metrices. Those will include the quantity variance (QV) which is the variance between the Budget Quantities of
Resources for Performed Scope of Work to Date (BQWP) and the Actual Resource Quantities for Performed Scope of
Work to Date (AQWP). A negative value indicates that the actual hours spent for completing the relevant project
schedule activity exceeds what was planned for which is not favorable. Another related metric is the Quantity
Performance Index (QPI) which reflects the efficiency in using the project’s resources which will be calculated by
dividing the Budget Quantities of Resources for Performed Scope of Work to Date (BQWP) and the Actual Resource
Quantities for Performed Scope of Work to Date (AQWP). A Quantity Performance Index (QPI) value that is higher
than one is considered favorable.

In addition, the BI reporting tool will be used to calculate the remaining earned value metrics will include the
Estimate to Complete (ETC) which equals (BAC – BQWP) for which could be adjusted depending on the actual
performance for the elapsed periods. The adjustment will be captured in a field called Performance Factor (PF)
which can be based on the average QPI performance value for the last three periods, a combination of SPI and QPI
or any other factor that can reflect the performance trend for the remaining project period. The PF can be specific to
an activity, group of activity or remaining project activities. The Estimate to Complete (ETC) which equals (BAC –
BQWP) will be adjusted by the Performance Factor (PF) to calculate the adjusted Estimate To Complete. The
Estimate at Completion (EAC) which equals (AQWP + ETC Adjusted), To Complete Quantity Performance Index (TQPI)
which equals (BAC – BQWP) / (EAC – AQWP) and Variance at Completion (VAC) which equals (BAC – EAC).

The report displayed below is an example of a report that displays the earned value metrics detailed above for each
project schedule activity. The data can be report by resource, WBS level or any other field used in the report. The
report provides a summary of the earned value metrics for the displayed activities which could vary depend on the
selected activities and resources. In brief, the report can be designed in the desired form and format to meet the
reporting requirements those who need to analyze, monitor, evaluate and report the resources performance
efficiency on the project, program of the projects’ portfolio managed by the organization.
About the Author
Bassam Samman, PMP, PSP, EVP, GPM is a Senior Project Management Consultant
with more than 35-year service record providing project management and controls
services to over 100 projects with a total value in excess of US $5 Billion. Those
projects included Commercial, Residential, Education and Healthcare Buildings and
Infrastructure, Entertainment and Shopping Malls, Oil and Gas Plants and Refineries,
Telecommunication and Information Technology projects. He is thoroughly
experienced in complete project management including project management
control systems, computerized project control software, claims analysis/prevention,
risk analysis/management (contingency planning), design, supervision, training and
business development.

Bassam is a frequent speaker in topics relating to Project Management, Strategic

Project Management and Project Management Personal Skills. Over the past 35 years he has lectured at more than
350 events and courses at different locations in the Middle East, North Africa, Europe and South America. He has
written more than 250 articles on project management and project management information systems that were
featured in international and regional magazines and newspapers. He is a co-founder of the Project Management
Institute- Arabian Gulf Chapter (PMI-AGC) and has served on its board of directors for more than 6 years. He is a
certified Project Management Professional (PMP) from the Project Management Institute (PMI), a certified Planning
and Scheduling Professional (PSP) and Earned Value Professional (EVP) from the American Association of Cost
Engineers (AACE) and Green Project Management (GPM).

Bassam holds a Masters in Engineering Administration (Construction Management) with Faculty Commendation,
George Washington University, Washington, D.C., USA, Bachelor in Civil Engineering – Kuwait University, Kuwait and
has attended many executive management programs at Harvard Business School, Boston, USA and London Business
School, London, UK.