Value of work done (VOWD)
Value of work done definition
Value of work done (VOWD) is a project management and reporting technique for measuring the costs of a project at a specific point in time. Your value of work done represents the full value of work that has been completed against the commercial commitments of the same phase of work - regardless of payment or receipt.
The purpose of working out your value of work done is to understand your financial productivity. You can use it at a specific point in time during the course of a project, or at the end of a project.
Value of work done is used most commonly in the petroleum industry, but it can be used for any type of project, and is used in construction and other heavy industries which typically follow the engineer, procure and construct model.
Value of work done can be confused with similar earned value measures, but VOWD is based on measuring the work done compared to the committed costs - while earned value is usually measuring the costs against the initial plan.
Committed costs on most different types of projects include:
- Purchase orders
- Approved changes and variations
Value of work done combines all of the above and potentially more inputs to create a comprehensive determination of the full value of goods and services committed to at a point in time.
Let's take a look at more value of work done details - including how its actually calculated.
Value of work done calculation
How you calculate your value of work done will depend on the type of cost commitments and type of outputs on your projects. In the petroleum and engineer, procure and construct industries, value of work done is measured in actual production or progress.
This production usually requires documented evidence, so that the project manager can understand progress against the deliverable.
Once you understand your actual progress, usually as a percentage of completion against the deliverable, you can measure that against the committed costs of that item or phase of works which is usually known as it was defined in the purchase order or contract.
To get a better idea of a value of work done calculation, let's take the example of a construction project.
The project has currently amassed 500 labour hours at a contracted labour cost of $50 per hour. This gives us a total labour cost of $25,000.
On top of that, the project manager has compiled receipts for $20,000 in material costs, which brings our value of work done to $45,000.
Based on our actual costs above, we know our value of work done.
At this point in the project, say we are 50% through, we were expected to have incurred $50,000 in costs, meaning we are under budget.
For fixed quotes, the value of work done calculation can look a little different.
Let's say we enter a contract to build four (4) brickwalls for a fixed price of $20,000 on the assumption that it will take us 20 hours ($1000 per hour).
If we are especially productive and get the walls built in 15 hours, then the value of work done would equate to $1,333 per hour.
There's a few different ways and lenses to look at value of work done through, and it will look different based on what type of work you are doing - and what you are looking to derive from your value of work done calculations.
Value of work done in project management
One of the most important aspects of managing any project is keeping it on track. For almost all projects, the two major dimensions of on-track are cost and time (or schedule).
Value of work done is another one of the tools we have at our disposal to better understand how we are tracking from a cost perspective. The more information we have on how we are tracking, the more likely we are to course-correct or make smart decisions which keep us on track.
Tracking value and costs in real-time
As we have seen from above, value of work done can only be calculated properly and used properly when we understand our committed costs and work done properly.
Our committed costs can usually be found and compiled through our invoices and accounting tools, while our labour hours and other work done need to be tracked too.
Many companies use real-time systems for tracking this data so that they can be confident in their value of work done data - which you can learn more about below.
Value of work done is another important project management tool. Like most metrics in project management, it doesn't solve all of your problems nor give you all of the information - but it as an important part of the arsenal, especially in industries where other parties and management lean on it such as the petroleum industry.
People in 100+ countries use this software to track the value of work done in real-time.