April 2024
by Ryan Posnikoff, Senior Director of Product Management
The key stakeholders for any public infrastructure project have traditionally been large government entities and the engineering and construction firms building them. That’s changing. The stakeholder map has expanded significantly in the last couple of decades — not just in terms of who—but also of how.
Who’s among today’s public infrastructure project stakeholders? Local governments that answer to the voting public and address residents’ concerns are getting more vocal and involved. Community organizations such as small business groups are apprehensive about the impact of large infrastructure projects on their viability and the local economy. Local and regional groups are concerned about the impact on their neighborhood and the environment.
And what about the how? Well, we function in a world where immediate information is the expectation. Today’s stakeholders demand timely updates, visibility into what’s being built now and in the next six months, and certainty around cost and schedule.
This puts enormous pressure on construction managers to deliver projects more efficiently and with greater certainty in their reporting — especially given the anticipated impact on communities and the potential for cost overruns and delays that strain public budgets and test stakeholder support.
Influencing Cost Control
We all know cost control is a constant process. The influence that managers have over this process is greatest at a project’s outset. However, as a project progresses toward completion, that ability to exert control takes a downward trajectory. Staying ahead of that curve to maintain control over realizing on-budget and on-schedule outcomes is critical, especially for infrastructure projects. Earned value management (EVM) gives you that control.
EVM is a strategic tool for navigating common challenges that threaten cost and schedule control and certainty. When implemented at the beginning of a project, this performance-tracking methodology can facilitate early identification of cost risks, allowing construction leaders to pivot with enough time to address those risks and maintain control over cost influence.
Navigating the Unique Challenges of Infrastructure Projects
Infrastructure projects are distinct from large-scale capital projects in several ways — all of which can impact cost management efforts.
Reliance on public funding. Infrastructure projects — such as roadways, water treatment facilities, railroads, power plants and airport systems — are commonly initiated by governments or public agencies or a collaboration between the two for the benefit and functioning of society at large. With public funding typically covering the construction of these projects, there’s more scrutiny around those monies.
Here, EVM can be used to predict future costs for data-driven budget decisions and provide transparency into how and where public funding is used.
Political influence. While both types of projects endure long timelines, there are considerations typically not seen with other capital projects. Infrastructure schedules can take up to a decade when factoring in conception through engineering, construction and commissioning. They also span election cycles. Such projects can be thrust into the spotlight as political candidates and incumbents weigh in on their need and cost, sometimes calling for increased or decreased funding or threatening to shut them down altogether. Construction managers and other project leaders can find themselves caught in an uncomfortable position, having to defend the viability and value of the projects.
EVM metrics provide real-time, objective data that communicates progress and performance in a way stakeholders can understand. This can be crucial in conveying a project’s long-term value.
Optimism bias. We must acknowledge the role optimism bias plays in infrastructure projects. The desire to present the best possible scenario — whether to win the bid or provide reassurance once a project has started — is understandable but unrealistic. Such high-profile projects are far too substantial and expensive to base decisions disproportionately on confidence and subjective assessments, especially when there’s so much at stake. When that happens, optimism bias becomes a risk factor that manifests as change orders, schedule delays and overshot budgets.
EVM can help avoid this bias, providing a reality check on everything from estimate realism to a project’s performance in real time.
Using EVM to Proactively Manage Infrastructure Projects
It comes down to infrastructure project leaders, whether public or private, having visibility into project health to protect their projects, their companies’ bottom line and stakeholders’ needs. EVM metrics provide this.
Real-time performance tracking. EVM takes all the incoming data and constantly analyzes the project’s cost and schedule efficiency, answering critical questions such as: Is the project where it should be at this point? Is it heading in the right direction?
EVM provides a window into project progress and real-time performance, showing where and how tax money is allocated.
Risk mitigation. That real-time tracking also acts as a reliable alert system. Consider all the minor issues that have become bigger, costlier crises when not caught in time. When infrastructure projects are expected to be put into operation by a specific date, those problems can erode not just the budget, but also public trust.
EVM’s constant behind-the-scenes monitoring detects the warning signs of possible delays or cost overruns as they develop. Flagging these deviations early gives construction managers enough time to delve into the metrics to pinpoint the issue and take corrective action. By addressing the challenges quickly, teams can avoid significant impact to budget and schedule.
Forecasting. Knowing current performance allows stakeholders to react immediately to any fluctuations. But EVM can also predict future performance.
For example, if the project remains on its current trajectory, how will the budget and schedule react? If certain variables are changed to experiment with what-if scenarios (fewer workers due to labor shortage or strike, altered completion date, or various budget levels if public officials decrease funding), what is the impact on the budget and schedule? When using EVM to evaluate contingency plans to counteract this impact, which will best help costs stay within the set financial constraints? Do the results necessitate requesting more public money?
Stakeholder communication. Communication is crucial for infrastructure projects involving so many diverse stakeholder groups.
This is where EVM becomes a communication tool. It translates all the complex project data into clear, objective numeric values (CPI, SPI, CV, SV) that are more easily understood. These metrics, especially when presented graphically in online dashboards, serve as a standardized, shared language to interpret and discuss progress and performance, especially for those who don’t speak “construction.” EVM helps everyone manage such substantial projects more effectively, making collaborative decisions and problem-solving based on mutual understanding.
With taxpayer money and public interest invested in such projects, communication is just as much a public relations exercise as a project management exercise. Construction leaders must constantly convey information to the public, community groups, and across local, national or international governments.
Gain Control over Costs and Schedules with EVM
The stakes are extraordinarily high with infrastructure projects. There is intense public oversight of how taxpayer funding is used throughout a project, and there is an increasing expectation of immediate project information and updates—especially considering what technology can deliver.
Using EVM is a key step toward achieving this. Equally important is having a robust cost management system that can seamlessly integrate EVM and process continuous data streams efficiently is the other. Find out how Contruent Enterprise can help you with your infrastructure projects. You can also request a demo.