Managing Risk Of Delay – Earned Value Management (Part 5)

This post is the fifth in a series of discussions regarding various aspects of time management.  More specifically, we have titled the series MANAGING RISK OF DELAY, since we focus heavily on the managerial aspects of program / project management.  This post addresses some ideas regarding preparation and maintenance of time management related to overall bulk progress.  Some might refer to this as Earned Value Management.

The challenge associated with managing all (critical and non-critical path) work is common to virtually all Lump Sum Turn Key (LSTK), Engineer Procure Construct (EPC) and other similarly executed projects.  In addition to the normal issues associated with bulk progress, actions or inactions by the owner can add considerable complexity to this challenge.  Owner/Employer delays can be masked among the myriad of activities that are the responsibility of other (than the Owner/Employer) stakeholders.  Even when detected or disclosed, these variances to plan are often dismissed as simply consuming available float.  Hence, the Owner/Employer (or other stakeholder) may rationalize these variations as having no impact.  Of course, the reality is that these sorts of departures may (or may not) add risk or disruption to the project execution.  Further, they may delay forecasted completion.  The managerial challenge becomes detection, assessment and quantification (should it be appropriate to compensate the contractor for the impacts).

Selection of earned value parameter resource or parameters is a complex consideration.  It can differ for each of the following phases of execution:

  • Engineering

–   Conceptual

–   Detailed

  • Procurement

–   Purchasing / Ordering

–   Expediting  (Fabrication and Delivery)

–   Other

  • Construction

–   Erection

–   Construction Support

–   Direct Labor

–   Indirects

  • Subcontracted Work

–   Trade

–   Material

–   Labor

  • Commissioning
  • Startup.

As an example, the owner had an obligation to provide various utilities to support the construction plan and schedule.  While these requirements were contract requirements (dates certain), the owner was materially late with the actual supply/completion dates.  When pressed, the owner took the position that the contractor was not truly ready for the utility and that the impacts of the delays merely served to consume float.

The contractor provided a retrospective Performance Measurement Baseline (PMB) or “S” curve analysis to demonstrate the impact (time) and a retrospective measured mile analysis to demonstrate related disruption.  While the analyses demonstrated cause and effect, the lack of timeliness coupled with notice requirements degraded the effectiveness of the underlying position.

Schedule risk and labor disruption can be suitably recognized and demonstrated through the use of analyses such as “S” curves and measured mile.  Since timeliness and notice are compelling issues, the contemporaneous project reports and managerial action must be sufficiently robust to achieve detection and quantification of these problematic variances.

Project Management Institute (PMI) Earned Value Management Community of Practice (EVM CoP) provides the industry with resources in this essential area of project management.  Key EVM CoP resources will be cited in this blog’s Resource Center updates and additions.  Other key resources (AACE, CII and others) are useful and blog users are encouraged to cite quality resources on this subject.

Time-Management Strategy is the higher level challenge.  The Time-Management Strategy must be integrated with progress and claims management strategy.  More specifically, the time-related issues must be harmonized and synchronized with the progress and claims strategy.  The specific strategy, process and procedures are driven by the project specifics.

When M&M undertakes an assignment involving program/project development, planning and/or management, we integrate earned value management practices and procedures into project execution.

Good luck and let us all attempt to approach the issue of TimeManagement strategy with all the factors in an integrated manner relative to other related aspects of program and project execution planning.

It is important to note that McLaughlin and McLaughlin [M&M] is not a law firm and is not intending to provide legal advice.  M&M is a consulting firm providing (among other services) non-legal expertise in dispute resolution and litigation support.  The Resource Center is for the convenience of blog visitors and M&M does not offer this for commercial purposes.  For further information on M&M services, please see