Physical progress& Financial progress

It is more or less same as james said. But i i have diffrent oppenion about financila progress!! .coz in my previous prroject contract document were not clearly mentioned about % payment upon arrival of mateial at site so we asked for 100 % on material!! they had to give no choice ( not all the case ofcourse) out of the project cost 60 % was on material at a stage our physical progress was 25 % but we cliamed more than 45 % of project cost as material on site.. do financial progress is 45 % correct me if im wrong!

James and everybody,



Here’s a scenario regarding financial progress measurement for comments.



I’m project controls manager with the Owner’s engineer team, (PCM) and the main contractor, (EPC), had agreement to measure progress financially.



The project is late timewise

The project is on time versus the financial focus i.e. cashflows, etc.

The current total amount invoiced/approved exceeds the physical %age completion by approx $5.5m



i.e.

Actual physical progress: 58.9% Planned: 64.8%

Actual financial progress: 64.6% Planned: 64.8%



When I pointed this out to the EPC contractor that I would be deducting the $5.5m from their next progress invoice, they went berserk! and tried their ’smoke n’ mirrors’ tactics to confuse me. I maintained my KISS, (keep-it-simple-stupid) principles, you know just simple sums and now we are in a pretty majoe dispute with them.



By the way, the Owners agree with me and the $5.5m will be deducted from their March invoice.



The bottom line here guys, is to remember that whatever progress measurement strategy is adopted for your project, you must balance it out, (a sanity check), with other methods.

Notwithstanding Deep’s explanation, perhaps a simpler one might be useful.



Physical Progress: Example: If you had 1000 metres of railway track to install, and you have already installed 500 metres, then you are physically 50% complete. However, do not confuse Schedule % Complete with Physical % Complete. Schedule % Complete is relevant to the duration of the project - and has nothing to do with Physical progress. You can be physically 20% complete and yet be 50% though the project duration.



Your Earned Value (BCWP) can be calculated in a variety of different ways. Some projects will use Physical % Complete, others might use Duration (Schedule) % Complete. Each will give you different results.



Financial Progress: There could be a number of interpretations as to the meaning of "financial progress". However, in essence, a good question would be: "How Much Money Have We Spent For The Work That We Have Done?" The answer to this question will help determine your cash-flow and your profit.



HTH.



James.

Physical is the progress the project makes with respect to time resource or durations. And financial is the progress your project makes with respect to loaded resources/costs.



In other words the schedule percent gives you %complete by durations and the percentage of total earned value(BCWP) with respect to project cost gives you financial progress of that period.



hope its clear

Deep