EPC project % completion

Yup Anoon and Tomas,



Both r right. More the parameters, more the comparisons and so, more is the flexibility.



Like in our monthly MIS report which v send to our HO, there r comaprison sheets for:



- Cement Consumption (Including RMC)

- Shuttering consumption against concrete poured

- Steel wastage and in stock

- Amount invliced against certified to contractors

- Labour productivity sheets against work done

- POL consumption rato

- Equipment usage ratio.

- Others



There r certain fixed maximum values for the above things but management wud always liek to sart with what is profit margin status and whats the schedule status?



So, the best parameter to hav a glance into is COST AND TIME.



Cheers,



Ravi

agree, so the more parameters used, the more comparisons there will be and more flexibility

Rav:



I know that there are several tools and methods available to measure and control project performance, like earned value. But the discussion started talking about percent completion, which is a simple but fundamental way of measuring performance. So, before going to more sophisticated methods, I was trying to convey a basic concept of control.

Control is, in one of its meanings, the comparison of the actual against the plan in order to visualize whether we are on track.

So, going back to percent completion, the percent completion value by itself does not mean anything unless we compare it to something, which in our case should be the plan.

And my point is, it does not matter what basis you use to calculate progress, whether that is duration, cost or manhours, you will basically have the same variance as long as you use a reference value for comparison based on the same parameter you used to calculate the actual value. And what matters is the variance, which will tell you how far you are from your plan.

So, to me, you can use the parameter for calculating progress, of your liking. I would not be discussing that one parameter is better than the other.

Any thoughts?



Tomas Rivera

Tomas,



Thats y the term EARNED VALUE has come into the picture these days.



In earned value management, u need to calculate two major things: Schedule Performance Index (SPI) and Cost Performance Index (CPI)



SPI = EV/PV



CPI = EV/AC



EV is nothing but Budgeted Cost of Work performed



PV - Planned Value : Budgeted Cost of Work Scheduled



AC - Actual Cost : Actual Cost of Work Performed



Both SPI and CPI shoould be calculated on every monirorinhg perriod; every month or week or so. If any value is less than 1, that means ur project is not performing well either in terms of cost or time.



Cheers,



Rav

Whoever is tracking progress needs to be aware of both time and cost.



Is it good to be ahead of schedule if budget status is unknown?

Is it good to have cash-flow on track if performance to schedule is unknown?



Tracking one without the other is only doing half the job.

Hi guys,



I have not read in any of the replies anything about how to tell if our project is performing OK with the progress percentage measurement or values you are using, whether they are based on cost, duration or manhours?

In other words, suppose I accept any of your measurement methods and get a number, now what? Is our project doing fine or is a disaster? How bad or how good?

How do we use that number to evaluate whether we are in the right direction?

And to simplify the discussion and reach some kind of useful conclusion, I suggest to think of project performance in terms of time, not cost yet.

Any volunteers?



Tomas Rivera

Normally, Companies in both EPC & EPCM business tend to have both norms of overall Progess i.e Project Physical Progress & Project Services progress.

For pure EPC Lumpsum projects reporting to Client is generally thru Project Physical Progress which is the $ value of all phases i.e Engg ($ value of Manhours), Procurement ($ value of procured+ $ value of Procurement manhours) & Construction($ val of Tendering mhrs + $ value of Construction/Commsg) & the relative weightages.

For EPCM projects,if reimursible with or without limits, its the manhours which give relative weightages. An Engg consultancy may report Project Physical progress ($ value) and Services Progress (Relative wtgs of Manhours).

Again some LSTK oriented companies do not really pester on Engg Manhours as long as the Project is completed on time), manhours profitability is insignificant compared to Proc/Cons Profits.



Cheers

Datta

Hi all,



Interesting discussion.

By default Primavera takes unit duration as measure of progress. If to total duration of all the activities in s project schedule is 1400 Unit days if an activity of 14 days planned duration ( performed in any no of days immaterial ), The percentage completion is 14/1400 * 100 ie 1%.



Unit duration weightage has its drawbacks. It gives equal weigtage to the duration irrespective of the cost or efforts or importance. For example Pouring Deck slab of a bridge will happen in a day and curing will take min 14 days.



