Michelle Salyer:                Welcome to Outside the Box with BRPH, where we discuss the most innovative, interesting, and outside-the-box solutions to some of the most exciting and challenging projects in the world of architecture, engineering, design, construction, and mission solutions. You’ll hear directly from the problem solvers at BRPH as we dive deep into the latest news, trends, and topics in aerospace, defense, manufacturing, and industrial, commercial, education, entertainment, and hospitality. I’m your host, Michelle Salyer, and I’ll be your guide as we open the lid on these topics and more and invite you for an insider’s look at one of the most successful, fastest-growing, employee owned AEC firms in the United States. Welcome to Outside the Box with BRPH.

It’s no secret that good planning is essential to a successful business. But in the AEC industry, proper forecasting can make or break your firm. Scheduling and budgeting expertise is not only crucial to the firm itself, it’s also important to clients who want to ensure that their professional consultants can manage money and schedule effectively and stand the test of time to deliver the services they’ve promised. With me today to talk about the science of earned value management as Jason Dunn, senior vice president, chief risk officer, and head of BRPH’s project management office. Welcome, Jason.

Jason Dunn:                       Thank you, Michelle. Great to be here today with you.

Michelle Salyer:                Thanks for joining me. So tell me a little bit about that big role, your multiple titles, and how long you’ve been with the firm.

Jason Dunn:                       So I joined BRPH in 2013, so I’ve been here a little over 11 years. And I was originally hired in as the director of project management. And when I came in, I helped develop the PM standards criteria of how we manage projects and develop tools and all those sort of things. And as our design and mainly construction businesses have grown really tremendously since then, I was elevated to the PMO in 2022. At that role, I’m responsible for the full practice of project management across all the subsidiaries of BRPH. So I play a decisive role in making sure and ensuring the entire organization has the structure, all the systems, the proper training, and the qualified team members in place to successfully manage and execute all the projects. And as chief risk officer, which is another role I have, I’m responsible for identifying and assessing and helping to mitigate events that could threaten BRPH’s capital and earnings. So I lead the efforts, at the executive level, involving all the business unit leaders, the project managers, project execs to help reduce overall corporate business risk that could impact the organization’s productivity and reputation also.

Michelle Salyer:                Okay. Wow. So an important role there as well. So for those who are not familiar with the term, briefly explain to us what earned value management is.

Jason Dunn:                       Right. So earned value management is a standard project management methodology and integrates the schedule, cost, and scope of a project that all PMs have to identify. We use those to establish what we call a project baseline to measure against for the full project performance as it gets executed. So based upon planned and actual values, EVM is the terminology, shortened terminology for that, that can help the project manager predict future performance, the expected revenue, and also enables them to make any adjustments accordingly when the projects deviates from the baseline.

Michelle Salyer:                Okay. Now, I understand that using these tools is somewhat unusual for a mid-sized firm or firm our size. Why do you feel it’s a priority for BRPH to use EVM?

Jason Dunn:                       Well, to keep EVM system updated and working properly, each and every project takes discipline and a lot of upfront planning effort to make it successful. Then it’s got to be monitored every single month, at a minimum, to make sure that it’s valid. But doing this is very time-consuming, but it’s important. So this methodology shows the convergence of three specific data points, plan, cost, and completion. And you look at those along the entire project timeline once it starts getting executed.

So all this data shows the project manager several things. Is the work getting done? Is my project behind schedule or ahead of schedule? Is the project over budget or under budget? And is it meeting our financial goals? And it’s a priority for BRPH because it shows the value of work completed to date of all the projects, and that generates revenue for us every single month once we identify that. And EVM can also act as an early warning system to detect cost or schedule variances. It can also show us, as a firm, if we have too much work or not enough work. It also helps us to plan the backlog and make valid hiring decisions based upon that planned value. So this is a must for us and it can also benefit the client.

Michelle Salyer:                Okay. How specifically can it impact the client side of things?

Jason Dunn:                       It can help with the client in a manner of ways, really mainly with they’re forecasting. So properly planning the expected compensation of the client’s project can help generate what we call a cash flow framework for them, and it helps them plan for spending in relation to their calendar or their fiscal year. A lot of clients actually ask for that. So it gives them the security we’re managing their money and our money as well on this project.

