Maximize Efficiency With Earned Value Management Systems

Earned Value Management (EVM) has emerged as a fundamental management tool to help construction executives and field teams monitor project progress, forecast performance, and make data-driven decisions.

In this comprehensive article, we will explore Earned Value Management Systems (EVMS) in the construction industry. We’ll cover what EVM is and some of its key components and benefits. Then, we’ll take a closer look at the technology available to help ensure construction project managers are utilizing their EVMS to the fullest of its capabilities.

Understanding Earned Value Management (EVM)

Earned Value Management is a project management technique that combines scope, schedule, and cost measures to assess project performance and predict its future outcomes. As the Project Management Institute (PMI) describes, EVM “is an ‘early warning’ Project Management tool that enables managers to identify and control problems before they become irrecoverable.”

EVM tracks a project's progress by quantifying the value of work completed (Earned Value). It compares the planned value (Planned Value, or PV) to the actual cost incurred (Actual Cost, or AC).

By comparing these metrics, EVM provides a comprehensive view of a project's performance, allowing project managers to assess whether it's progressing on time and within budget. Moreover, EVM's derived indices, such as the Cost Performance Index (CPI) and Schedule Performance Index (SPI), offer quantifiable insights into cost and schedule efficiency, aiding project teams in making data-driven decisions and taking corrective actions as needed.

How to Implement an Earned Value Management System

Before construction begins on site, the construction team should craft the project plan, which includes the schedule and budget. Dollar amounts should be assigned to deliverables and activities — this is known as the Budgeted Cost for Work Scheduled (BCWS). The critical path, with clear milestones, should be defined.

By establishing these measurables before work begins, a project baseline is established. From a cost perspective, the financial baseline for the project is known as the Budget at Completion (BAC).

Once the project work begins, executives can conduct an earned value analysis, which allows them to track the project baseline relative to performance on site. The following is an overview of the information that project teams can obtain via their EVMS:

• Cost Performance Index: The CPI is a ratio of EV to AC, providing insight into cost variances and whether the project is under or over budget.
• Schedule Performance Index: SPI measures the project's progress in terms of schedule variances, indicating whether the project is ahead or behind schedule.
• Estimate at Completion (EAC): An estimate of the total cost required to complete the project based on current performance. It can be calculated in various ways, such as EAC = BAC / CPI or EAC = AC + (BAC – EV).
• Budgeted Cost for Work Performed (BCWP): The value of the work that has been completed according to the project's budget and schedule at a specific point in time. This reflects the original anticipated project budget at certain points in time.
• Actual Cost of Work Performed (ACWP): The total cost incurred to complete the work up to a specific point in a project, providing a real-time measure of project costs.

By actual versus budgeted metrics, stakeholders can adjust both cost and the project schedule based on the amount of work remaining.

The Benefits of EVM in Construction

Implementing an EVM system in construction offers several significant advantages from both a schedule and cost management perspective. Let’s take a closer look at the benefits associated with implementing an EVMS.

Enhanced Project Visibility

EVM provides a clear, quantifiable picture of a project's performance. Executives and field teams can quickly assess whether the project is meeting its objectives in terms of cost and schedule, allowing for timely intervention if necessary.

Early Issue Identification

By analyzing CPI and SPI, construction professionals can identify cost and schedule deviations early in the project lifecycle. This early warning system allows for proactive problem-solving, minimizing the risk of delays and cost overruns.

Informed Decision-Making

EVM equips decision-makers with valuable insights. They can allocate resources efficiently, make informed trade-offs, and optimize project strategies based on real-time data.

Accountability and Benchmarking

EVM provides a basis for evaluating the performance of contractors, subcontractors, and team members. The EVMS methodology allows teams to set performance benchmarks and hold stakeholders accountable for their contributions to the project.

Avvir's Innovative Offerings

While EVM is a powerful tool for construction project management, its effectiveness can be further enhanced by integrating advanced technologies. Avvir, a leader in construction technology, offers cutting-edge 5D offerings that take EVM and construction analytics to the next level.

In construction management, 5D refers to the integration of three-dimensional (3D) models, schedule (4D), and cost (5D) information. Avvir's 5D offerings leverage this integration to provide a comprehensive view of construction projects, enhancing decision-making and project control.

Avvir's 5D features and benefits include:

• Accurate as-built data: Avvir utilizes state-of-the-art laser scanning technology to capture precise as-built data. This data is compared to the Building Information Model (BIM) to identify discrepancies and deviations in real-time.
• Automatic progress tracking: Avvir's system automatically tracks construction progress by comparing 360 photos and videos or 3D scans to the BIM model. This allows executives and field teams to monitor progress with unparalleled accuracy.
• Cost and schedule integration: Avvir's 5D offerings seamlessly integrate cost and schedule data, allowing for real-time cost performance analysis and schedule adherence checks. This enhances the EVM process by providing a holistic view of a project's performance.
• Change detection and management: Avvir's technology detects changes in the project's scope, enabling quick identification of scope creep or unexpected deviations from specific work packages. This proactive approach helps prevent costly rework and delays while also allowing teams to manage scope revisions more efficiently.
• Data-driven decision support: Avvir's data-driven insights enable executives and field teams to make proactive decisions that positively impact project performance.

Combining EVM and Avvir's 5D Offerings

The synergy between Earned Value Management Systems and Avvir's 5D offerings creates a dynamic framework for construction project management. By integrating these two powerful tools, construction professionals can achieve total project control, visibility, and efficiency. Here are the ways in which EVM and Avvir's 5D solutions work together:

• Real-time progress assessment: Avvir's 5D system provides real-time updates on construction progress by comparing as-built data to the BIM model. This data feeds directly into the EVM System, ensuring that Earned Value is accurately calculated based on the latest project status.
• Cost and schedule integration: EVM relies on the integration of cost and schedule data, and Avvir seamlessly provides this integration through its 5D offerings. Executives can monitor cost performance and schedule adherence in real time, enabling timely adjustments to keep the project on track.
• Change management: When Avvir's 5D system detects changes in the project scope, EVM can assess the impact of these changes on the Earned Value and schedule performance. This proactive approach allows for better risk management and change order negotiation.
• Data-driven decision-making: Avvir's 5D data enhances the EVM process by providing executives with comprehensive insights into project performance. These data-driven insights enable executives to make informed decisions to optimize resources, mitigate risks, and improve project outcomes.
• Accurate forecasting: The combination of EVM and Avvir's 5D offerings allows for more accurate forecasting of project performance and completion. This enables executives to identify potential issues early and take corrective actions to ensure project success.

Improve Your Project With Earned Value Management Systems

An Earned Value Management System is a valuable tool for construction teams, offering insights into cost and schedule performance. When integrated with Avvir's innovative offerings, EVM becomes a dynamic and powerful tool that provides unprecedented control and visibility into construction projects.

Avvir's offerings, with accurate as-built data, real-time progress tracking, cost and schedule integration, change management capabilities, and data-driven decision support, enhance the EVM process, making it more responsive to the dynamic nature of construction projects.

By combining EVM and Avvir's 5D offerings, construction executives and field teams can tackle challenges head-on, increasing the likelihood of the successful and efficient completion of complex construction projects. Request a demo to learn more about how Earned Value Management Systems and Avvir can revolutionize your next construction project.

To learn more about Avvir's offerings check out one of our latest blogs on automating as-built models.