Professional Liability Insurance company data indicates there is strong evidence that keeping projects on budget and on time and reduces client claims.
Budget & scheduling problems trigger 12% to 14% of Architecture & MEP claims.
Total claim costs include deductibles and claim settlements as well as management time dealing with claims related issues. Hours managing claims has increased by 200% in the last several years.
Every dollar of claim costs requires $10 of revenue to replace the lost profit.
Steps to improve your risk management for your firm:
- Build your project plans by phase and task
- Give each phase a Fee and a Cost Budget
- Update the percentage of completion (actual work completed) by task at least weekly
- Update the cost to complete continuously
- Calculate Earned Value Analysis(EVA) on all project with a schedule of two weeks or longer
What is Earned Value Analysis (EVA)?
EV Analysis can help identify projects that are falling behind schedule with the potential to overrun budgets, even though the planned vs. actual expenditures comparison looks like the project is tracking well.
In the traditional analysis comparing actual dollar spending versus budget, many projects appear to be performing well until they reach the last 10% to 15% of the project life. Often it is too late to take corrective action to get the project budget and the schedule back on track to prevent a negative event.
EVA compares how much of the work is actually complete vs. how much money has been spent to date against the project budget and work plan. When displayed as a graph, there are three lines: Plan, Actual and Earned Value.
The state of the art Project & Accounting systems available today have an EVA tool built in.
Does yours? If not, WinterView Group can help you explore your options.