So one thing we also can do is use this data in EVM system to create a client dashboard. They can utilize that for their monthly reporting up to their superiors. So that dashboard can identify certain trends in the project performance and execution. For example, if costs are rising, we can help them evaluate the program and offer to make decisions or help them make decisions on cost or certain equipment or whatever.

Michelle Salyer:                Okay. So for a lengthy project, you can identify trends over time and-

Jason Dunn:                       Correct. Correct. And they can even identify if the whole project or even portions of a project is falling behind schedule. And that means perhaps there are decisions the client has to make to see, if these scenarios are identified, what do we need to do to accelerate the schedule? Do we need to phase it, do we need to delay it? Those sort of things can be discussed.

Michelle Salyer:                Okay. It sounds like a no-brainer. It seems like every firm would be using a tool of this nature, but-

Jason Dunn:                       Yeah, like I said, it takes discipline and effort and you got to monitor it appropriately.

Michelle Salyer:                So the tools are only as good as the people using them.

Jason Dunn:                       That’s correct. That’s correct.

Michelle Salyer:                Okay. So why is it important to show the client how we are effectively tracking our costs and our fees?

Jason Dunn:                       I think it’s beneficial that they can see that we are tracking those and we’re being diligent about that because we want to be stable and make a profit and they want to have a successful project. So it shows them that we’re financially viable, we’re going to stick to this project, and we’re going to perform this project and execute it till the end so that we’re around for the next one. So it can work both ways. It can benefit the client, it can benefit us. So if the EVM graph on the dashboard is showing that the costs are starting to far exceed what we’ve been contracted for, that’s a way to identify these costs are running and we can have a discussion with the client, why are they doing that? Perhaps it’s change order work or work we’re doing ahead or extra work beyond the baseline that they’ve asked us to do. And you can graphically see that on the EVM chart. So it’s a good way to portray that information to them where we can have that discussion when you’re reviewing the dashboard.

Michelle Salyer:                Okay, great. I understand change orders can have a big impact on the cost and the schedule. How does the EVM help manage or mitigate some of that?

Jason Dunn:                       So yeah, that’s a good question. And changes always come up. We all know that every single project’s going to have changes. So what I do when we kick off a project, I ask that the project manager pull together, create the change management log, right at the beginning of the job, because we know changes are going to happen. And that’s a tool for them to log those changes as they occur across the project. And it could be changes requested by the owner, it could be changes in design, it could be criteria changes, but they’re all logged. And that’s a basis for us to have discussions with the client once those reach a certain level and it starts impacting our baseline. We identify the changes early from the very beginning right away.

Michelle Salyer:                So it sounds like the dashboard helps both sides to be a little bit more accountable.

Jason Dunn:                       It does. It helps us to be accountable from financially managing the project, but it also helps us to keep the client accountable. The dashboard can identify items within the certain milestones of the project that they might owe us, that the client might owe us some criteria requirements or some reports, a geotechnical report or something like that, that we’re going to need to continue-

Michelle Salyer:                To stay on schedule.

Jason Dunn:                       … to stay on schedule. And if we don’t get those by the certain times, we can use the dashboard to identify those items to the client and keep them accountable, and say, “Mr. Client, if we don’t have this by this certain day, we’re at jeopardy of prolonging the schedule.” So it keeps both sides accountable.

Michelle Salyer:                I know this is getting into a little bit of technical information, but so, without going into too much detail, walk me through how this process might work when a new project is awarded.

Jason Dunn:                       Yeah, sure. So as early as the bidding process, when we’ve identified an opportunity that we think it may be a project, we start anticipating fee estimates very early. What’s the magnitude that this could potentially be? And we do that in a very collaborative process. We include all the business unit leaders, the identified project manager, sometimes myself, if it’s large enough, and they involve practice leaders that are going to be working on the job internally to strategically come to a right size fee. We know what the fee’s going to be if we’re pursuing a large pursuit. So once the scope is verified with the client, the fees are locked in and negotiated, and we’ve gotten the project award, we assign the appropriate team members to the project, and that’s based on scope, what services we’re providing. It’s also based upon the team member’s expertise and availability. We look at that at the practice level, and then we plan each of those individual resources with planned hours to perform the work.

