8 Questions Clients Ask and How to Use Earned Value to Answer Them
Project stakeholders are a demanding bunch. They have normally got a lot of questions about project performance and they always seem to want to know something about how the work is going.
They would, wouldn’t they? But what would you answer?
Here are eight common questions that clients ask. The secret to providing reliable responses can be found in your EVM reports. Here’s how.
1. How are we doing against our schedule?
Clients want to know if the team is ahead or behind schedule, because time is a huge factor for most project sponsors. An on-time delivery can mean the difference between contract penalties or the promise of more work.
Answer: Use Schedule Variance (SV) to provide insight to this question.
2. What will the project cost?
Everyone wants to know the answer to this one! The business case or proposal might have been prepared a long time ago, and now the focus is on what the project is likely to cost by the time the work is completed. Estimates change over time, and the schedule should keep up with that. Luckily, Earned Value calculations can give you an accurate forecast for how much the work is going to cost.
Answer: Take a look at the Estimate at Completion (EAC) to get a realistic view of the final project price.
3. What is still left to spend?
You are part-way through a project and the client wants to know the remaining investment. Even though you’ve been capturing detailed expense reports all the way through, that headline ‘what’s still left to spend’ figure is useful for securing continued support and showing transparency. EVM comes to the rescue again as the data makes it easy to find out what the remaining work will cost.
Answer: Use the Estimate to Complete (EAC) figure to tell your client how much money is still going to be invested in the project.
4. How are we doing against the budget?
This is a wide-ranging and broad question but what people most want to know is whether the project is behind or ahead of the planned spend. In other words, is the project under or over budget at this moment in time?
It’s a useful question to ask because it helps everyone on the team understand the current position so action can be taken to manage performance and get the work back on track.
Answer: Use Cost Variance (CV) to work out whether the project is on track, under spending or over spending in relation to forecasted performance.
5. What budget is going to be left?
An optimistic client might ask whether there is going to be budget left at the end of the work, especially if Cost Variance is showing that the project is currently tracking under budget. Fortunately, Earned Value can also give us that number: by using the financial information we have today, we can predict how much under (or over) budget the project will be by the time it finishes.
Answer: Work out the Variance at Completion (VAC) to calculate what budget will be left, or whether the project will be overspent at the point it is completed.
6. Is the team working efficiently?
Everyone wants to feel they work efficiently, but are they really? Efficient working is essential to get through the work in the available time. If you are aware that efficiency levels are dropping, management can step in to see what the problems are and help the team get back on track.
Answer: Use Schedule Performance Index (SPI) to guide your response.
7. How efficiently is the team working?
We’ve worked out whether the team is working efficiently, but what does that mean for the project budget? Stakeholders want to know how efficiently resources are being used, and Earned Value calculations can provide that too.
Answer: Look at the Cost Performance Index (CPI) to prepare your response as that will show you how project costs are being ‘used’ in relation to expected performance.
8. What should target efficiency be?
Let’s say that the SPI and CPI results show that there is room for improvement. The next question a stakeholder may want to know is what needs to change to ensure the project completes with a reasonable level of efficiency? In other words, how efficiently do we need to work from now on?
The answer is in the numbers. With that data, you can decide how to achieve the correct efficiency levels by taking management action to manage and control performance from now on.
Answer: The To-Complete Performance Index (TCPI) is your guide to what efficiency levels should be in order to hit the performance expectations.
There is no single moment in time when a client will ask these questions. They are likely to want the answers on an ongoing basis because projects are a dynamic environment. As a result, your team needs to be equipped to provide regular earned value reporting information to the stakeholders who need it.
The best way to do that is to make sure the team has earned value management training so they can respond to queries and create reports that answer client questions before they have even been asked. When the team has the confidence to effectively manage the schedule, questions like this are easy to answer and more importantly, the team will know what to do with the answers. Course-correction and management action is straightforward when you understand the EVM environment and what the data is telling you.
We offer a range of EVM classes from an executive overview you can complete in a morning to detailed 4-day advanced workshop. Whatever your team needs, we can help them feel confident talking to clients about project performance so they are equipped to answer any question.