This document provides an overview of a quantitative study examining the contribution of Earned Value Management (EVM) to project success on external projects under contract. The study tested hypotheses about the relationship between EVM principles and project success, and whether that relationship differs for fixed-price versus cost-plus contracts. Key findings included that EVM principles positively predict project success, and that fixed-price contracts may benefit more from EVM than cost-plus contracts. The study contributes to understanding how EVM can improve project planning and control for different contract types.
Polynomial Function and Fuzzy Inference for Evaluating the Project Performanc...IJERA Editor
The objectives of this paper are two folds. The first one is to improve the time forecasting produced from the well known Earned Value Management (EVM), using the polynomial function. The time prediction observed from the polynomial model, which is compared against that observed from the most common method for time forecasting (critical path method), is a more accurate (mean absolute percentage of error is less than 2%) than that observed from the conventional deterministic forecasting methods (CDFMs). The second is to evaluate and forecast the overall project performance under uncertainty using the fuzzy inference. As the uncertainty is inherent in real life projects, the polynomial function and fuzzy inference model (PFFI) can assist the project managers, to estimate the future status of the project in a more robust and reliable way. Two examples are used to illustrate how the new method can be implemented in reality.
Earned Value Management involves more that just cost and schedule. Six Business Systems, including EVM, are the basis of credible program performance management.
Here's a suggestion of how to "connect the dots."
Polynomial Function and Fuzzy Inference for Evaluating the Project Performanc...IJERA Editor
The objectives of this paper are two folds. The first one is to improve the time forecasting produced from the well known Earned Value Management (EVM), using the polynomial function. The time prediction observed from the polynomial model, which is compared against that observed from the most common method for time forecasting (critical path method), is a more accurate (mean absolute percentage of error is less than 2%) than that observed from the conventional deterministic forecasting methods (CDFMs). The second is to evaluate and forecast the overall project performance under uncertainty using the fuzzy inference. As the uncertainty is inherent in real life projects, the polynomial function and fuzzy inference model (PFFI) can assist the project managers, to estimate the future status of the project in a more robust and reliable way. Two examples are used to illustrate how the new method can be implemented in reality.
Earned Value Management involves more that just cost and schedule. Six Business Systems, including EVM, are the basis of credible program performance management.
Here's a suggestion of how to "connect the dots."
Earned Value Probabilistic Forecasting Using Monte Carlo SimulationRicardo Viana Vargas
The aim of this article is to present a proposal of interconnection between models and probabilistic simulations of project as possible ways to determine EAC (Final cost) through Earned Value Analysis. The article proves that the use of the 3 main models of projection (constant index, CPI and SCI) as the basis of a triangular probabilistic distribution that, through Monte Carlo simulation will permit associate and determine the probability according to the accomplishment of budgets and costs of the project.
إدارة التخطيط والبرامج الزمنية
فيديو المحاضرة: https://www.youtube.com/watch?v=HiGNZeLQ9Po
Content:
1- Planning and scheduling
2- Time schedule development
3- Resource and cost loading
4- Time schedule submittal
5- Review and approval
6- Update and reporting
7- Delay quantification approaches
8- Mitigation and action plans
A simple approach to understanding Earned Value ManagementProPM Academy
The slide on Earned Value Management focuses on explaining the concepts in a simpler approach. The slides shows about how a project manager can use the Earned value concepts to depict his project progress, variance on the key performance measurement baseline. Project forecasting is been discussed separately with examples.
We are sure that the slides posted above, it would help potential as well as experienced PMs to gain a good insight into the EVM concepts
Hope you found this useful
Any queries / clarifications are most welcome
BioPharma Projects: Essentials in Project ControlsPMA Consultants
Are project controls essential for effective governance and decision making? Learn how wave planning and project controls were used for transferring BioPharma operations. Initiating manufacturing operations in a newly built pharmaceutical facility is a demanding process for any organization. The technology transfer team is responsible for both ensuring that the facilities meet the design requirement as well as successfully transferring all products to the new site. Understanding the costs, benefits, and risks of multiple solutions requires complex modeling. A key component of the growth strategy involves the transfer of specific operations to a new facility, which requires identifying resource limitations, prioritization of needs initially and continuously throughout the dynamic project.
Earned Value Probabilistic Forecasting Using Monte Carlo SimulationRicardo Viana Vargas
The aim of this article is to present a proposal of interconnection between models and probabilistic simulations of project as possible ways to determine EAC (Final cost) through Earned Value Analysis. The article proves that the use of the 3 main models of projection (constant index, CPI and SCI) as the basis of a triangular probabilistic distribution that, through Monte Carlo simulation will permit associate and determine the probability according to the accomplishment of budgets and costs of the project.