Michelle Salyer:                So you can actually plot the work hours of every individual team member?

Jason Dunn:                       Correct.

Michelle Salyer:                Wow. Wow.

Jason Dunn:                       Yep. And that’s what we track. Once those planned hours are set as, what we call, the baseline, we track those against the actual hours, and that helps us to identify the project performance as it’s being executed.

Michelle Salyer:                Okay. That’s why we get those reminders about time shifts.

Jason Dunn:                       Exactly. That’s very important. And another thing too, I want to mention, we do this with all of our projects. So all of our projects are resource planned in the same manner. So these planned hours roll up into a company-wide portfolio that we review all the time. And this allows us to properly forecast workload, revenue, make proper hiring decisions at the discipline and company-wide level too.

Michelle Salyer:                Okay. So this is not just for the very largest clients, this is for every client that we service, every project.

Jason Dunn:                       Yes. Every project, every client, all the portfolios, it all rolls up. And we use that data to make business decisions when it comes to revenue forecasting and hiring.

Michelle Salyer:                Okay. Wow. So how do you measure the effectiveness using this graph and these plot points?

Jason Dunn:                       There’s two very simple ones that we do look at. They’re just ratio calculations, and one’s called cost performance index, and the other is schedule performance index. And they have indexes, CPI and SPI, what we track. And it’s a simple way to track cost and schedule. So CPI will measure the financial efficiency and it compares the work completed by the cost of the work. So if your ratio is over one, your project is under budget, meaning your earned value has exceeded the cost. And if it falls below one, obviously your over budget where your costs are exceeding your earned value.

Michelle Salyer:                Okay. Sounds simple enough.

Jason Dunn:                       And on other hand, for schedule, we do look at that. The SPI measures conformance of the actual progress of work against the plan work. So it’s looking at work completed divided by the plan value. So if our ratio there is over one, that means the project is on schedule or ahead of schedule, because that earned value is exceeding the plan value. And if the ratio is under one, the project is falling behind schedule where the plan value of work has exceeded what we’ve actually completed. So those are two pretty simple measures that’ll show how effective projects are being managed.

Michelle Salyer:                Okay. What are some reasons that you might have variances or deviations?

Jason Dunn:                       There are several things that can be contributed to that. One, it happens a great deal, I know what happens at many firms, is working ahead of either a known change order or extra work that’s being asked by the client, because that’s going to add cost to the project that you hadn’t planned for. Seeing that spike in cost above your plan is a way to identify maybe a change order, a change request, or an add service just as needed to ask the client. The other thing that contribute to that is the staff mix might be incorrect, where you perhaps could have more senior folks with higher bill rates charging to the job versus the junior level. That staff mix ratio could impact that. Errors in rework can contribute to that, if we have a slip up or a mishap, and we don’t have many of those. But spending the time to perform rework that we really can’t charge the client can impact, it can show a deviation of that too.

Michelle Salyer:                Okay. So there’re, yeah, a lot of different ways to read this information. What are some reasons that you might have variance in schedule?

Jason Dunn:                       The same way, if the completed work has fallen behind the planned work, and you can see that on the graph, either the team’s not spending enough time to complete the job and the timeline associated with that milestone, that could be one thing. Or there could be changes in the work that the client’s instituted and we haven’t updated the baseline yet. So we do look at that. We do want the PMs to regularly update their project baseline as the compensation might change with change orders and things like that.

Michelle Salyer:                Okay. So like you said before, this is an early warning system.

Jason Dunn:                       It is, yeah. Correct.

Michelle Salyer:                And you mentioned also that this is useful in hiring and staffing. Tell me a little bit more about that.

Jason Dunn:                       As I mentioned earlier, the way we resource plan projects, all these planned hours that we’ve accumulated for all the projects roll up into a company-wide portfolio for the business. And what this does is allow us to properly forecast workload and revenue and also make hiring decisions at that discipline and company-wide level. So if we’re seeing a certain discipline that perhaps is over-planned, meaning they’ve got more work than they can actually do, then that is a trigger to say, hey, maybe we need to consider making some new hires, adding staff to that certain discipline.

