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08 Mar

Earned Value Analysis 101: 3 Highlights for Construction Executives to Control Costs

EVENTS

Earned Value Analysis 101: 3 Highlights for Construction Executives to Control Costs

March 8, 2022 • 7 min read

Dozens of construction pros watched live this past December as Dr. John Killingsworth of Colorado State University gave a ProNovos webinar titled Earned Value Analysis 101: Controlling Costs by Measuring Performance.” 

The audience included CFOs, VPs and other c-suite executives along with schedulers, controllers and project and operations managers, to name a few. For those who missed the webinar (or just want to revisit the content) below are three highlights from the 30-minute event.

4 Key Takeaways on Schedule Performance Index

In his role at CSU’s Department of Construction Management, Dr. Killingsworth teaches classes on construction finance at all levels, working closely with graduate students on leading-edge construction data research. The industry veteran (he worked as a PM for two decades) also trains construction pros on topics such as managerial accounting and project-level cash flow. He serves as an adviser to CFMA’s benchmarking initiative and frequently works to educate members of CFMA and AGC chapters around the country.

Dr. Killingsworth opened the webinar by offering some basic definitions of Earned Value Analysis (EVA) and why contractors should perform it. “It is basically a project-level cost-control instrument,” he said. “You’re performing a comparative analysis between your performance and your plan.”

His rundown of how to perform an EVA starts at 6:05 in the webinar. That overview includes the basics of using a Schedule Performance Index (SPI) to measure variances between planned schedules and actual performance. (Throughout the webinar, Dr. Killingsworth uses ProNovos dashboards populated with data from a sample construction project to illustrate EVA-related concepts.)

4 Key Takeaways for Cost Performance Index

At 16:18, the professor covers the next useful tool—the Cost Performance Index. His wrap-up of the “4 Key Takeaways for CPI” is below.

As Dr. Killingsworth notes, crunching the numbers on the likes of SPI and CPI is a cost-control exercise, not a cost-reporting exercise. “We don’t want to wait until after the project is complete to find out how we’re doing,” he said. “That doesn’t allow us to make any changes as we go.”

Using ProNovos for Earned Value Analysis

And that speaks to the professor’s final point—the efficiency of cloud-based construction data analytics platforms for keeping projects on time and on budget. It’s a far cry from waiting until the end of the month, processing invoices, building spreadsheets and then looking backward at a 10-day-old snapshot of your project performance.

“Many of us are using Excel to chart things,” Dr. Killingsworth observes. “But what that does is create a manual process of reporting. When you’re using a tool like ProNovos, there’s some automation. It allows you to actually view the data live.”