Improving Project Performance Reporting: The Case for Earned Value Reporting

Councils across have recently adopted their 10-year Long-Term Plans (LTPs), encompassing billions of dollars in capital expenditure. These ambitious plans are set to drive substantial improvements in infrastructure, community services, and overall community wellbeing. However, the current state of performance reporting is varied and, in many cases, overly reliant on dollars spent as a proxy for project performance. This approach, while straightforward, does not provide an accurate picture of how projects are progressing in terms of scope, schedule, and cost efficiency.

The Current State: Dollars Spent as a Proxy

Most councils currently use the amount of money spent as the primary indicator of project progress. This method, though simple, can be misleading. For example, a project might be on budget but significantly behind schedule, or it might have met all spending milestones without delivering the expected value or outcomes. The focus on dollars spent does not capture these nuances, leading to incomplete or skewed assessments of project performance.

The Need for a More Comprehensive Approach

To address these challenges, a more comprehensive approach to performance reporting is needed. This is where Earned Value Management (EVM) comes into play. EVM is a project management technique that integrates scope, time, and cost parameters to provide a more accurate and holistic view of project performance. By moving to earned value reporting, councils can better understand how their projects are performing and make more informed decisions to keep them on track.

Introducing Earned Value Reporting

Earned value reporting involves several key metrics that collectively provide a clear picture of project performance:

• Planned Value (PV): The budgeted cost of work scheduled to be completed by a certain date.

• Earned Value (EV): The budgeted cost of work that has been completed by a certain date.

• Actual Cost (AC): The actual cost incurred for the work completed by a certain date.

• Cost Performance Index (CPI): A measure of cost efficiency, calculated as EV divided by AC.

• Schedule Performance Index (SPI): A measure of schedule efficiency, calculated as EV divided by PV.

By focusing on these metrics, councils can gain insights into not only how much has been spent but also how effectively and efficiently the projects are progressing.

Efficacy Group: Your Partner in Project Performance Improvement

At Efficacy Group, we specialise in helping organisations mature their project practices by implementing earned value reporting. We recommend starting with your top 10 to 20 projects, which typically represent a significant portion of your capital expenditure. This focused approach allows you to gain a clearer view of your portfolio performance and identify areas for improvement.

We will collaborate with you to establish robust EVM processes, train your project teams, and provide ongoing support to ensure successful implementation. By adopting earned value reporting, you will be better equipped to manage your projects, mitigate risks, and achieve your strategic objectives.

Conclusion

It is time to mature performance reporting. Moving beyond the simplistic measure of dollars spent to adopt earned value reporting can provide the insights needed to ensure project success.