Michelle Salyer:                So it’s all very scientific. Okay. Is all of this based on historical data or similar jobs done in the past? How are you getting to that starting point for any of this?

Jason Dunn:                       We have toyed with AI. So one thing we do, we do implement a CRM data system as part of our project management software where we collect client data, fees associated with certain projects and certain clients, and we refer back to that data in the system for previously or execute or similar type projects when we’re pricing a project. And we can use that data as a basis for a fee range determination to get started with that. So we do use the historical data, particularly with similar jobs, to see what was our fee and what did we charge for this type of building at this square foot at this business unit in the past, and use that for comparison too. So we do refer to historical data.

We also are investigating some AI tools that will automate performance prediction of a project. And that’s based on the data that’s accumulated on how the project’s being executed, how it’s been planned and earned, and how costs are hitting it. So the AI tool will review that and give a prediction of how this project’s likely to end up. The other cool thing it will do… Yeah, it’s really neat. The other thing it will do is it’ll review actually the staff mix that’s planned on the project and make recommendations for better efficiency. So it can identify if you have two heavy charges from more senior folks versus junior and it’ll make recommendations about how that can be adjusted to help with your cost.

Michelle Salyer:                Wow. Wow, that’s fascinating.

Jason Dunn:                       So it’s in the early stages, but we are researching and investigate that now and perhaps that could be a future podcast.

Michelle Salyer:                Okay. Yep. Stay tuned everybody. As we said, that tools are only as good as those who use them. It does require a certain amount of discipline on the part of the PM. So what kind of training and support are they receiving to be able to use EVM?

Jason Dunn:                       So yes, I conduct an internal annual training for the project managers at BRPH, and that includes any newly hired PMs across the year and any internal candidates that we want to promote to that role. And it’s comprised of about 10 dedicated sessions, classes that cover the full spectrum of project management from start to finish. And the way we’ve set up our training platform here, it follows the Project Management Institute, which is known as PMI. It’s a pretty widely known industry standard for managing projects and executing projects. And we set it up in what we call the five basic knowledge areas of PMI, and that’s initiation, planning, executing, monitoring and controlling, and close out. So it goes from start to finish, and we build upon the training as we progress. And I’ve also developed many standard PM tools and templates for the PMs to utilize for all project management tasks, execution, planning, and close out, so they’re not having to reinvent the wheel with each project.

Michelle Salyer:                Okay. And I know you are also managing risk for BRPH. How does that role tie into earned value management?

Jason Dunn:                       It definitely does. So with me being responsible for identifying all these risks that could threaten BRPH or capital predictability earnings, and also being in charge of all projects’ performance, I have a firsthand look and exposure to all the projects as issues develop. So these are typically discovered when we perform our monthly project reviews. We look at the financial strategy, how the projects are being executed. That’s where a lot of these issues come up and are identified and are discussed. So it allows me the capability to work directly with those project managers to identify the certain risk or issue and help them develop a recovery plan and strategy and a mitigation to alleviate that risk. So it’s a very productive way to head off those issues early before they become larger issues that can truly impact BRPH.

Michelle Salyer:                Or the clients.

Jason Dunn:                       Or the clients.

Michelle Salyer:                Okay. Well, this has been so informative, Jason. Thank you so much for sharing a little bit more about earned value management with us.

Jason Dunn:                       Thank you for having me. It’s been a pleasure.

Michelle Salyer:                Thanks for joining us today for Outside the Box with BRPH. We hope you’ve enjoyed today’s episode as we explored some of the most innovative and challenging projects and the most pressing issues and trends in the AEC world. Learn more about us at brph.com. Email us at [email protected], and follow us on LinkedIn, Facebook, Instagram, and X. You’ll find this podcast on Apple, Spotify, or wherever you find your favorite podcasts. Be sure to subscribe so you’ll be notified when new episodes are posted. See you next time on Outside the Box with BRPH.