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Sistemas & Gestão 10 (2015), pp 194-202
PERFORMANCE MONITORING USING EVM INDICATOR: A STUDY CASE OF
CONSTRUCTION PROJECTS IN THE PUBLIC SECTOR IN BRAZIL
MONITORAMENTO DE DESEMPENHO UTILIZANDO O INDICADOR DE EVM: ESTUDO DE
CASO EM PROJETOS DE CONSTRUÇÃO NO SETOR PÚBLICO NO BRASIL
Joaquim Teixeira Nettoa
; Osvaldo L. G. Quelhasa
; Sérgio Françaa
; Marcelo Meiriñoa
; Valdir Lameiraa
a
Universidade Federal Fluminense (UFF) - Niterói, RJ, Brasil - Laboratório de Tecnologia, Gestão de Negócios & Meio Ambiente (LATEC)
PROPPI / LATEC
DOI: 10.7177/sg.2015.v10.n1.a16
The control of performance through indicators is a very important management tool for companies. The EVM
(earned value management) indicator has been used as a management tool in various types of projects. It has been widely
used in construction engineering; however, some authors have identified differences in its use between theory and practice.
The main objective of this paper is to compare the practice in the market to the theory of EVM in civil construction projects
in the public sector in Brazil.
A study case was conducted of three construction pro-jects in the public sector. The results of the survey were
analysed on the basis of a qualitative approach which indicated differences concerning the theory and practice of EVM. With
the aim of verifying these dif-ferences, the applicability of the model was analysed from the point of view of relevance and
adequacy. Later, a detailed study from the perspective of the training and practices of project management was conducted
in the contracting companies.
Keywords: project management; EVM; earned value management; performance in civil construction.
Abstract
1. INTRODUCTION
Kahn (2011) emphasizes the importance of research in
order to improve performance in development projects in
emerging countries. He describes the four BRIC countries
(Brazil, Russia, India and China), referred to as the world’s
factory (China), the garden of the world (Brazil), the gas in
the world (Russia), and the back office of the world (India).
South Africa is added to the group of BRIC countries as the
world’s jeweller and is indicated as a gateway in Africa to the
BRIC countries, having considerable experience in mining
exploration, extraction and the processing of minerals.
Garces et Silveira (2002) outlines the legal mechanisms for
disseminating the restructuring of all activities in the public
administration in Brazil. They detail the form of integration of
principles in project management in Brazilian public projects
and define the position of the project manager and his/her
mainresponsibilities,anddescribehownewlegalmechanisms
create the mandatory annual performance monitoring of
Brazilian public projects.
Increased competition on a global scale and rapid
technological development has caused companies to
improve the internal controls of their own and their
customers’projects(Kimetal.,2003).Indicatorsareessential
management tools in monitoring and evaluating project
activities, as they allow the achievement of goals to be
monitored as well as advances and improvements in quality
to be identified. To monitor the project is to compare the
current with the planned situation, determining if the costs
and the schedule are progressing according to plan, in order
to take corrective action when needed (De Marco et Timur,
2013).The performance indicator in engineering projects
is particularly important because it allows problems that
may occur during the course of the project to be foreseen,
enabling adjustments and corrections, as well as avoiding
deviations from the plan. EVM (earned value management)
is a powerful tool in managing scope, time and costs,
allowing scheduled performance indices and costs to be
achieved (Anbari, 2003).
Research conducted by the ICPMA (International Council
for Project Management Advancement) (2002) shows that
theEVMisthemostusedperformanceindexinconstruction.
Table 1 shows the percentage use of the indicator in each
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DOI: 10.7177/sg.2015.v10.n1.a16
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segment of the industry. Eighty per cent of businesses in
civil construction use it, as do 76.47% of those in other
engineering areas and 56.47% of those in IT (information
technology). Construction is a type of complex project with
many uncertainties; however, despite the different cost
controls, the construction industry has adopted the EVM
indicator to control cost (Al Jibouri, 2003).
Type of Project Percentage of
Responses
Civil Construction 80.00%
Engineering 76.47%
IT 56.47%
Defence 51.76%
Finance 32.94%
Processing 31.76%
Human Resources 17.65%
Other 8.24%
Table 1 – Percentage of EVM implementation by project type
Source: ICPMA (2002)
Despite being well known in the market, EVM application
in projects is not simple. Depending on how the indicator is
used, performance variations may occur disguising the real
situation. It is necessary, therefore, to define appropriate
processes to achieve earned value. It is important to
consider the choice of a suitable methodology to monitor
performance by using earned value (Fleming et Koppelman,
2010). According to Kim et al. (2003), the greatest problems
in using EVM refer to understanding the methodology.
According to the (PMI Standard EVM 2nd ed.,2011), for
successful EVM use it is necessary for the company to have
in place an information system, together with policies and
procedures for its use, as well as proper training for the
project team. According to Kim et al. (2003), the use of
integrated software for project management is crucial to the
success of EVM implementation.
In comparison with other industries, the construction
industry has been left behind as far as the use of EVM is
concerned. In addition, it has had difficulty in adapting the
EVM methodology to practice (De Marco et Timur, 2013).
According to Fleming et Koppelman (2010), the most
worrying factor is the fact that many construction companies
use the planned value of costs and the present value of costs
without considering a third dimension, the aggregate value.
According to Song (2010), the aggregate indicator is known
in the construction industry as aggregate hours or aggregate
dollars.
This research aimed to investigate whether differences
exist between theory and practice in the use of EVM in the
construction industry in the public sector in Brazil and the
possible causes of this discrepancy.
2. EARNED VALUE MANAGEMENT
The earned value indicator evaluates the performance
of projects in three key dimensions: schedule, scope and
cost. These three dimensions are recognized by the PMI
(Project Management Institute) as the “iron triangle” and
their importance is recognized for their efficiency in project
control PMBOK (2013). The earned value indicator is derived
from the cost of each phase of the project. To ascertain the
value of the indicators, the activities need to be quantified in
terms of cost and completion dates for each task. According
to Vargas (2008) the earned value technique meets the goal
of linking time, scope and cost.
