Cost Control of Construction Projects Through Earned Value Analysis
Cost Control of Projects:
An Introduction to Earned Value Analysis
Abstract
Earned value analysis is a method of performance measurement. Many project managers manage their project performance by comparing planned to actual results. With this method, one could easily be on time but overspend according to the plan. A better method is earned value because it integrates cost, schedule and scope and can be used to forecast future performance and project completion dates. It is an “early warning” program/project management tool that enables managers to identify and control problems before they become insurmountable. It allows projects to be managed better – on time, on budget.
Introduction
Different traditional approach like performance reviews; project audit reports and key performance indicators have the limitation to relate the true cost performance of the construction project. Usually two data sources are used in traditional approaches, the actual expenditures and budget expenditures. The physical amount of work performed cannot determine by only compare these two data sources and it does not indicate anything about what has actually been performed for the cost spent, or performed according to the schedule. This paper briefly discusses about the Earned Values Analysis (EVA) as the alternative tools to control and monitor the projects.
Earned Value Analysis
Earned Value Analysis (EVA) is a management tools to evaluate the performance of a project and also indicate what will happen in the future. EVA is an enhancement for the traditional approaches. Usually traditional approaches only focus on planned expenditures and actual expenditures and EVA goes one step further to examine the actual accomplishment. EVA will give managers more clear picture for the project. Sometimes, it acts like “early warning” tools that manager able to identify and solve the problems before they become insurmountable. It also provides a quantitative basis for the estimate cost and
An Introduction to Earned Value Analysis
Abstract
Earned value analysis is a method of performance measurement. Many project managers manage their project performance by comparing planned to actual results. With this method, one could easily be on time but overspend according to the plan. A better method is earned value because it integrates cost, schedule and scope and can be used to forecast future performance and project completion dates. It is an “early warning” program/project management tool that enables managers to identify and control problems before they become insurmountable. It allows projects to be managed better – on time, on budget.
Introduction
Different traditional approach like performance reviews; project audit reports and key performance indicators have the limitation to relate the true cost performance of the construction project. Usually two data sources are used in traditional approaches, the actual expenditures and budget expenditures. The physical amount of work performed cannot determine by only compare these two data sources and it does not indicate anything about what has actually been performed for the cost spent, or performed according to the schedule. This paper briefly discusses about the Earned Values Analysis (EVA) as the alternative tools to control and monitor the projects.
Earned Value Analysis
Earned Value Analysis (EVA) is a management tools to evaluate the performance of a project and also indicate what will happen in the future. EVA is an enhancement for the traditional approaches. Usually traditional approaches only focus on planned expenditures and actual expenditures and EVA goes one step further to examine the actual accomplishment. EVA will give managers more clear picture for the project. Sometimes, it acts like “early warning” tools that manager able to identify and solve the problems before they become insurmountable. It also provides a quantitative basis for the estimate cost and
References: 1. Frank, T.A. (2003) Earned Value Project Management Method and Extensions, Project Management Journal, 34(4), pp.12-23 2. Brandon, D.M.(1998) Implementing Earned Value Easily and Effectively, Project Management Journal,29(2), pp.11-18 3. Kim, E.H., Wells, W.G. & Duffey, M.R.(2003) A Model for Effective Implementation of Earned Value Management Methodology, International Journal of Project Management, 21, pp. 375-382 4. Cioffi, D.F. (2006) Designing Project Management: A Scientific Notation and an Improved Formalism for Earned Value Calculations, International Journal of Project Management, 24, pp. 136-144 5. Lipke, W., Zwikael, O., Henderson, K. & Anbari, F. (2009) Prediction of Project Outcome: The Application of Statistical Methods to Earned Value Management and Earned Schedule Performance Indexes, International Journal of Project Management, 27, pp. 400-407 6. Noori, S., Bagherpour, M. & Zareei, A. (2008) Applying Fuzzy Control Chart in Earned Value Analysis: A New Application, World Applied Sciences Journal, 3(4), pp. 684-690