One of the most important things you will do as a project manager is cast a baseline for your project. A baseline is a clearly defined starting point for your project plan. It is a fixed reference point to measure and compare your project's actual progress against. This allows you to assess the performance of your project over time. Under the direction of project controls, the project manager needs to understand the basis and assumptions that will go into the baseline. The first step to casting a baseline is having a well-developed estimate that correctly aligns with the scope of the project. Proper estimates should not only include a cost component but also include quantities and work hours to achieve every line item. An estimate on a mega-project may have over 20,000-line items. Any error or omission in the approved estimate will have a knock-on effect on your project progress baseline. The estimate should be carefully reviewed as the scope becomes more defined.
In some of my work experiences, there has been some confusion about work hours, physical progress, installing quantities, and producing deliverables. Many companies and individuals will have different thoughts or procedures on how to measure physical progress. The support staff is completing valuable work to progress the project but may not be achieving physical progress to meet the requirements of completion. Specific disciplines and examples include:
Safety Personnel – Performing audits of work areas
Project Controls – Updating cost and schedule reports
Project Management – Leading project activities
Construction Management – Coordinating construction activities
Supply Chain – Issuing purchase orders and contracts
Warehousing – Issuing materials
Human Resources - Recruiting, onboarding, and training employees
Finance – Auditing and invoicing activities
Security – Patrolling the project site.
We can define some of the work that individuals perform as indirect while the work that achieves physical progress is known as direct work. Tracking and reporting the direct work allows for more transparency when reporting project progress. Adding indirect hours into the progress reporting may make your project appear better than it is.
When it comes to deliverables-based progress reporting, it is clear to most. Simply develop a list of deliverables along with the required effort hours to produce each. Define the “rules of credit” for each type of deliverable. Example: The 1st review of the document = 50% complete, 2nd review = 75% complete, and issued for use = 100% complete. Update the entire deliverable list periodically and sum the total to obtain the overall project progress. The most known example is engineering and the tracking of each design document.
For construction progress, it can become a little more confusing. Contractors achieve physical progress and make a profit by installing quantities. To install quantities, hours need to be spent at a certain rate. It is critical to track quantities installed and the hours that were expended to achieve the quantities. Tracking only quantities for project progress can lead to over-reporting and errors. It would not give the project manager an accurate view of where the project is. Take the following example:
An estimate or “pay” item for a contractor shows a budget of 7,118 direct hours to install 570M of pipe
After 3 weeks on the project, the contractor reports that they have installed all 570 meters of pipe. Upon inspection in the field, it was found that the pipe was erected but not connected, there were no supports installed, it has not been flushed or hydro tested, no punch-list has been conducted, and the QA/QC documents have not been received.
A set of milestone weightings can be established based on the complexity of the construction work component. A knowledgeable Project Manager will come back to the office and look at the equivalent length and hours earned based on the budget. Since all the pipe is erected only, the contractor has only earned an equivalent length of 131M and 1637 hours. The remaining work is substantial @ 77% and includes bolting up, installing supports, and testing.
It would be even worse if the contractor reported that they expended 2500 hours to complete this work. Productivity is defined as the efficiency of the production of goods or services expressed by some measure. The productivity factor (PF) is equal to the (earned hours /expended hours) = (1637/2500) = 0.65 and anything below a 1.0 PF will mean that we are not achieving the estimated rate. The project could take longer, and there could be claims from the contractor. The project manager must research the root cause of a bad PF. Simply tracking installed quantities for physical progress will not show the entire picture.
In closing, the project manager must understand the concepts of progress to ensure the project is on course to achieve the desired outcomes. This includes earned value calculations, equivalent length, performance factors, indirect work vs. direct work, expended hours, earned hours, and how they all work together to make proactive decisions. It is important to define the progress reporting methodology and understand what is behind the percentages before baselining. Those responsible for performing the work must also take an active role in the process.
Joe
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