Using cost as its basis also has drawbacks in EPC environment: If we have to construct 100 foundation and install 100 Transformer, then if the material ( transformer ) which forms the major cost arrives early and the foundation work is much delayed also The cost achieved will be very high not reflecting the actual physical progress.



In a construction only environment, material being constant, the efforts required to deliver ie manpower and machinery cost shall be taken as Basis for weightage.

Nar Thap

give me your e-mail.my e-mail is pcliuyi@sohu.com or pcliuyi@yahoo.com.cn

Basically,



What the questioner is looking is how to convert into common matrix (units) the diverse units in EPC contract.



My preference is to use cost, in this way EVM. But sometimes cost information is so dynamic in EPC to the point that it has no more meaning unless, periodic update is done.



Durations as a common matrix is for lazy planners, mind you, I also doing it (our secret).



Cheers,

Sensei

Succesful Project Management Consultant

Dear Raffy,



I beg to disagree with your conclusion regarding percentage as subjective. The premise is wrong in the sense that duration was used in your discourse.



If we will look at the basic in project management, it is very clear that we should know the scope of work and make this tangible in the form of deliverables.



In essence, these are the physical forms of what is written in the contract document. For example, concrete building (quantity of concrete, etc.)



Knowing the quantity of concrete that we will deliver, say 1,000 cubic meter will give us a better understanding on where we are, in the event that 500 cubic meter of concrete was place, meeting we are 50% complete in concrete works.



This is very simple, essential activities in planning, project control, tracking, etc....



While EVM bring us to higher level, the essential remains the same: progress measurement should be , shall be grounded in quantities that form the project deliverables.



I believe EVM use progress percentage, other than the above, I dont believe EVM has any meaning.



Cheers,

Sensei

Successful Project Management Consultant

Thank you

A form of a contract that includes the following stages:

Engineering

Procurement

Construction

excuse me, what is EPC project

The trouble with measuring anything in percentage terms is that most people cannot envisage the amount of work which equals a percentage.



They generally mix it up with how much duration or elapsed time has occurred.



If I have elapsed 50% of the duration am I 50% achieved in work progress. No.



If I have spent 40% of the budget am I 40% achieved. No



I use Earned Value Performance Mesurement techniques as there are several key ratios which are used to provide performance and you can never have more than 100% Earned Value.



The important thing with EV is that it is a trending methodology, observing the trends of actual work performed versus the budgetted cost of work scheduled (not forgetting Budgetted Cost of Work Performed) is most enlightning



Percentages are subjective, whereas EV is more Objective



Raf

Basically,



Percent Progress should be base on the scope of Works and deliverables as quantified.



Percent progress should be base on quantity



The weakness in progress measurement for EPC is due to quality of planning approach and system approach.



To site a case: some planning engineer only have experience in construction. In this case, the planning engineer will find it difficult to grasp the deliverables during engineering and procurement stage.



It is also similar in the event the planning engineer comes from design and find it difficult to graps the deliverables during construction stage.



As a consequence, the planning engineer will resort to use duration as basis of progess measurement.



THIS APPROACH IS WRONG



Sensei

Successful Project Management Consultant

i am sorry for my illegible describing .example: one EPC project, sum is $700. based on cost: E=$100 P=$400 C=$200,E\P\C WBS weight:E=1/7,P=4/7,C=2/7.then ,on E ,based on manhour.on P ,based on cost,on C,based on cost and manhour(at first ,the two weight must be combine one based one %).is this ok?

I have an idea on % progress,weight + cost + manhour. on E,P,C, use cost weight,on E ,use manhour, on P,use cost ,on C,use cost + manhour(cost 30% and manhour 70% or cost 50% and manhour 50%).is this useful?

thanks!

Zhang,



Delay analysis is important, but how do u quantify delays; in terms of duration or %.



Top Global EPC (Bechtel, SNC, Fluor, Foster Wheeler, Technip etc) companies analyse delays but % progress is quite important. If progress measurement system is set up objectively, then its easy to find out reasons for delays.



Cheers



Datta

the % progress does not mean anything,just a number.

you can use any method to calc. it, duration / cost / weighted quantity / manhour...



the trend is more important the the number of % , so I would like to use the easiest way to get the % progress and analyse the trend after each update.



As a scheduler, I’m focus on delay(Critical path)analysis. the % progress is just for someone who like to see it.