The EV indicator is ascertained from the completed
activities and their associated value called EV. Figure 1
illustrates the baseline budget or planned cost, called the PV
(planned value), the EV and the AC (actual cost).
Figure 1 – EV graph
Source: Adapted by the author from Vargas (2008)
The ANSI / EAI 748 (1998) define 32 processes for the
implementation of EVM; these processes were further
simplified by PMI (Project Management Institute) 1996.
AccordingtoFlemingetKoppelman(2010),thissimplification
brought great acceptance of the use of the indicator and can
be fully utilized in projects of any size.
In the analysis of the implementation of procedures for
EVM, it was also necessary to identify the main processes
of the EVM of the companies selected. In Figure 2 details
the main processes of the planning and operation cycles of
the EVM.
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Figure 2 – Indicator value (EVM) processes.
Source: Adapted by the author from PMI Standard EVM (2011).
According to PMBOK (2013), to perform the tasks of the
project it is important to divide the work into smaller pieces,
so that it is easy to define and control. The lower parts of the
division of scope are known as the WBS (work breakdown
structure) and to establish the WBS it is necessary that all the
previous processes and management projects are already
completed, such as the project charter, strategy, stakeholder
management, requirements documents and scoping.
According to Fleming et Koppelman (2010), the cost
account plan should integrate the WBS with the work to be
performed, allowing measurements of cost for each WBS
item. The process to “define cost account plans” uses the
division of work packages previously defined by WBS. Each
work package will have an account code already defined
by the WBS and will provide the basis for analysing the
expenses.
According to Kerzner (2010), establish budget defines the
cost of each item of the WBS, which in sum should be the
total cost of the project. The budget shall include items of
direct cost, indirect cost, materials and human resources
for each activity and also reserve funds. This cost shall be
allocated in the cost accounts plan defined previously.
According to De Marco et Timur (2013), develop schedule
process defines the baseline schedule, setting the start and
end dates of each activity of the project. The cost of each
work package should be added to the schedule; therefore,
the final schedule integrates the cost and timelines of the
projectandwillbeusedtomeasurethebaselineperformance
known as the PMB (performance measurement baseline).
According to PMI Standard EVM (2011), determine
measurement methods process is clearly defined as
quantifying each item. This measurement will depend
on the type of contract and also the type of activity to be
carried out. The types of activity are: discrete effort, shared
effort and level of effort. Discrete effort can be broken down
as: fixed formula weight milestones, per cent complete and
physical measurement.
Kerzner(2010)arguethataftercompletionoftheplanning
processes, the operating cycle begins. In order to control
the execution, it is necessary to evaluate the performance
variation, considering the work done within the established
period of measurement. The change in project performance
is ascertained by comparing the predicted value (baseline
design) with the amount realized .When starting the
operation cycle, the work authorization document must be
issued.
According to Fleming et Koppelman (2010), In accordance
withperformanceinthetimeperiod,theschedule,aggregate
costs and actual costs should be updated. The update of the
actual cost must include the cost of materials and services
during the evaluation period. Each cost item should have
been previously established in the account plan.
According to De Marco et Timur (2013), the manage
performance process the value of the cost performance
indicator, CPI (cost performance index), and schedule
performance indicator, SPI (schedule performance index),
will be evaluated.
The change control process provides the controls to
change the project and still provide corrective measures in
the event of deviations in the time and cost indices (PMI
Standard EVM, 2011).
Lipke (2013) argues that despite the fact that EVM has
been used for the last 40 years, its use is not simple and
requires complex management that involves schedule
control, precise control of costs and control of the aggregate
value (work done). The author further argues that the
classification of maturity in project management by OPM3
(Organizational Project Management Maturity Model) using
indicators begins at maturity level 2 (managed) and evolves
to higher levels.
ResearchdevelopedbyVargas(2003)inthreeconstructions
projects identified the following critical factors for EVM
use: management support, team qualification and defined
project scope. According to Valle (2006), the critical factors
for EVM use are: indicator report, schedule control, assigning
responsibilities to each item in the WBS, management
support, team qualification, scope well defined, workflow
and activities, continuous learning process. According to
Kim et al. (2003), the training in and practice of EVM are
critical success factors. Fleming et Koppelman (2010) argue
that, for the use of such an indicator, it is necessary for the
company to be mature enough. It appears that maturity
in project management and training in EVM are common
requirements among the authors cited in this article.
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3. PROJECT MANAGEMENT MATURITY
Some maturity models in project management have
been developed by the scientific community: all models are
based on the idea of assessing organizational competence in
performing project management activities. Kim et al. (2003),
Song (2010), Lipke (2013)
Project management maturity, according to the PMBOK
(2013) model, is based on OPM3 (2013). The levels of
maturity defined are:
• Level 1 – The use of project management practices in
the organization are practically non-existent. There is no
interest in recognizing the benefits from the use of project
management practices. When there is some recognition, it
is merely to meet certain requirements for a client in hiring
the services of the organization.
• Level 2 – The need to implement processes and
methodologies that support project management and
measuring indicators are perceived. The importance of
acquiring knowledge in project management is recognized.
Project Managment covers scope, time and cost.
• Level 3 – The processes are integrated and there is
support from top management. Project management
methodologies based on guides and checklists are used.
Training in project management is continuous. Project
management is part of the company’s culture and its
benefits are recognized.
• Level 4 – A project management office is established
and this is dedicated to continuous process improvement
and project documentation. Measurements (benchmarking)
covering the quantitative and qualitative aspects of the
projects are undertaken.
• Level 5 – Project management is optimized and
continuous improvements from lessons learned are
documented and used in projects. There is continuous
strategic planning for project management.
It was verified that, according to the levels previously
described, measurement with the indicators starts only
from level 2 of maturity.
According to the research into maturity in project
management undertaken by Prado (2012), the average
maturity in construction companies is low according to the
assessment made in 2012.
4. METHODS
The research has been characterized as applied or
technological because it creates products and processes for
immediate and practical application, as far as performance
indicators in projects and engineering works are concerned.
