Percent Complete or Money Spent? A Worked Example of Measuring Progress

Three different measures of progress on the same building can differ by fifteen points. A worked example of how to reconcile them and which one to trust.

Progress can be measured by money certified, by physical quantities placed, or by time elapsed against the programme. On any real project these three give different answers, and the gap between them is the information. This example works through one month on a building and shows what each measure was actually saying.

The situation

A four storey building is in month nine of a sixteen month programme. The contractor reports progress at 62 per cent. The owner wants to know whether that figure means anything and what the other measures say.

Assumptions (illustrative)

• Contract sum: SAR 20,000,000 with a sixteen month programme.
• Cumulative certified value at month nine: SAR 12,400,000.
• Value of work physically measured in place by the supervising engineer: SAR 11,000,000.
• Materials on site, paid for but not installed: SAR 900,000.
• Programme time elapsed: nine of sixteen months.
• Planned value at month nine from the baseline cash flow: SAR 13,000,000.
• These amounts are illustrative assumptions used to demonstrate the comparison.

Step 1: Progress by money certified

SAR 12,400,000 divided by SAR 20,000,000 gives 62 per cent.

This matches the contractor figure, which is unsurprising, because it is the measure that flatters a project where materials have been paid for in advance of installation.

Step 2: Progress by work physically in place

SAR 11,000,000 divided by SAR 20,000,000 gives 55 per cent.

Seven points lower. The difference of SAR 1,400,000 is money paid for materials on site and for measurement generosity, which is the real exposure if the contractor stops.

Step 3: Progress by time elapsed

Nine months of sixteen is 56 per cent of the programme consumed.

Time and physical progress are roughly aligned, which sounds comfortable until you remember that cost is not spread evenly across a programme.

Step 4: Compare against planned value

Planned SAR 13,000,000 against SAR 11,000,000 in place is a shortfall of SAR 2,000,000, which is 10 per cent of the contract sum.

Against the baseline cash flow the project is behind, even though the headline percentage looked reasonable. This is the comparison that matters.

Step 5: Convert the shortfall into time

At an average planned monthly value of roughly SAR 1,250,000, a SAR 2,000,000 shortfall represents about 1.6 months of work not done.

A vague sense of being slightly behind becomes a specific estimate of six to seven weeks, which is something you can act on.

Step 6: Separate the overpayment from the delay

Of the SAR 1,400,000 gap between certified and measured, SAR 900,000 is materials on site and SAR 500,000 is measurement in excess of work in place.

The materials portion is legitimate if properly secured and insured. The remaining SAR 500,000 is a certification question to raise this month rather than at the final account.

What changes the answer

• If the materials on site were not secured by title and insurance, the whole SAR 900,000 would be at risk rather than merely early.
• If the baseline cash flow had never been produced, the 10 per cent shortfall would be invisible and the project would look on track.
• If remaining work is weighted towards finishes, the monthly value rate rises, so the delay in weeks could be shorter than calculated.
• If the contractor has front loaded easy measurable items, the remaining work is more expensive per unit of progress than the average suggests.

What the numbers tell you

• Always ask for planned value from the baseline alongside certified value, because the comparison is where the information sits.
• Treat the gap between certified and physically measured value as your exposure if the contractor fails.
• Convert any shortfall into weeks, since a figure in weeks provokes action and a percentage does not.
• Deal with measurement generosity in the month it appears rather than saving it for the final account.

Limits of this example

Every figure above is an illustrative assumption used to show the method, not a quote, valuation or market rate. Costs, rates, fees and regulations change and must be confirmed with the relevant authority, lender or supplier before you commit.

Domira designs, builds and manages projects across Saudi Arabia for owners who are based abroad: land appraisal, feasibility, design, construction, handover and asset management under one accountable contract. Send us the plot or the brief and Domira will put the numbers in front of you before you commit.