Driver Trett Digest Issue 26 - Flipbook - Page 6
BENEFITS OF USE AND VALUE ADDED
With the use of EVM to measure project performance,
management can have more certainty of a project’s
position in terms of what work has been achieved
against the baseline and also what it has cost to
achieve that amount of work.
The value for money equation (CPI) gives a good
indication of whether the work done has been achieved
efficiently. Earned Value Management provides data
that can inform time and cost recovery action plans to
avoid or mitigate major cost and time overruns. If the
Change Control System behind EVM is set up correctly
it can help manage the risks associated with scope
creep throughout the project. If EVM is applied across
an organisation’s portfolio of projects, it can assist with
good governance of how progress and performance of
that portfolio is managed. With the cost management
capabilities of EVM, cash-flow can be measured
correctly and optimised if appropriate corrective actions
are taken.
EVM is also one of the industry recommended
methodologies for measuring loss of productivity, and
one of the most common approaches followed when
determining loss of productivity compensation via
construction claims, as we shall develop further in our
regional analysis. The following is an example of where
EVM has been very effectively used.
London 2012 Olympics is one of the great
examples of EVM usage to complete the
venues on time and to the set budget by the
U.K. government and the Olympic Committee.
At the Olympics it can be seen that the system
requirement to integrate several systems
like Primavera P6 planning tool with the cost
system through COBRA was fundamental
to the setup. The EVM system bene昀椀ted the
2012 Olympics with disciplined approach to
measuring performance against a plan, it was
a powerful tool for establishing Trends and
giving Early Warnings. It acted as an enabler
for Risk identi昀椀cation & implementation
of successful mitigation action plans, also
facilitated effective forecasting.5
A similar approach has been used at the
London Power Tunnels project where the
rewire of the capital electricity system used the
same EVM approach to manage and control the
project performance.
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EARNED VALUE AS A RECOMMENDED TOOL TO
MEASURE LOSS OF PRODUCTIVITY IN CLAIM
PREPARATION AND IN DISPUTE RESOLUTION
PROCEEDINGS
Loss of productivity is often one of the major causes
of additional costs incurred in a project. EVM is one of
the most common methods used to calculate loss of
productivity where a claim is made for the same.
Loss of productivity occurs if a contracting entity does
not reach its expected or achievable production rate. It
can be described for example as that entity producing
less than its anticipated output per hour of work. In
such instances, the entity is spending more effort per
unit of production than initially anticipated.
Two of the most internationally recognised advisory
bodies in the fields of construction and engineering
dispute resolution and project controls are the Society
of Construction Law (SCL) and the Association of
American Cost Engineers (AACE).
The SCL´s “Delay and Disruption Protocol 2nd Edition
2017"6 under its chapter “Methods of Disruption
Analysis” and the AACE´s “Recommended Practice
25R-03 – Estimating lost labour productivity in
construction claims"7 consider certain methodologies
to be used to measure/analyse disruption. Both bodies
recommend the use of project specific methodologies
in order to assess disruption. The SCL set out the
following methodologies which it considers appropriate.
Figure 3. SCL Methods of Disruption Analysis
5. Marshall, A. (2019). Olympic Delivery Authority* Earned
Value in the London 2012 Programme. Retrieved from
SlidePlayer: https://slideplayer.com/slide/15019922/
6. SCL´s “Delay and Disruption Protocol 2nd Edition 2017”
– Methods of Disruption Analysis.
7. AACE´s “Recomended Practice 25R-03” – Estimating
Lost labor productivity in Construction Claims.