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Risk
Published in David Shirley, Project Management for Healthcare, 2020
Earned value management (EVM) is used as a tool to discover variance in budgets and schedules to warn a project manager about a potential risk to a project. “EVM is an integrated management control system for assessing, understanding, and quantifying what a contractor or field activity is achieving with program dollars: Integrates technical, cost, schedule, with risk managementAllows objective assessment and quantification of current project performanceHelps predict future performance based on trends
Earned Value Method
Published in Seweryn Spalek, Data Analytics in Project Management, 2018
The well-known management consultant Peter Drucker (1909–2005) once said: “If you can’t measure it, you can’t manage it.” Most project managers know this very well and project teams are often obsessed with finding better ways to measure project performance. Projects generate large amounts of data and there is usually no shortage of methods to report project performance. The challenge is, however, that selective performance reporting may hide inherent problems from decision makers until it is too late to save the project. The earned value management (EVM) method gives practitioners a clear, numerical method for measuring project performance, and it allows managers to ask critical questions about the actual progress of a project. In this chapter, the principles of EVM and some common pitfalls are discussed.
Analysis of key factors causing delay in green buildings: An empirical study in China
Published in Konstantinos Papadikis, Chee S. Chin, Isaac Galobardes, Guobin Gong, Fangyu Guo, Sustainable Buildings and Structures: Building a Sustainable Tomorrow, 2019
The client and contractor should analyze the overall project cost and consider price fluctuation before the commencement of the work. Project cost monitoring and controlling techniques include (1) Earned Value Management (EVM), a mathematical method which can measure the actual performance of a project in terms of schedule and cost. It provides formulae to forecast the future performance of a project. The forecast is based on the current actual performance; (2) Performance Reviews in projects are required to check the health of a project. This usually involves cost and schedule as the main parameters to assess; (3) To-Complete Performance Index (TCPI) can be used to determine the project performance required to complete the project as planned.
Understanding and eliminating waste in Engineer-To-Order (ETO) projects: a multiple case study
Published in Production Planning & Control, 2023
Gabriele Jünge, Erlend Alfnes, Bella Nujen, Jan Emblemsvag, Kristina Kjersem
This enabler refers to the method used by the project team to track its performance. The empirical data show that the most used tool for measuring project performance is earned value management (EVM), which measures the project’s evolution in relation to the planned budget, time and resources. While EVM provides top management with a useful early indication of how the project’s overall performance, planning dedication and replanning should be taken care of to avoid EVM’s measurement of activities that do not give value to the project and are rather wasteful. Combining these three enablers called an integrated EVM system (Jünge et al. 2019). It means that all disciplines measure progress on both an overall project level (EVM) and on a discipline level, considering how planned activities and actual performance impact affect other disciplines’ activities. Hence, as confirmed by the analysis, the enabler project dedication reduces the likelihood of some wastes (e.g. 3.7. Wrong output due to a lack of analysis of impacts on downstream activities).
Integrated Risk of Progress-Based Costs and Schedule Delays in Construction Projects
Published in Engineering Management Journal, 2018
Salahi Pehlivan, Ali Erhan Öztemir
As one of the payment evaluation techniques, Earned Value Management (EVM) is often used to assess the performance of the project schedule and cost. EVM helps to identify the Estimate at Completion (EAC), which may differ from the Budget at Completion (BAC), based on the performance of the project (Project Management Institute, 2013). To progress as planned, payments are extremely important for contractors in terms of performance. The payment model can vary with the agreement that determines time and amount of cash inflows received. According to Sweis, Sweis, Hammad, and Shboul (2008), “financial difficulties faced by the contractor” are ranked as the most important reason for delays. Therefore, delay of a milestone (event) can cause delayed payment for a project. From this perspective, the probability of delayed payments is crucially important for contractors in budget estimation, particularly for bid/no-bid decision-making processes. For this reason, a simulation of risks on milestones provides a more accurate framework to estimate a final budget. Moreover, the integration of various approaches developed in this study can be used to predict the effect of risk factors on scheduling to minimize the cost risks by estimating the probable completion time of a construction project. It is not an easy task to integrate cost and schedule as noted by Cho, Hong, and Hyun (2010), where only repetitive project activities were considered for integration. Integrated approaches (Hulett & Nosbisch, 2012; Schatteman, Herroelen, Vonder, & Boone, 2008) are based on proposing a range of outcomes using existing critical path(s). However, this study proposes to take into account all activities that may generate new critical paths, as well as potential delays of these activities to understand the potential cost impact.
A technique for supporting decision process of global software project monitoring and rescheduling based on risk analysis
Published in Journal of Decision Systems, 2020
Many of the iterative methods and techniques available for project risk monitoring use earned value management (EVM). Concepts of EVM appear in many methods, techniques and frameworks available for risk management support. Bonato et al. (2019) integrate and apply EVM with Monte Carlo simulation for the purpose of project’s costs monitoring. Elwany and Elscharkavy (2016) focus on a technique to improve the present PM knowledge by identifying the effect(s) of integrating EVM with risk management and its impact in accurately forecasting the future performance of projects and how it leads to project success. The case study (Elwany & Elscharkavy, 2016) also investigates the use of EVM based on the financial and schedule risk distribution and the effect of EVM on project performance. Unlike in the literature studies performed in this article, according to Tereso et al. (2018), the concepts of EVM and risk management are usually considered separately in PM literature but should be considered as a whole. For this reason, they describe their framework to integrate the two concepts. KhodaBandehLou et al. (2016) have similar observations about EVM and risk management and they also suggest the integration method of the two concepts that maximises project performance. In Babar et al. (2016), an integration model of risk performance index (RPI), cost performance index (CPI) and schedule performance index (SPI), which extends the standard EVM model and allows to estimate better the EAC measure (Estimate at Completion). A graphical framework integrating the concepts of EVM and risk management is proposed in Acebes et al. (2013). This framework uses Monte Carlo simulation approach and suggests a simple method output in the form of five possible project states. What is more, the authors performed a sensitivity analysis on their method. Article of Acebes et al. (2014) is just another method that shows the advantages of integrating EVM and risk management into one methodology. Hayashi et al. (2019) propose a quantitative risk management method that is based on EVM and logistic regression analysis. Muriana and Vizzini (2017) combine EVM, risk management and project controlling into an adaptive risk analysis and mitigation technique in which preventive actions are taken to reduce the negative risk influence. For this purpose, they make use of all tree PM triangles measures. Unlike many risk management methods and techniques, their technique is deterministic. An overview of the methods and techniques connected with the concept of EVM (not necessarily in the context of risk management) can be found in Colin and Vanhoucke (2015) and Willems and Vanhoucke (2015).