The approach is exploratory as it attempts to clarify facts
seeking greater familiarity with the problem. The relevance
in the scientific international literature is presented by
Figueiredo (2009) who highlights the shortage of conceptual
contributions as well as of management contributions. The
latterfocusedontheimprovementofdesign,implementation
of empirical research and innovation strategies in project
management from the perspective of technological learning
in the context of emerging economies. Such a view will
hopefully contribute to enlarging the comprehension of the
complex process of technological development as well as of
project management.
The sequence of the methodology used is shown in figure
3.
Figure 3 – Methodological sequence
Source: Authors 2014
Initially, the literature on the subject will be reviewed and
a problem situation will be formulated and then hypotheses
built. Finally, through study case, the differences mentioned
in the literature identified.
The results were validated through study case with a
qualitativeapproach,whereobservationaswellasdocument
revision and informal interviews with engineers and
technicians in the planning sectors of companies were used.
The study case was conducted in three civil constructions in
the public sector and occurred between 2012 and 2013, in
the State of Rio de Janeiro in Brazil.
In the analysis of the implementation of procedures for
EVM, it was also necessary to identify the maturity in project
management of the companies selected.
This research attempts to answer the following question:
Are there differences between the theoretical model and
the practical use of the earned value performance indicator
in civil construction in the public sector in Brazil?
According to Leedy (2000), after defining the problem,
the next step is to formulate the hypotheses that could
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answer the proposed problem and guide the next steps of
the research. To answer the central question the following
hypotheses are formulated:
•	 H1 - The Company considers EVM use relevant: The
company has a perception about the importance of
using the EVM for project performance.
•	 H2 - Usage the EVM Theoretical Model: The EVM
theoretical model is used by the companies.
•	 H3 - The Company considers EVM use adherent: It is
understood that it is possible that the proposed EVM
analytical models are appropriate to the needs of
construction companies in measuring performance.
•	 H4 - The Company considers EVM use complex: The
complexity of the models, states that EVM models
are complex and difficult to understand.
•	 H5 - The Company considers EVM difficult to
operationalize: Operationalization difficulty
implementation of EVM by the companies.
•	 H6 - The team don’t have qualifications in EVM. The
companies have no qualified personnel to implement
the earned value indicators.
•	 H7 - The Company do not have maturity in project
management. The companies do not have no
maturity in project management a find difficulty to
implement the earned value indicators.
After the hypotheses definition, a set of variables have
been defined. According to Bacharach (1989), variables are
observed units and constructors are approximate units that
can not observed directly.
The table 2, define hypothesis as constructors, variables
and evidences for field research.
Hyp Constructos Item Variables Source of Evidence
H1 The company considers EVM
use relevant.
1 Relevance of Evm using. Interview
H2 Usage the EVM Theoretical
Model
2 The formulas for calculating the performance
indices and the graphics were in accordance with
the theory.
Documentation
3 WBS defined. Documentation
4 Cost account plans (CAP) defined. Documentation
5 Budgets established. Documentation
6 Measurement methods determined. Documentation
7 Schedule developed. Documentation
8 Work authorization. Documentation
9 Work performance Documentation
10 Schedule updated Documentation
11 Cost updated Documentation
12 Manage Cost Performance Documentation
13 Manage Schedule Performance Documentation
14 Change control Documentation
H3 The company considers EVM
use adherent.
15 Adherence to EVM Interview
H4 The company considers EVM
use complex.
16 Complexity to EVM Interview
H5 The company considers EVM
difficult to operationalize.
17 Difficult to operationalize EVM Interview
H6 The team has qualifications in
EVM analysis.
18 Qualification of the team for the EVM Interview, Documentation
H7 The company has maturity in
project management.
19 Team maturity in project management Interview, Documentation
Table 2 – Constructs, variables and evidence source
Source: Authors 2014
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4. CASE STUDY
In order to evaluate the practice of the construction
industry in the use of project performance using EV analysis,
three construction projects were analysed.
The projects were carried out in Rio de Janeiro in the
period 2012 to 2013. The firms were large companies in
different sectors (energy, airport infrastructure and public
health), all with nationwide coverage.
Theselectedprojectswereanalysedthroughdocumentary
research, unstructured interviews and field observation and
the projects are summarized in Table 3.
Item
Project 1
(Company A)
Project 2
(Company B)
Project 3
(Company C)
Scope Road access to equipment, 18 km
long with 15 bridges.
Enlargement of airport
runway.
Administrative office
building with 4 floors.
Start 10/01/2012 29/10/2011 02/04/2012
Time 24 months 24 months 23 months
Budget U$ 79,100,000.00 U$ 26,700,000.00 U$ 18,600,000.00
Industry Energy Airport infrastructure Public health
Type of
company
Public Public Public
Company size Large Large Large
Contractor
segment
Civil construction Civil construction Civil construction
Contract type Fixed-Price Fixed-Price Fixed-Price
Software used MsExcell, MsProject MsExcell, MsProject MsExcell, MsProject
Table 3 – Projects from Case Study
Source: Authors 2014
The projects selected are from different scope: road
access to equipment, enlargement of airport runway,
administrative office building. The company size is Large
from civil construction segment and fixed-price contract.
The software use is MsExcell and MsProject.
5. RESULTS
Table 4 summarizes the data from the interviews and
observation in documents conducted during project
execution. The interviews followed to verify the hypothesis
of:relevance,useoftheoreticalmodel,adherent,complexity,
qualification in EVM, operational difficulty and maturity in
projects.
From the literature review and the results of study case,
the intention was to find differences between the theory
and practice of EV in construction. Table 3 analysed the
implementation as regards the theory of EV and Table 4
analysed the relevant information regarding the companies
involved.
