How to budget and control costs in a project? How to make it valuable for the performance? The case study

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Do you remember my May post about building the railway tunnel in Serbia?

It’s September already, and at the same time, we hav e some progress in a project. We’re approaching the 200 metres of the planned 1 km of excavation (200 metres are really a lot). We’re even more happy, because we have managed to catch up on the accrued delay resulting from submitting the construction site too late, which wasn’t dependent on us. Please see below the proof of progress:

Tunnel Serbia

Source: priv

The highly valuable idea of our team was to split the schedule that was planned to last for three years. How? In this particular case - from the monthly building plans (the monthly perspective) to the integration of the weekly flow between the schedules, par tly manually. In practice it looks like that: once a week we synchronise and update the progress of the building plan. Besides, we then check how the current progress refers to the general base plan. From the planning perspective - a great idea. Hitting th e bull’s eye. But, was that all profit from such scheduling?

It turned out that it wasn’t. It’s not only about time. We weren’t fully aware of that, but thanks to such actions we have also achieved precision in the process of project costs control. From the very beginning, I insisted on the fact that the base of reporting and supervision was BCWP factor (budgeted cost of work performed); EVM (earned value management), the budgeted cost of work done. The idea was accepted with no greater resistance from th e team’s side ;) , so it’s been implemented now. Once a month we check out how much money we planned to spend on the current work and how much we have actually spent.

Tunnel Serbia

Source: privat

Why is this so important? Above all, for one simple reason - the control of the planned scope of work and the work done indeed.

Let’s have a look at some examples. We have the delay mentioned at the very beginning, which is the result of submitting the construction site too late. Lookin g at the budget execution rate alone, without BCWP, will surely please us: in the end we’ve spent less than planned. Yes, but we don’t see that we’re spending more on the current, already done project scope - there is no progress without the construction site. And now the key question arises: where do we get the data from? The simplest way to count BPCW is when we have the precise, real and detailed plan of execution for a given month. In addition to that, we use the buffer rule, comparing the base plan with the real execution. To be honest, at the beginning, my weekly and monthly reports sent to the team didn’t get much response. The situation changed when I added the perspective of budget execution. Only that did fill in the gap that usually occurs in this type of projects, namely the lack of information flow between the financial and executive part.


I will elaborate on this during XXI IPMA Poland Conference “The revolution in management”, so I invite all those who want to hear more details about it. Of course, there will also be other renown practitioners from the world of project management.


Best regards

Tomek Wrzesiewski

Tunnel Serbia Tomasz Wrzesiewski

Source: privat