Thank you for your insights regarding the “prompt pay” opportunities as it relates to earned value management for contractors. While prompt pay is an option within various contract types, simply offering earn value as a reporting solution does not obligate business owners to agree to such a contract.

However, proposing a cost-plus incentive fee contract type would undoubtedly influence a prospective client to accept the “prompt-pay” option. The reason is because this contract type encourages contractors to meet the agreed upon baseline cost.

Your insights warrant a more in depth article which describes the pros and cons of various contract types. Does any care to meet this challenge?

Regards,
Kevin L. Smith, MBA, PMP
Provident Enterprises

Earned value, implemented the way it was designed, enhances contractor cash flows. As contractors (and everyone in the supply chain) live or die by their cash flows, by ensuring that governments and owners pay promptly for work done correctly and in conformance to the contractual requirements, everyone benefits. The contractors do not need to obtain as much interim (expensive) financing and “prompt payment” serves as an incentive for contractors to complete the work quickly and correctly.

Few books on project management emphasize the advantages to both contractor and owner that can accrue when EVM is implemented correctly and appropriately.

BR,
Dr. PDG, Jakarta