Item Variable Project 1 Project 2 Project 3
1 Relevance of using Evm. Yes Yes Yes
2 The formulas for calculating the
performance indices and the
graphics were in accordance
with the theory
Use formulas and
graphical View
Use formulas and
graphical View
Use only graphical
View
3 WBS defined Use WBS Don´t use WBS , only
a list of material
Don´t use WBS , only a
list of material
4 Cost account plans ( CAP )
defined
Use CAP Don´t use CAP Don´t use CAP
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5 Budgets established Budgets was
established
Budgets was
established
Budgets was
established
6 Measurement methods
determined
Use measurement
methods
Use a list of material
with costs and
methods
Use a list of material
with costs
7 Schedule developed Schedule develop
according WBS
Schedule develop
according WBS
Schedule develop
without
WBS
8 Work authorization Use Work
authorization
Sometimes use Work
authorization
Don’t use Work
authorization
9 Work performance Analyse work
performance monthly
with EVM and Report
Performance
Analyse work
performance
monthly with
EVM and Report
Performance
Analyse work
performance only with
graphical view
10 Schedule updated Schedule updated
monthly in accordance
with physical work
Schedule updated
monthly
Don’t update schedule
11 Cost updated Don’t update cost Don’t update cost Don’t update cost
12 Manage Cost Performance Don’t manage cost Don’t manage cost Don’t manage cost
13 Manage Schedule Performance Manage Schedule
Performance and
analyse results
Manage Schedule
Performance
Don’t manage
Schedule performance
14 Change control High Low Low
15 Adherence to EVM Yes Yes Yes
16 Complexity to EVM Yes Yes Yes
17 Difficult to operationalize EVM Yes Yes Yes
18 Qualification of the team for the
EVM
High Medium Low
19 Team maturity in project man-
agement
Yes Yes No
Table 4 – Results
Source: Authors 2014
The companies were analysed and the hypotheses
formulated were validated based on the information of each
company in Table 4.
Item 1 (H1) refers to the relevance of EVM as considered
by all the projects.
Item 2-14 (H2) relate to usage the EVM theoretical model
the analysis of the results in Table 4 shows the best use of
EVM theory in Company “A”, followed by Companies “B” and
“C”. As the literature review, De Marco, Timur (2013) also
identified the difficulty in usage the EVM theoretical model.
Item 15 (H3) refers to the adherence of EVM and whether
the proposed analytical models for EVM were considered
suitable for construction companies in measuring
performance.
Item 16 (H4) refers to the complexity of the EVM
methodology, it was noted that the companies in general
considered EVM theory to be complex. As the literature
review, Kim et al. (2003) also identified the difficulty in
operationalizing EVM.
Item 17 (H5) refers to the difficulty in operationalizing
EVM, it was found that companies in general considered
EVM difficult to operationalize. As the literature review,
Fleming et Koppelman (2010), Lipke (2013), De Marco et
Timur (2013) also identified the difficulty in operationalizing
EVM.
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Item 18 (H6) refers to qualification of the team, it was
greater competence was found in Project 1 and less in
Project 3. Therefore compare the results from usage the
EVM theoretical model (Item 2-14) and qualification of
project team (item 18) it is noted that the team with better
qualification use better the theoretical model. As the
literature review, PMI Standard EVM 2nd ed. (2011), Kim
et al. (2003), Vargas (2003), Valle (2006) also identified the
importance of the team qualification.
Item 19 (H7) refers to team maturity in project
management; it was observed that Project 1 and 2 were
mature in project management. As the literature review,
Fleming et Koppelman (2010) also identified the importance
of the team maturity in project management for EVM use.
6. CONCLUSIONS
The answers to the question proposed by the research
and the evaluations of the formulated hypothesis can
be reached by using qualitative research, including field
observation, informal interviews and document analysis of
the companies and of the construction projects studied.
Are there differences between the theoretical model and
the practical use of the earned value performance indicator
in civil construction in the public sector in Brazil?
Yes, it has been found that there are differences between
EVM theory and practice. This study has shown that the gap
between theory and practice in EVM.
Hypothesis 1 – Relevance
Analysing the results regarding relevance, it has been
confirmed in the three companies surveyed that there is
a perception in those companies about the importance of
using EV analysis for project performance.
It was also observed that, despite not using EVM
properly, the companies profited from its use because,
in addition to the graphic view, they were also be able to
anticipate problems in the projects through the time and
cost performance indicators.
Hypothesis 2 – Usage the EVM theoretical model
Relate to usage the EVM theoretical model the analysis
of the results in Table 4 shows that the companies don’t use
the EVM Theory completely. The best use of EVM theory in
Company “A”, followed by Companies “B” and “C”.
Hypothesis 3 – Adherence
It was observed that the companies consider EVM
appropriate to their needs, enabling them to control the
cost associated with the project scope and to schedule the
project. However, they consider the EVM methodology
complex and difficult.
Hypothesis 4 - Complexity.
It was observed that all companies consider the theory of
complex EVM.
Hypothesis 5 - Difficult to operationalize.
It was found that companies in general considered EVM
difficult to operationalize.
Hypothesis 6 – Qualification
According to the information in Tables 4, the companies
with more qualifications were better able to meet the EVM
requirements. We can therefore infer that training of staff
is of fundamental importance in EV being used properly.
Understanding EV involves knowing project management,
construction costs and EV theory.
Hypothesis 7 – Maturity in project management
According to the information in Tables 4, the companies
with greater maturity in project management were the ones
that were better able to meet the requirements analysed for
EVM. Maturity in project management is the most important
item for the EVM to be fulfilled properly.
Although the research was conducted with a limited
number of companies, given the same representative and
regular results, we can infer that correct EV implementation
is directly related to maturity in project management and
the training of the staff involved.
A correlation was noted between maturity in project
management and training in the correct application
of the concepts of EVM, because the companies with
greater maturity in project management and training have
better conditions to achieve project goals based  on  the
project  management triangle (scope,  time and cost).We
can therefore infer that maturity in project management
and training of staff is of fundamental importance for EVM.
Training in EVM includes knowledge of project management,
the cost of work and EVM theory.
It was verified that most of the companies had difficulties
in the operation cycle of the project, when the aggregate
and the cost curves are required. It was also observed that
the use of software in integrating EV analysis is a factor that
could make EVM use easier.
The research confirms other EVM surveys, quoted at the
beginning of this article and conducted by authors from
different countries, and deepens the theme of the use of
the EV indicator. The development of new studies in other
research is proposed, with several companies of different
sizes to extend and confirm the findings obtained in this
research.
