A plan is only useful if we can compare it to what is actually happening.
I learned why this matters as the project manager on a hospital expansion in Newport, Oregon. We started late, but the completion date held. Once we were erecting steel, the job seemed to be moving reasonably well. I was caught up in the commercial and coordination work and missed how the earlier issues were catching up with us. We worked substantial overtime toward the end, and the job went over budget. I didn’t have a good way to connect our progress with the manpower and hours we were spending. I needed that picture earlier.
By this point, we have broken the job into work packages, assigned budgeted hours, built a schedule, and established rules for claiming progress. That gives us enough structure to check if the work is earning hours faster or slower than we are spending them.
We do not need to turn this into a full earned value management exercise. We need three numbers:
- Budgeted hours
- Claimed progress
- Actual hours worked
From those, we can get a useful read on labor performance.
Actual hours need a practical basis.
Matching actual hours to earned work is a challenge. Breaking the hours up by crew makes it easier. If we know when the raising gang worked and have the foreman’s pick tickets, we have a reasonable basis for splitting those hours between sequences.
It is possible to code every hour by sequence and operation, but ironworkers are usually focused on getting steel in the air. We need some flexibility. Use the crew hours, pick tickets and the weekly conversation to make a reasonable allocation. When something is unclear, ask.
The hours and earned work still need to cover the same scope and reporting period. The allocation does not need to be exact to help us understand the trend and where to look.
Know when the information is good enough to support a decision. More detail is useful when it changes what we do. Otherwise, it can become another reporting task the field has to carry.
Turn progress into earned hours.
Suppose Sequence 1 has a budget of 1,000 labor hours.
Based on the agreed rules of credit, the sequence is 40% complete.
Earned hours = Budgeted hours × Claimed progress
1,000 hours × 40% = 400 earned hours
The crew has completed the amount of work we expected to require 400 hours.
Now compare that with the crew’s actual hours.
| Sequence 1 | Hours |
|---|---|
| Budgeted hours | 1,000 |
| Claimed progress | 40% |
| Earned hours | 400 |
| Actual hours worked | 360 |
| Variance | +40 |
The crew spent 360 hours and earned 400.
At the labor level, that is favorable. We are earning hours faster than we are spending them.
The basic calculation is:
Labor variance = Earned hours − Actual hours
- Positive means we are gaining hours.
- Negative means we are losing hours.
- Zero means we are tracking with the budget.
Another simple way to express it is the rate at which we are earning hours:
Earned rate = Earned hours ÷ Actual hours
400 ÷ 360 = 1.11 hours earned per hour worked
For every hour spent, the crew earned 1.11 budgeted hours.
If the same crew had worked 460 hours to earn the same 400:
400 − 460 = −60 hours
The crew would be earning:
400 ÷ 460 = 0.87 hours per hour worked
That is an unfavorable trend. We are spending labor faster than the work is being completed.
Put it back into the production workbook.
The progress claim already gives us earned hours. The weekly load gives us the hours we planned to spend. The only new input is the crew’s actual hours by week.
That gives us three cumulative curves:
- Planned value: the budgeted hours scheduled to be complete by that week
- Earned value: the budgeted hours attached to the work actually claimed complete
- Actual hours: the hours the crews have actually spent
Planned, earned, and actual labor
Above 1.00: favorable · 1.00: on target · below 1.00: unfavorable
Ratios compare cumulative work at the status date. Schedule performance measures budgeted work, not days gained or lost. At full completion EV ÷ PV returns to 1.00, even if the work finished late.
In the workbook example, the team has earned 5,876 hours through Week 8 and spent 5,550. The labor variance is positive 326 hours.
The same weekly entry records tons erected and crane picks. That lets us compare the three production metrics we have been using throughout the series:
MH/ton and MH/pick are labor-efficiency measures. Picks/ton describes the work mix. More picks per ton can push MH/ton higher even when the crew is handling each pick efficiently, so it should not be treated as favorable or unfavorable by itself.
Use the trend to focus attention.
These numbers are not absolute truth.
A positive variance does not automatically mean the project is profitable. A negative variance does not automatically mean the crew is performing poorly. The original budget could be wrong. The scope may have changed. Progress could be claimed too early or too late. The crew may be dealing with access, material, engineering, crane, or sequencing constraints.
If one sequence is consistently earning 0.85 hours for every hour worked, that gives the team somewhere to look:
- Is the work package different from what was estimated?
- Is the crew waiting on material or information?
- Is the crane supporting the planned production rate?
- Are picks smaller or more complicated than expected?
- Is the follow-up work keeping pace with erection?
- Are the rules of credit accurately reflecting completed work?
None of this tells us exactly what went wrong. It shows us where the plan is starting to break down and where the team should look next.
Close the loop while the work is still moving.
This should be reviewed by work package and over time, not only as a project-wide total.
A good sequence can hide a bad one. The raising gang can look productive while hours build up in the plumb, bolt, weld, deck, or punch work behind it. The total may look fine while unfinished work accumulates between operations.
When I review the update with the project team, I usually flag the variances that need attention. The superintendent is already involved in the update process and generally has a good understanding of what is happening in the field. We compare the budget with actual performance to understand whether we have a bust in the estimate, a production issue or some combination of the two.
Once we understand what is driving the difference, the real work is figuring out how to work through it. My role is to help the team understand what the numbers are showing and evaluate the available options and their effect on the plan. The superintendent and project team make the decisions.