Operion Journal
The weekly report says 80% complete and ahead of schedule. Then the quarterly finance report shows 95% of budget consumed and the margin gone. Progress measures how far the work has moved; profitability measures what that movement cost against its value. Tracking one without the other misleads.
Different measures of the same project
| Measure | Question | Usual source |
|---|---|---|
| Technical progress | How much work is done? | Engineer and consultant |
| Billing progress | How much has been billed or approved? | Progress bills |
| Budget consumption | How much planned cost is spent? | Accounts and purchasing |
| Profitability | Does the value of work done cover its cost? | Comparison of the above |
Why progress alone misleads
- It is often estimated optimistically.
- Easy work is done first.
- It ignores cost such as overtime.
- It ignores billing and cash.
Why accounting profit alone misleads
- Costs arrive late.
- Stored materials may or may not be charged.
- Revenue waits for progress bills.
Earned value
Planned value is the planned cost of work scheduled to date; earned value is the planned cost of work actually done; actual cost is what was spent. Actual above earned means overrun even if ahead of schedule; earned below planned means late.
| Situation | Schedule | Cost | Meaning |
|---|---|---|---|
| Ahead and profitable | Better | Below earned | Healthy |
| Ahead and costly | Better | Above earned | Speed bought with margin |
| Late and profitable | Worse | Below earned | Efficient but poorly planned |
| Late and costly | Worse | Above earned | Urgent action |
How an ERP brings them together
- Budgets per item on the project and tasks.
- Progress updated on tasks.
- Actual cost collected automatically; see linking costs.
- Billing from linked progress bills; see contract to cash.
- One report with progress, cost, billing and margin.
ERPNext projects hold percent complete, actual cost, billed amount and gross margin, and reports can add earned value indicators.
Who sees what
- Project manager: weekly progress and cost per item.
- CFO: expected margin at completion and the progress-billing gap.
- Executives: "late and costly" projects first.
Common mistakes
- Meetings that discuss progress only.
- Eyeballed progress instead of measured quantities.
- Late supplier invoices flattering profit.
- Not updating cost at completion.
See ERPNext for construction and Smart Buildex, or request a demo.
Frequently asked questions
Progress vs profitability?
Progress measures work advanced; profitability measures whether its value covers cost with a margin.
What is earned value?
The planned cost of work actually done, compared with actual cost and planned value.
Does ERPNext show project profitability?
Yes, with actual cost, billed amount and margin, plus custom earned value reports.
How often to review?
Weekly per item, monthly at management level.