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EARNED VALUE MANAGEMENT

  • 1. Sistemas & Gestão 10 (2015), pp 194-202 PERFORMANCE MONITORING USING EVM INDICATOR: A STUDY CASE OF CONSTRUCTION PROJECTS IN THE PUBLIC SECTOR IN BRAZIL MONITORAMENTO DE DESEMPENHO UTILIZANDO O INDICADOR DE EVM: ESTUDO DE CASO EM PROJETOS DE CONSTRUÇÃO NO SETOR PÚBLICO NO BRASIL Joaquim Teixeira Nettoa ; Osvaldo L. G. Quelhasa ; Sérgio Françaa ; Marcelo Meiriñoa ; Valdir Lameiraa a Universidade Federal Fluminense (UFF) - Niterói, RJ, Brasil - Laboratório de Tecnologia, Gestão de Negócios & Meio Ambiente (LATEC) PROPPI / LATEC DOI: 10.7177/sg.2015.v10.n1.a16 The control of performance through indicators is a very important management tool for companies. The EVM (earned value management) indicator has been used as a management tool in various types of projects. It has been widely used in construction engineering; however, some authors have identified differences in its use between theory and practice. The main objective of this paper is to compare the practice in the market to the theory of EVM in civil construction projects in the public sector in Brazil. A study case was conducted of three construction pro-jects in the public sector. The results of the survey were analysed on the basis of a qualitative approach which indicated differences concerning the theory and practice of EVM. With the aim of verifying these dif-ferences, the applicability of the model was analysed from the point of view of relevance and adequacy. Later, a detailed study from the perspective of the training and practices of project management was conducted in the contracting companies. Keywords: project management; EVM; earned value management; performance in civil construction. Abstract 1. INTRODUCTION Kahn (2011) emphasizes the importance of research in order to improve performance in development projects in emerging countries. He describes the four BRIC countries (Brazil, Russia, India and China), referred to as the world’s factory (China), the garden of the world (Brazil), the gas in the world (Russia), and the back office of the world (India). South Africa is added to the group of BRIC countries as the world’s jeweller and is indicated as a gateway in Africa to the BRIC countries, having considerable experience in mining exploration, extraction and the processing of minerals. Garces et Silveira (2002) outlines the legal mechanisms for disseminating the restructuring of all activities in the public administration in Brazil. They detail the form of integration of principles in project management in Brazilian public projects and define the position of the project manager and his/her mainresponsibilities,anddescribehownewlegalmechanisms create the mandatory annual performance monitoring of Brazilian public projects. Increased competition on a global scale and rapid technological development has caused companies to improve the internal controls of their own and their customers’projects(Kimetal.,2003).Indicatorsareessential management tools in monitoring and evaluating project activities, as they allow the achievement of goals to be monitored as well as advances and improvements in quality to be identified. To monitor the project is to compare the current with the planned situation, determining if the costs and the schedule are progressing according to plan, in order to take corrective action when needed (De Marco et Timur, 2013).The performance indicator in engineering projects is particularly important because it allows problems that may occur during the course of the project to be foreseen, enabling adjustments and corrections, as well as avoiding deviations from the plan. EVM (earned value management) is a powerful tool in managing scope, time and costs, allowing scheduled performance indices and costs to be achieved (Anbari, 2003). Research conducted by the ICPMA (International Council for Project Management Advancement) (2002) shows that theEVMisthemostusedperformanceindexinconstruction. Table 1 shows the percentage use of the indicator in each
  • 2. Revista Eletrônica Sistemas & Gestão Volume 10, Número 1, 2015, pp. 194-202 DOI: 10.7177/sg.2015.v10.n1.a16 195 segment of the industry. Eighty per cent of businesses in civil construction use it, as do 76.47% of those in other engineering areas and 56.47% of those in IT (information technology). Construction is a type of complex project with many uncertainties; however, despite the different cost controls, the construction industry has adopted the EVM indicator to control cost (Al Jibouri, 2003). Type of Project Percentage of Responses Civil Construction 80.00% Engineering 76.47% IT 56.47% Defence 51.76% Finance 32.94% Processing 31.76% Human Resources 17.65% Other 8.24% Table 1 – Percentage of EVM implementation by project type Source: ICPMA (2002) Despite being well known in the market, EVM application in projects is not simple. Depending on how the indicator is used, performance variations may occur disguising the real situation. It is necessary, therefore, to define appropriate processes to achieve earned value. It is important to consider the choice of a suitable methodology to monitor performance by using earned value (Fleming et Koppelman, 2010). According to Kim et al. (2003), the greatest problems in using EVM refer to understanding the methodology. According to the (PMI Standard EVM 2nd ed.,2011), for successful EVM use it is necessary for the company to have in place an information system, together with policies and procedures for its use, as well as proper training for the project team. According to Kim et al. (2003), the use of integrated software for project management is crucial to the success of EVM implementation. In comparison with other industries, the construction industry has been left behind as far as the use of EVM is concerned. In addition, it has had difficulty in adapting the EVM methodology to practice (De Marco et Timur, 2013). According to Fleming et Koppelman (2010), the most worrying factor is the fact that many construction companies use the planned value of costs and the present value of costs without considering a third dimension, the aggregate value. According to Song (2010), the aggregate indicator is known in the construction industry as aggregate hours or aggregate dollars. This research aimed to investigate whether differences exist between theory and practice in the use of EVM in the construction industry in the public sector in Brazil and the possible causes of this discrepancy. 2. EARNED VALUE MANAGEMENT The earned value indicator evaluates the performance of projects in three key dimensions: schedule, scope and cost. These three dimensions are recognized by the PMI (Project Management Institute) as the “iron triangle” and their importance is recognized for their efficiency in project control PMBOK (2013). The earned value indicator is derived from the cost of each phase of the project. To ascertain the value of the indicators, the activities need to be quantified in terms of cost and completion dates for each task. According to Vargas (2008) the earned value technique meets the goal of linking time, scope and cost. The EV indicator is ascertained from the completed activities and their associated value called EV. Figure 1 illustrates the baseline budget or planned cost, called the PV (planned value), the EV and the AC (actual cost). Figure 1 – EV graph Source: Adapted by the author from Vargas (2008) The ANSI / EAI 748 (1998) define 32 processes for the implementation of EVM; these processes were further simplified by PMI (Project Management Institute) 1996. AccordingtoFlemingetKoppelman(2010),thissimplification brought great acceptance of the use of the indicator and can be fully utilized in projects of any size. In the analysis of the implementation of procedures for EVM, it was also necessary to identify the main processes of the EVM of the companies selected. In Figure 2 details the main processes of the planning and operation cycles of the EVM.
