Construction Audit – Using EVM in Monthly Progress Reports
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Speaker : DENISE CICCHELLA
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When : Thursday, November 21, 2024
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Time : 01 : 00 PM EST
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Denise Cicchella is a recognized expert in construction audit, protecting owners from the overpayment of construction costs due to error, negligence or fraud.
Dense is a Certified Internal Auditor, Certified Fraud Examiner, Certified Construction Auditor, Project Management Professional and Fellow of the Life Management Institute. She holds an MBA in International Business from Fairleigh Dickinson University and a BBA in Accounting from Loyola University. She is the Founding President of the New York/New Jersey Chapter of the National Association of Construction Auditors. She has audited and audit teams for small construction project as well as multi billion dollar projects.
She is an experienced trainer and can often be seen teaching domestically and internationally. She has written 3 books on construction audit.
Earned Value Management (EVM): Understanding and Implementation
Earned Value Management (EVM) is a powerful project management technique used to measure and track project performance against the planned schedule and budget. It integrates scope, schedule, and cost metrics to provide a comprehensive view of a project's health and progress. By analyzing key metrics such as Planned Value (PV), Earned Value (EV), and Actual Cost (AC), project managers can assess project performance, identify deviations from the plan, and make data-driven decisions to keep the project on track.
- Key Concepts of Earned Value Management (EVM):
- Planned Value (PV): Planned Value, also known as Budgeted Cost of Work Scheduled (BCWS), represents the authorized budget for the planned work scheduled to be completed at a specific point in time. PV is typically expressed in terms of cost and is used as a baseline for measuring project performance.
- Earned Value (EV): Earned Value, also known as Budgeted Cost of Work Performed (BCWP), represents the value of the work actually completed as of the reporting date. EV is calculated based on the progress of completed tasks and is a measure of the project's accomplishments.
- Actual Cost (AC): Actual Cost, also known as Actual Cost of Work Performed (ACWP), represents the actual costs incurred for the work performed up to the reporting date. AC includes all direct and indirect costs associated with the project, such as labor, materials, equipment, and overhead.
- Implementing EVM into Monthly Progress Reports:
- Status of Work Completed: The monthly progress report should provide a summary of the work completed during the reporting period, including milestones achieved, tasks completed, and deliverables produced. This section should include a comparison of the planned work (PV) versus the actual work completed (EV), highlighting any variances and the reasons for deviations.
- Schedule Performance: The progress report should assess the project's schedule performance by comparing the planned schedule (PV) with the actual progress (EV). This analysis can be presented using metrics such as Schedule Performance Index (SPI), which measures the efficiency of schedule performance relative to the planned schedule. SPI values greater than 1 indicate ahead of schedule performance, while values less than 1 indicate behind schedule performance.
- Cost Performance: The progress report should evaluate the project's cost performance by comparing the planned budget (PV) with the actual costs incurred (AC). This analysis can be presented using metrics such as Cost Performance Index (CPI), which measures the efficiency of cost performance relative to the planned budget. CPI values greater than 1 indicate under budget performance, while values less than 1 indicate over budget performance.
- Forecasting: The progress report should include forecasts for project completion based on current performance trends and extrapolated estimates. Forecasting can be performed using metrics such as Estimate at Completion (EAC) and Variance at Completion (VAC), which provide insights into expected final costs and schedule duration based on project performance to date.
- Root Cause Analysis: The progress report should identify the root causes of any schedule or cost variances and outline corrective actions taken or planned to address them. This analysis helps management understand the reasons behind deviations from the plan and provides insights into improving future performance.
- Risk Management: The progress report should highlight any emerging risks or issues that could impact project performance and outline mitigation strategies to address them. This proactive approach to risk management helps prevent potential disruptions and ensures project success.
- Narrative Summary: The progress report should include a narrative summary that provides context, explanations, and insights into the project's overall performance. This section allows project managers to communicate key findings, trends, and recommendations to management in a clear and concise manner.
- Integration with Audit Reports: Incorporating EVM into audit reports enhances the effectiveness of project oversight and accountability. Audit reports should assess the adequacy of EVM implementation, compliance with established policies and procedures, and the accuracy and reliability of reported data. Key areas of focus in audit reports include:
- Compliance with EVM Guidelines: Audit reports should evaluate the extent to which project management practices align with EVM guidelines and standards, such as those outlined by the Project Management Institute (PMI) and the Defense Contract Management Agency (DCMA). This assessment ensures that EVM is implemented consistently and effectively across projects.
