EV Reporting Ethics

Hi Oliver

To start with is the EV based on cost or resource hours?

Resource hours give a more accurate picture.

Why not ask for two S curves:

1.  Based on Actual data

2.  Based on forecast achievement

It will soon become apparent how accurate the forecasts were.

Best regards

Mike T.

Thanks for the reply Mike.

I am the person doing the EV reporting and was wondering about the rules of engangement when reporting. I was more interested if contractually there is any reason that performance cant be over-reported by the PM? Seen as (with regard to EV) plans are just a financial model of predicted spend, i wondered if the choice to over-report progress just becomes a risk for the team in delivering the work. (as opposed to being something that the PM is not contractually allowed to do!)

Hi Oliver

If there is nothing written down then you can put what you like in any report.

The cost plan is usually top loaded  anyway so any over reporting will be over egging it a bit.

Over reporting at the start will always be revealed at the end - remeber that the first 90% of the work is done in the first 90% of the time and the last 10% takes the other 90% of the time.

In any case costs and expenditure are not a reliable guide to progress - the classic example is the Gold Plated Taps scenario - also you have to eliminate the "one off" costs to use only time related costs.

Best to use resource hours if you have them.

Best regards

Mike Testro

"Is over-claiming during the end of a quarter (in order to achieve a payment milestone) to be classed as being 'commercially astute'? (As long as you believe that you will recover the deficit before the end of the next quarter) or is it unethical project management?"

I'm assuming the payment model is you get paid for your estimate of work you will do, in advance, by quarter?

I would class being commercially astute as erring your forecasts on the side of optimism rather than pessimism. It would tip over for me into unethical behaviour if you forecast progress you don't think is realstically achievable.

 

"I was more interested if contractually there is any reason that performance cant be over-reported by the PM"

I think if the contract requires you to forecast planned progress, you can assume there will be a clause somewhere in there whereby you are also required to ensure any information provided to the client is accurate, to the best of your knowledge. So yes, I think you can reasonably expect that deliberately lying to the client for financial gain would be a breach of contract!

Depends on the contract, but most contracts would include a mechanism for the client to review the application and make adjustments. If I was the client and spotted a trend of over-reporting I would adjust down on that basis and ask you to put more effort into accurate forecasting.

If I had client reps in your project office who were in a position to tell me you were deliberately and consistently misrepresenting your planned progress in order to improve your cashflow at my expense, I would adjust your applications down brutally and see how you like it.

Hi Oliver,

Another suggestion would be to establish a standard method of measurement to determine progress.  This could be a simple Excel sheet shared by the PM & Construction Team which you can refer to when completing your update.  You can then quantify the progress reported by the PM each month with your update and where necessary, challenge the PM's findings.  You are responsible for submitting the EV progress report and it will be you who may be challenged by your client in an audit.  Experience shows that it is much better to under report progress as any short fall will be made up in the next update.

Hope this helps.

 

Simon