User:Chnodomar~enwiki/Value of work done

Value of Work Done (VOWD) is a project management technique for measuring project cost. It is mainly used in project environments of the Petroleum industry and is defined as the value of goods and services received, regardless of whether or not they have been paid for.

Introduction to Value of Work Done
Unlike the Earned Value, which measures the value of goods and services received as a percentage of the planned value, the VOWD is not measured against the plan, but against the Forecast. From an Earned Value Management point of view, the VOWD is comparable to the Actual Cost rather than the Earned Value.

The main methods of calculating VOWD are as follows:

VOWD for Engineering, Procurement and Construction (EPC) Services

VOWD of EPC (contract) Services are measured in terms of actual physical progress based on the documentary evidence of the deliverable produced. The VOWD is determined by applying the percentage of physical progress achieved to the current estimated value of the cost of that item, which is in general the contract value, including any approved changes.

VOWD for procured Bulk Materials

The VOWD for procured bulk materials is calculated based on the quantities of materials delivered. The percent complete is calculated by dividing the quantity of material received at the site by the total quantity required for the project. The resulting percent is multiplied by the current agreed budget of the material item to obtain the VOWD for that item.

VOWD for procured Major Equipment

The VOWD for Major Equipment is based on weighted values of items of equipment. At the outset of the project a list of Equipment is prepared, and the weighted (%) value of each piece of equipment, with the sum of the weighted values of all items totaling 100%. When an item of equipment is received on site the percentage contribution of that equipment is added to the previous months weighted value of all other equipment to determine the total cumulative percentage value of equipment received on site. The VOWD of Major Equipment is calculated by multiplying the weighted percentage value of all equipment received at site by the total current approved contract value of the Major Equipment scope.

VOWD for Construction

For Construction the physical percent complete of any element of the work is measured based on a physical measurement system (but not in terms of job-hours expended, as the measurement system needs to be fixed during the project duration).

Shortcomings of the Value of Work Done
The value of work done does not really show the actual value of the work performed. It in fact shows the accrued cost of the work done. Example: If one person is sitting in an office for one year creating costs of $100,000 to the project without doing anything productive, then the VOWD would be $100,000 even though the real value to the project was zero.