- Accuracy of EVM Data: Audit reports should assess the accuracy and reliability of EVM data, including PV, EV, and AC calculations. This involves reviewing supporting documentation, such as project schedules, cost estimates, and financial records, to validate the integrity of reported data and identify any discrepancies or inconsistencies.
- Effectiveness of Internal Controls: Audit reports should evaluate the effectiveness of internal controls related to EVM implementation, including policies, procedures, and processes for data collection, analysis, and reporting. This assessment helps identify weaknesses in internal controls and areas for improvement to enhance the reliability and accuracy of EVM data.
- Risk Management and Compliance: Audit reports should review the effectiveness of risk management practices in identifying, assessing, and mitigating risks related to project performance and EVM compliance. This includes evaluating the adequacy of risk management processes, controls, and documentation to ensure compliance with regulatory requirements and organizational policies.
In conclusion, implementing EVM into monthly progress reports enhances project management effectiveness and transparency by providing stakeholders with timely and accurate insights into project performance. By integrating EVM into audit reports, organizations can ensure compliance with established guidelines and standards, enhance internal controls, and mitigate risks associated with project delivery. EVM, when effectively implemented and monitored, facilitates informed decision-making, improves project outcomes, and enhances overall organizational success.
Areas Covered
- To inspect what formulas exist in project management methodology to help you get a true picture of project progress.
- To analyze how to appreciate the information project management could/should supply.
- To recognize the fundamental principles one needs to have in place to make EVM work.
- To realize how powerful the EVM tool is in managing your projects.
- To determine the performance and cost of a project.
- Course Level - Intermediate
Who Should Attend
Internal Auditors, Construction Auditors, PMPs, Construction Controllers
Why Should You Attend
Students should attend a course on Earned Value Management (EVM) and construction project reporting for several compelling reasons. Firstly, EVM is a powerful project management technique widely used in the construction industry to monitor and control project performance effectively. By attending this course, students will gain a deep understanding of EVM principles and methodologies, equipping them with valuable skills that are highly relevant to construction project management.
One of the key benefits of EVM is its ability to provide accurate and timely insights into project progress, allowing project managers to identify potential issues early and take corrective actions proactively. Through EVM, students will learn how to measure and analyze project performance using metrics such as Planned Value (PV), Earned Value (EV), and Actual Cost (AC). They will understand how to calculate and interpret these metrics to assess schedule and cost performance, forecast project outcomes, and make data-driven decisions to optimize project delivery
Moreover, EVM facilitates effective communication and collaboration among project stakeholders by providing a standardized framework for reporting project performance. Students attending the course will learn how to create clear and concise project reports that communicate key performance indicators, trends, and variances to project sponsors, clients, and team members. Effective project reporting is essential for building trust, managing expectations, and maintaining transparency throughout the project lifecycle.
Knowing that EVM exists and how to calculate the values is important but this class will take it to the next step and show how EVM can be used to answer questions that are relevant to senior audit management and senior management.
In the construction industry, where projects often involve complex schedules, multiple stakeholders, and tight budgets, EVM can be particularly valuable in ensuring project success. By attending the course on EVM and construction project reporting, students will be better prepared to navigate the challenges of construction project management, mitigate risks, and deliver projects on time and within budget.
Furthermore, EVM aligns with industry best practices and standards, such as those outlined by the Project Management Institute (PMI) and the Construction Industry Institute (CII). Students who understand EVM principles and techniques will be well-positioned to pursue professional certifications such as the Project Management Professional (PMP) or Certified onstruction Manager (CCM), enhancing their credibility and marketability in the job market.
Lastly, attending a course on EVM and construction project reporting offers students a valuable opportunity to learn from an industry expert and gain practical insights from real-world case studies and examples. The interactive nature of the course encourages collaboration, critical thinking, and problem-solving skills development, preparing students to excel in their future roles as construction project managers or professionals in related fields
In conclusion, by mastering EVM principles and techniques, students will gain valuable skills that are essential for effectively managing construction projects, delivering results, and advancing their careers in the dynamic and competitive construction industry.
Topic Background
Earned Value Management (EVM) is a project management technique used to measure project performance and progress by integrating scope, schedule, and cost metrics. It provides a comprehensive view of a project's health by comparing the planned work with the actual work completed and the costs incurred. EVM uses key metrics such as Planned Value (PV), Earned Value (EV), and Actual Cost (AC) to assess project performance and forecast future outcomes. By analyzing these metrics, project managers can identify deviations from the plan, assess project efficiency, and make informed decisions to keep the project on track.
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$160.00
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