Crossrail Approach to Earned Value
Author: Julian Bartlett
Publication Date: 26/02/2016
The aim of the Crossrail performance measurement regime was to provide a comprehensive, consistent, timely and reliable view of the programme’s performance that predicted performance, and triggered management action to positively influence the outcome. Earned Value (EV) was one indicator of performance and was used in the context of other meaningful indicators of performance. The performance measurement regime was designed & developed to draw on the granular performance data provided at control account level. A data warehouse was implemented to capture all performance data to act as the ‘single source of truth’ and electronic dashboards were used as a business intelligence tool. These tools enhanced the quality of data and encouraged proactive behavioural change.
Key learning points include the importance of defining the management information requirements as soon as possible in order that programme controls can be configured and implemented appropriately and efficiently. The importance of a ‘single-source-of-truth’ for performance data and the use of a ‘data warehouse’ enables informed decision making, rather than expending effort on assuring or testing the integrity of data, or undertaking ad hoc and time consuming supplementary data analysis.
This paper is applicable to any project or programme designing or implementing Earned Value techniques.
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Introduction and Industry ContextOn Crossrail, the performance measurement regime was designed & developed to draw on the granular performance data provided at control account level. A data warehouse was also implemented to capture all performance data to act as the ‘single source of truth’ and electronic dashboards were used as a business intelligence tool. These tools enhanced the quality of data and encouraged proactive behavioural change. This paper should be read in conjunction with Crossrail’s Performance Measurement Procedure.
Crossrail Approach to Earned ValueThe aim of the Crossrail performance measurement regime was to provide a comprehensive, consistent, timely and reliable view of the programme’s performance that predicted performance, and triggered management action to positively influence the outcome. Earned Value (EV) was one indicator of performance and was used in the context of other meaningful indicators of performance. The majority of the required performance measures were collected through established information collected within data systems. However, for Earned Value, a level of agreement was required between Contractor and Client to agree:
- The time profile and breakdown of budgeted cost against work scope
- What was measured and how
- The method for ‘earning’ completed work
- What person-hours are considered against what Indicative Units.
Figure 1 - Periodic reporting of EV figures against WBSAs work on the Contract progressed, assessment was made each period on two aspects:
- The % Progress corresponding to the agreements made in the Earning Plan
- The actual cost of the works in accordance with the Earning Plan.
- The Contractor was responsible for reporting performance in line with the agreed methods for EV and Productivity. The percentage complete was calculated objectively, based upon installed quantities through the use of the QURR (Quantity Unit Rate Report).
- The Project Manager was responsible for assessing the Contractor’s reported performance and implementing revisions for inclusion in the period reports as deemed appropriate.
- The Programme Controls assured submitted data, and supported the projects teams through the provision of guidance documents and the standardisation of processes and approach.
Figure 2 - Crossrail Programme Controls Toolset
- Although contractors were responsible for determining the earning methodology for the contract, this led to inconsistencies in the methodology for common elements of the work breakdown structure – especially those elements outside of the coverage of the QURR such as preliminary items, risk and fee. In these cases, the Programme Controls team had to provide additional guidance, and prescribe earning methodologies to improve the consistency and integrity of the dataset
- Cost performance and schedule performance indices were adversely affected by the impact of unresolved change. For example, where project manager’s instructions were issued for works to proceed without the cost and schedule impacts being agreed, the contractor would incur cost in progressing the newly instructed works, without the ability to earn the value against budgets. To mitigate this, ‘what-if’ scenario modelling was established across key contracts to ascertain the true cost and schedule performance indices by estimating the impact of unresolved change.
Recommendations for Future Projects
- Time should be dedicated during the set-up phase to establish and agree the management information requirements, for both the internal management team, as well as external stakeholders in order that data requirements can be established
- The programme controls toolset should be designed based upon the agreed management information requirements
- The use of standard software applications provides the benefit of automatic upgrades from the software developers
- Consideration should be given to the link between earned value and governance – e.g. governance processes to approve additional budgets for change items may affect cost and schedule performance
Director – Turner & Townsend
Crossrail Head of Cost
Julian Bartlett is a Director at Turner and Townsend and has 18 years’ experience in commercial management on a wide range of major projects. Julian has been at Crossrail since September 2009 as Head of Estimating, and latterly Head of Cost within the Programme Controls function, including acting as the Cost lead for all Crossrail station projects. His role has primarily entailed management of estimate production and the commercial review and challenge of estimates produced by all the industry partners including Network Rail and LUL, as well as leading the management of cost post-contract to ensure value.