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What you need to know

Run the monthly review on every phase before the prebill. Steps 1 to 5 find where the phase is and how it will finish. Steps 6 to 8 bill, collect, judge the phase, and plan the next month.

Update the Estimated Hours before you read any other number. Percent complete, Revenue, the invoice and the forecast all come from them. Effort to date divided by the Budget Effort measures only money spent.

Name the state, then do its response this month. Off track goes to the PIC as a recommendation. At risk goes on next week’s PM Plan as a Priority.

Effort is cost. Your target effort is the Budget Effort less your profit goal. A $280,000 phase at a 20 percent goal has a target effort of $224,000.

Print the Monthly Review Field Resource (PDF) for the whole review on one sheet, front and back.

8 steps, every month, before the prebill. The first 5 give you the position and the forecast. The last 3 turn them into action. The weekly check finds problems between reviews.

What to do

Seven actions. Do them in this order at each monthly review.

What to do

Update the Estimated Hours with the team, person by person. You make sure the hours are updated by working with the Project Accountant.
Calculate percent complete as Effort to date ÷ Estimated Effort. Use that number for Revenue, the invoice and the forecast.
Compare Estimated Effort with the target effort and the Budget Effort. That comparison is the forecast.
Ask the Project Accountant to update EAC when it differs from Estimated Effort by a large amount. Do it before the prebill.
Bill every month to percent complete. Subtract the total billed to date.
Make the specific ask at day 45 and the call at day 60, with the PIC aware.
Schedule next month’s hours in BST with the Project Accountant, then tell the team the plan.

What to watch out for

Seven warning signs. You can find each one on the PM dashboard or in the weekly check.

What to watch out for

Effort on plan and the work behind. The spend looks right and the phase is at risk. Oakhaven DD spent 50 percent of its target effort and was 40 percent complete.
Estimated Effort above the target effort. Profit drops below the plan.
Estimated Effort above the Budget Effort. The phase is forecast to lose money. It is off track.
Unbilled Days above 30. Earned work has waited more than one billing cycle for an invoice.
A WIP peak that does not drop, or peaks that get higher each month.
An invoice past day 45 with no ask from you.
Hours Remaining below zero. The team is charging hours faster than scheduled.

What to avoid

Seven habits that seem helpful but cause problems.

What to avoid

Reading Effort Percent Complete as the work done. It measures money spent.
Using the Effort Performance Index as the state. The Index shows only the profit earned to date. The state comes from the forecast and the milestones.
Holding an invoice while you wait for a client decision. Bill the earned fee, and work the decision separately.
Billing the full Revenue to date. Subtract the total billed to date.
Sending the aging report to Accounting and stopping there. You still own the collection.
Going to a later lever first. Close the open decision before you change the staffing, and change the staffing before the scope.
Updating the Estimated Hours and skipping the schedule. The dashboard then compares next month against an old schedule.

The numbers

Each number, how you get it, and the Oakhaven DD value from the videos.

Number	How you get it	Oakhaven DD
Budget Effort	The contract fee for the Task. Grace says fee. BST records it as Budget Effort.	$280,000
Target effort	The Budget Effort less your profit goal. It has no column on the dashboard.	$224,000
Effort	The burdened dollar value of the hours charged. The average direct labor rate times a uniform overhead ratio, so Effort is cost.	$112,000 to date
Estimated Hours	Hours to date plus hours to finish, person by person, from the team.	From the team
Estimated Effort	Estimated Hours × rate. The total effort the phase will use. Your working forecast.	$280,000
EAC	The accounting value BST uses to recognize revenue. The Project Accountant updates it from Estimated Effort.	$224,000, 25 percent low
Percent complete	Effort to date ÷ Estimated Effort.	40 percent
Revenue	Percent complete × Budget Effort. The Budget Effort earned to date.	$112,000
Effort Remaining	Budget Effort minus Effort to date. The Budget Effort that is left.	$168,000
Effort Performance Index	Revenue ÷ Effort. 1.0 is break even. The plan is 1.25 at a 20 percent goal. Add it as a column.	1.00
Invoice	Percent complete × Budget Effort, minus the total billed to date.	$28,000

Percent complete = Effort to date ÷ Estimated Effort

The 3 states

Judge the phase before step 8. Each state has a test and a response.

State	Test	Response
On track	Estimated Effort is at or below the target effort, and the work due is done.	Continue with the plan.
At risk	The forecast profit is below the plan, and at or above the margin floor in your Module 5 plan. Or the weekly check shows an early warning.	Work the recovery levers. A gap you can close goes on next week’s PM Plan as a Priority.
Off track	The forecast profit is below the margin floor, a milestone was missed, or Estimated Effort is above the Budget Effort.	Update the forecast and size the gap. Take a recommendation to the PIC with the situation, the options, your recommendation and the first action.

The 4 recovery levers

Use them in this order. Each lever applies to a different cause.

Lever	Use it when	Example from the module
1 · Close the open decision	A client or internal decision holds up the work or causes redraws.	Pinewood DD. The board has not approved the finish palette.
2 · Rework the resource plan	Senior staff do work that a lower cost role can do well.	Oakhaven DD elevations. Magnolia CD wall sections.
3 · Re scope the remaining work	The remaining work does not fit the remaining Budget Effort after levers 1 and 2.	Agree the new scope with the PIC first.
4 · Price the changes to the scope	Scope changes cause the problem.	Module 10

Bill and collect

You control the time from earned work to invoice. Grace’s collections protocol is in the Module 3 AR Guide.

When	Action	Who
Every month	Bill to percent complete.	Project Manager
Unbilled Days above 30	Earned work waited more than one billing cycle. Bill it now.	Project Manager
Day 45	Make the specific ask to the client.	Project Manager
Day 60	Call the client, with the PIC aware.	Project Manager
After the invoice	Follow up with the client’s accounts payable team.	Accounting

Days to cash = Unbilled Days + Receivable Days

The weekly check

Run it yourself first, then take the gaps to the weekly project team meeting.

Hours	Work	What it means
On plan	Done	The week went to plan.
On plan	Behind	Less progress per hour than the plan assumed. An early warning, so the phase is at risk.
Under plan	Behind	The staffing is short, or the work started late.

Hours Remaining = Estimated Hours minus hours to date minus hours scheduled to finish

Hours Remaining stays at zero when the team works to the schedule. Below zero, decide if the work needs more Estimated Hours or if future scheduled hours can come out. Make the change with the Project Accountant.

BST Dashboard Explainer

A recreation of the BST PM dashboard with Oakhaven DD selected. Choose a field, or click a column name or a panel title, to see what it shows, how to read it, and the step that uses it.

Before the prebill

If you cannot name the state of the phase, the review is not complete. Update the Estimated Hours, read the forecast, and name the state before the invoice goes out.