  • 3. Revista Eletrônica Sistemas & Gestão Volume 10, Número 1, 2015, pp. 194-202 DOI: 10.7177/sg.2015.v10.n1.a16 196 Figure 2 – Indicator value (EVM) processes. Source: Adapted by the author from PMI Standard EVM (2011). According to PMBOK (2013), to perform the tasks of the project it is important to divide the work into smaller pieces, so that it is easy to define and control. The lower parts of the division of scope are known as the WBS (work breakdown structure) and to establish the WBS it is necessary that all the previous processes and management projects are already completed, such as the project charter, strategy, stakeholder management, requirements documents and scoping. According to Fleming et Koppelman (2010), the cost account plan should integrate the WBS with the work to be performed, allowing measurements of cost for each WBS item. The process to “define cost account plans” uses the division of work packages previously defined by WBS. Each work package will have an account code already defined by the WBS and will provide the basis for analysing the expenses. According to Kerzner (2010), establish budget defines the cost of each item of the WBS, which in sum should be the total cost of the project. The budget shall include items of direct cost, indirect cost, materials and human resources for each activity and also reserve funds. This cost shall be allocated in the cost accounts plan defined previously. According to De Marco et Timur (2013), develop schedule process defines the baseline schedule, setting the start and end dates of each activity of the project. The cost of each work package should be added to the schedule; therefore, the final schedule integrates the cost and timelines of the projectandwillbeusedtomeasurethebaselineperformance known as the PMB (performance measurement baseline). According to PMI Standard EVM (2011), determine measurement methods process is clearly defined as quantifying each item. This measurement will depend on the type of contract and also the type of activity to be carried out. The types of activity are: discrete effort, shared effort and level of effort. Discrete effort can be broken down as: fixed formula weight milestones, per cent complete and physical measurement. Kerzner(2010)arguethataftercompletionoftheplanning processes, the operating cycle begins. In order to control the execution, it is necessary to evaluate the performance variation, considering the work done within the established period of measurement. The change in project performance is ascertained by comparing the predicted value (baseline design) with the amount realized .When starting the operation cycle, the work authorization document must be issued. According to Fleming et Koppelman (2010), In accordance withperformanceinthetimeperiod,theschedule,aggregate costs and actual costs should be updated. The update of the actual cost must include the cost of materials and services during the evaluation period. Each cost item should have been previously established in the account plan. According to De Marco et Timur (2013), the manage performance process the value of the cost performance indicator, CPI (cost performance index), and schedule performance indicator, SPI (schedule performance index), will be evaluated. The change control process provides the controls to change the project and still provide corrective measures in the event of deviations in the time and cost indices (PMI Standard EVM, 2011). Lipke (2013) argues that despite the fact that EVM has been used for the last 40 years, its use is not simple and requires complex management that involves schedule control, precise control of costs and control of the aggregate value (work done). The author further argues that the classification of maturity in project management by OPM3 (Organizational Project Management Maturity Model) using indicators begins at maturity level 2 (managed) and evolves to higher levels. ResearchdevelopedbyVargas(2003)inthreeconstructions projects identified the following critical factors for EVM use: management support, team qualification and defined project scope. According to Valle (2006), the critical factors for EVM use are: indicator report, schedule control, assigning responsibilities to each item in the WBS, management support, team qualification, scope well defined, workflow and activities, continuous learning process. According to Kim et al. (2003), the training in and practice of EVM are critical success factors. Fleming et Koppelman (2010) argue that, for the use of such an indicator, it is necessary for the company to be mature enough. It appears that maturity in project management and training in EVM are common requirements among the authors cited in this article.
  • 4. Revista Eletrônica Sistemas & Gestão Volume 10, Número 1, 2015, pp. 194-202 DOI: 10.7177/sg.2015.v10.n1.a16 197 3. PROJECT MANAGEMENT MATURITY Some maturity models in project management have been developed by the scientific community: all models are based on the idea of assessing organizational competence in performing project management activities. Kim et al. (2003), Song (2010), Lipke (2013) Project management maturity, according to the PMBOK (2013) model, is based on OPM3 (2013). The levels of maturity defined are: • Level 1 – The use of project management practices in the organization are practically non-existent. There is no interest in recognizing the benefits from the use of project management practices. When there is some recognition, it is merely to meet certain requirements for a client in hiring the services of the organization. • Level 2 – The need to implement processes and methodologies that support project management and measuring indicators are perceived. The importance of acquiring knowledge in project management is recognized. Project Managment covers scope, time and cost. • Level 3 – The processes are integrated and there is support from top management. Project management methodologies based on guides and checklists are used. Training in project management is continuous. Project management is part of the company’s culture and its benefits are recognized. • Level 4 – A project management office is established and this is dedicated to continuous process improvement and project documentation. Measurements (benchmarking) covering the quantitative and qualitative aspects of the projects are undertaken. • Level 5 – Project management is optimized and continuous improvements from lessons learned are documented and used in projects. There is continuous strategic planning for project management. It was verified that, according to the levels previously described, measurement with the indicators starts only from level 2 of maturity. According to the research into maturity in project management undertaken by Prado (2012), the average maturity in construction companies is low according to the assessment made in 2012. 4. METHODS The research has been characterized as applied or technological because it creates products and processes for immediate and practical application, as far as performance indicators in projects and engineering works are concerned. The approach is exploratory as it attempts to clarify facts seeking greater familiarity with the problem. The relevance in the scientific international literature is presented by Figueiredo (2009) who highlights the shortage of conceptual contributions as well as of management contributions. The latterfocusedontheimprovementofdesign,implementation of empirical research and innovation strategies in project management from the perspective of technological learning in the context of emerging economies. Such a view will hopefully contribute to enlarging the comprehension of the complex process of technological development as well as of project management. The sequence of the methodology used is shown in figure 3. Figure 3 – Methodological sequence Source: Authors 2014 Initially, the literature on the subject will be reviewed and a problem situation will be formulated and then hypotheses built. Finally, through study case, the differences mentioned in the literature identified. The results were validated through study case with a qualitativeapproach,whereobservationaswellasdocument revision and informal interviews with engineers and technicians in the planning sectors of companies were used. The study case was conducted in three civil constructions in the public sector and occurred between 2012 and 2013, in the State of Rio de Janeiro in Brazil. In the analysis of the implementation of procedures for EVM, it was also necessary to identify the maturity in project management of the companies selected. This research attempts to answer the following question: Are there differences between the theoretical model and the practical use of the earned value performance indicator in civil construction in the public sector in Brazil? According to Leedy (2000), after defining the problem, the next step is to formulate the hypotheses that could
  • 5. Revista Eletrônica Sistemas & Gestão Volume 10, Número 1, 2015, pp. 194-202 DOI: 10.7177/sg.2015.v10.n1.a16 198 answer the proposed problem and guide the next steps of the research. To answer the central question the following hypotheses are formulated: • H1 - The Company considers EVM use relevant: The company has a perception about the importance of using the EVM for project performance. • H2 - Usage the EVM Theoretical Model: The EVM theoretical model is used by the companies. • H3 - The Company considers EVM use adherent: It is understood that it is possible that the proposed EVM analytical models are appropriate to the needs of construction companies in measuring performance. • H4 - The Company considers EVM use complex: The complexity of the models, states that EVM models are complex and difficult to understand. • H5 - The Company considers EVM difficult to operationalize: Operationalization difficulty implementation of EVM by the companies. • H6 - The team don’t have qualifications in EVM. The companies have no qualified personnel to implement the earned value indicators. • H7 - The Company do not have maturity in project management. The companies do not have no maturity in project management a find difficulty to implement the earned value indicators. After the hypotheses definition, a set of variables have been defined. According to Bacharach (1989), variables are observed units and constructors are approximate units that can not observed directly. The table 2, define hypothesis as constructors, variables and evidences for field research. Hyp Constructos Item Variables Source of Evidence H1 The company considers EVM use relevant. 1 Relevance of Evm using. Interview H2 Usage the EVM Theoretical Model 2 The formulas for calculating the performance indices and the graphics were in accordance with the theory. Documentation 3 WBS defined. Documentation 4 Cost account plans (CAP) defined. Documentation 5 Budgets established. Documentation 6 Measurement methods determined. Documentation 7 Schedule developed. Documentation 8 Work authorization. Documentation 9 Work performance Documentation 10 Schedule updated Documentation 11 Cost updated Documentation 12 Manage Cost Performance Documentation 13 Manage Schedule Performance Documentation 14 Change control Documentation H3 The company considers EVM use adherent. 15 Adherence to EVM Interview H4 The company considers EVM use complex. 16 Complexity to EVM Interview H5 The company considers EVM difficult to operationalize. 17 Difficult to operationalize EVM Interview H6 The team has qualifications in EVM analysis. 18 Qualification of the team for the EVM Interview, Documentation H7 The company has maturity in project management. 19 Team maturity in project management Interview, Documentation Table 2 – Constructs, variables and evidence source Source: Authors 2014
  • 6. Revista Eletrônica Sistemas & Gestão Volume 10, Número 1, 2015, pp. 194-202 DOI: 10.7177/sg.2015.v10.n1.a16 199 4. CASE STUDY In order to evaluate the practice of the construction industry in the use of project performance using EV analysis, three construction projects were analysed. The projects were carried out in Rio de Janeiro in the period 2012 to 2013. The firms were large companies in different sectors (energy, airport infrastructure and public health), all with nationwide coverage. Theselectedprojectswereanalysedthroughdocumentary research, unstructured interviews and field observation and the projects are summarized in Table 3. Item Project 1 (Company A) Project 2 (Company B) Project 3 (Company C) Scope Road access to equipment, 18 km long with 15 bridges. Enlargement of airport runway. Administrative office building with 4 floors. Start 10/01/2012 29/10/2011 02/04/2012 Time 24 months 24 months 23 months Budget U$ 79,100,000.00 U$ 26,700,000.00 U$ 18,600,000.00 Industry Energy Airport infrastructure Public health Type of company Public Public Public Company size Large Large Large Contractor segment Civil construction Civil construction Civil construction Contract type Fixed-Price Fixed-Price Fixed-Price Software used MsExcell, MsProject MsExcell, MsProject MsExcell, MsProject Table 3 – Projects from Case Study Source: Authors 2014 The projects selected are from different scope: road access to equipment, enlargement of airport runway, administrative office building. The company size is Large from civil construction segment and fixed-price contract. The software use is MsExcell and MsProject. 5. RESULTS Table 4 summarizes the data from the interviews and observation in documents conducted during project execution. The interviews followed to verify the hypothesis of:relevance,useoftheoreticalmodel,adherent,complexity, qualification in EVM, operational difficulty and maturity in projects. From the literature review and the results of study case, the intention was to find differences between the theory and practice of EV in construction. Table 3 analysed the implementation as regards the theory of EV and Table 4 analysed the relevant information regarding the companies involved. Item Variable Project 1 Project 2 Project 3 1 Relevance of using Evm. Yes Yes Yes 2 The formulas for calculating the performance indices and the graphics were in accordance with the theory Use formulas and graphical View Use formulas and graphical View Use only graphical View 3 WBS defined Use WBS Don´t use WBS , only a list of material Don´t use WBS , only a list of material 4 Cost account plans ( CAP ) defined Use CAP Don´t use CAP Don´t use CAP
  • 7. Revista Eletrônica Sistemas & Gestão Volume 10, Número 1, 2015, pp. 194-202 DOI: 10.7177/sg.2015.v10.n1.a16 200 5 Budgets established Budgets was established Budgets was established Budgets was established 6 Measurement methods determined Use measurement methods Use a list of material with costs and methods Use a list of material with costs 7 Schedule developed Schedule develop according WBS Schedule develop according WBS Schedule develop without WBS 8 Work authorization Use Work authorization Sometimes use Work authorization Don’t use Work authorization 9 Work performance Analyse work performance monthly with EVM and Report Performance Analyse work performance monthly with EVM and Report Performance Analyse work performance only with graphical view 10 Schedule updated Schedule updated monthly in accordance with physical work Schedule updated monthly Don’t update schedule 11 Cost updated Don’t update cost Don’t update cost Don’t update cost 12 Manage Cost Performance Don’t manage cost Don’t manage cost Don’t manage cost 13 Manage Schedule Performance Manage Schedule Performance and analyse results Manage Schedule Performance Don’t manage Schedule performance 14 Change control High Low Low 15 Adherence to EVM Yes Yes Yes 16 Complexity to EVM Yes Yes Yes 17 Difficult to operationalize EVM Yes Yes Yes 18 Qualification of the team for the EVM High Medium Low 19 Team maturity in project man- agement Yes Yes No Table 4 – Results Source: Authors 2014 The companies were analysed and the hypotheses formulated were validated based on the information of each company in Table 4. Item 1 (H1) refers to the relevance of EVM as considered by all the projects. Item 2-14 (H2) relate to usage the EVM theoretical model the analysis of the results in Table 4 shows the best use of EVM theory in Company “A”, followed by Companies “B” and “C”. As the literature review, De Marco, Timur (2013) also identified the difficulty in usage the EVM theoretical model. Item 15 (H3) refers to the adherence of EVM and whether the proposed analytical models for EVM were considered suitable for construction companies in measuring performance. Item 16 (H4) refers to the complexity of the EVM methodology, it was noted that the companies in general considered EVM theory to be complex. As the literature review, Kim et al. (2003) also identified the difficulty in operationalizing EVM. Item 17 (H5) refers to the difficulty in operationalizing EVM, it was found that companies in general considered EVM difficult to operationalize. As the literature review, Fleming et Koppelman (2010), Lipke (2013), De Marco et Timur (2013) also identified the difficulty in operationalizing EVM.
  • 8. Revista Eletrônica Sistemas & Gestão Volume 10, Número 1, 2015, pp. 194-202 DOI: 10.7177/sg.2015.v10.n1.a16 201 Item 18 (H6) refers to qualification of the team, it was greater competence was found in Project 1 and less in Project 3. Therefore compare the results from usage the EVM theoretical model (Item 2-14) and qualification of project team (item 18) it is noted that the team with better qualification use better the theoretical model. As the literature review, PMI Standard EVM 2nd ed. (2011), Kim et al. (2003), Vargas (2003), Valle (2006) also identified the importance of the team qualification. Item 19 (H7) refers to team maturity in project management; it was observed that Project 1 and 2 were mature in project management. As the literature review, Fleming et Koppelman (2010) also identified the importance of the team maturity in project management for EVM use. 6. CONCLUSIONS The answers to the question proposed by the research and the evaluations of the formulated hypothesis can be reached by using qualitative research, including field observation, informal interviews and document analysis of the companies and of the construction projects studied. Are there differences between the theoretical model and the practical use of the earned value performance indicator in civil construction in the public sector in Brazil? Yes, it has been found that there are differences between EVM theory and practice. This study has shown that the gap between theory and practice in EVM. Hypothesis 1 – Relevance Analysing the results regarding relevance, it has been confirmed in the three companies surveyed that there is a perception in those companies about the importance of using EV analysis for project performance. It was also observed that, despite not using EVM properly, the companies profited from its use because, in addition to the graphic view, they were also be able to anticipate problems in the projects through the time and cost performance indicators. Hypothesis 2 – Usage the EVM theoretical model Relate to usage the EVM theoretical model the analysis of the results in Table 4 shows that the companies don’t use the EVM Theory completely. The best use of EVM theory in Company “A”, followed by Companies “B” and “C”. Hypothesis 3 – Adherence It was observed that the companies consider EVM appropriate to their needs, enabling them to control the cost associated with the project scope and to schedule the project. However, they consider the EVM methodology complex and difficult. Hypothesis 4 - Complexity. It was observed that all companies consider the theory of complex EVM. Hypothesis 5 - Difficult to operationalize. It was found that companies in general considered EVM difficult to operationalize. Hypothesis 6 – Qualification According to the information in Tables 4, the companies with more qualifications were better able to meet the EVM requirements. We can therefore infer that training of staff is of fundamental importance in EV being used properly. Understanding EV involves knowing project management, construction costs and EV theory. Hypothesis 7 – Maturity in project management According to the information in Tables 4, the companies with greater maturity in project management were the ones that were better able to meet the requirements analysed for EVM. Maturity in project management is the most important item for the EVM to be fulfilled properly. Although the research was conducted with a limited number of companies, given the same representative and regular results, we can infer that correct EV implementation is directly related to maturity in project management and the training of the staff involved. A correlation was noted between maturity in project management and training in the correct application of the concepts of EVM, because the companies with greater maturity in project management and training have better conditions to achieve project goals based  on  the project  management triangle (scope,  time and cost).We can therefore infer that maturity in project management and training of staff is of fundamental importance for EVM. Training in EVM includes knowledge of project management, the cost of work and EVM theory. It was verified that most of the companies had difficulties in the operation cycle of the project, when the aggregate and the cost curves are required. It was also observed that the use of software in integrating EV analysis is a factor that could make EVM use easier. The research confirms other EVM surveys, quoted at the beginning of this article and conducted by authors from different countries, and deepens the theme of the use of the EV indicator. The development of new studies in other research is proposed, with several companies of different sizes to extend and confirm the findings obtained in this research.
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