إدارة التخطيط والبرامج الزمنية
فيديو المحاضرة: https://www.youtube.com/watch?v=HiGNZeLQ9Po
Content:
1- Planning and scheduling
2- Time schedule development
3- Resource and cost loading
4- Time schedule submittal
5- Review and approval
6- Update and reporting
7- Delay quantification approaches
8- Mitigation and action plans
A simple approach to understanding Earned Value ManagementProPM Academy
The slide on Earned Value Management focuses on explaining the concepts in a simpler approach. The slides shows about how a project manager can use the Earned value concepts to depict his project progress, variance on the key performance measurement baseline. Project forecasting is been discussed separately with examples.
We are sure that the slides posted above, it would help potential as well as experienced PMs to gain a good insight into the EVM concepts
Hope you found this useful
Any queries / clarifications are most welcome
BioPharma Projects: Essentials in Project ControlsPMA Consultants
Are project controls essential for effective governance and decision making? Learn how wave planning and project controls were used for transferring BioPharma operations. Initiating manufacturing operations in a newly built pharmaceutical facility is a demanding process for any organization. The technology transfer team is responsible for both ensuring that the facilities meet the design requirement as well as successfully transferring all products to the new site. Understanding the costs, benefits, and risks of multiple solutions requires complex modeling. A key component of the growth strategy involves the transfer of specific operations to a new facility, which requires identifying resource limitations, prioritization of needs initially and continuously throughout the dynamic project.
Strategic Cost Management for Construction Project Success : A Systematic Studycivej
Large construction projects are inherently complex and dynamic. Many projects start with good ideas,
huge investments and great efforts. However, most of them do not achieve much success. A major
contribution to unsuccessful projects is the lack of understanding on scope, time, cost and quality. Projects
as powerful strategic weapons when initiated create economic value and competitive advantage. The
objective of the research is to explicitly declare the scope of the research to by considering only the scope,
time, cost and quality as process success parameters and how specifically the cost element would influence
the project success when all other elements or factors other than cost are represented in terms of cost
factor along with the contract conditions as basic rules or constraints that drive the strategic cost based on
applying the CRASP methodology concept. The concept of benchmarking would provide right meaning of
project success when allowing to properly distributing the meaning of customer profitability to the project
providers (project owner and contractors).
STRATEGIC COST MANAGEMENT FOR CONSTRUCTION PROJECT SUCCESS: A SYSTEMATIC STUDYcivejjour
Large construction projects are inherently complex and dynamic. Many projects start with good ideas, huge investments and great efforts. However, most of them do not achieve much success. A major contribution to unsuccessful projects is the lack of understanding on scope, time, cost and quality. Projects as powerful strategic weapons when initiated create economic value and competitive advantage. The objective of the research is to explicitly declare the scope of the research to by considering only the scope, time, cost and quality as process success parameters and how specifically the cost element would influence the project success when all other elements or factors other than cost are represented in terms of cost factor along with the contract conditions as basic rules or constraints that drive the strategic cost based on applying the CRASP methodology concept. The concept of benchmarking would provide right meaning of project success when allowing to properly distributing the meaning of customer profitability to the project providers (project owner and contractors).
STRATEGIC COST MANAGEMENT FOR CONSTRUCTION PROJECT SUCCESS: A SYSTEMATIC STUDYcivejjour
Large construction projects are inherently complex and dynamic. Many projects start with good ideas, huge investments and great efforts. However, most of them do not achieve much success. A major contribution to unsuccessful projects is the lack of understanding on scope, time, cost and quality. Projects
as powerful strategic weapons when initiated create economic value and competitive advantage.
Cost Overrun Causes Related to the Design Phase in the Egyptian Construction ...World-Academic Journal
Cost overrun is one of the most common problems that threaten any construction project. As the Design phase is responsible for many critical decisions, many of cost overrun causes are related to such phase. This paper aims to identify the most significant causes of cost overrun related to the design phase in the Egyptian construction industry from the point of view of owners, consultant, designers, project managers and contractors. A list of cost overrun causes related to the design phase collected through an extensive literature review, main causes were adapted to the Egyptian construction industry through seven semi-structured interviews. The resultant list was submitted to a questionnaire survey for the impact and frequency quantitative evaluation. the results of the research is expected to help the participants in the design phase to develop more optimized design and avoid the most usual flaws that could led to cost overruns.
1. A Quantitative Study of the Contribution of Earned Value Management to Project Success on External Projects Under Contract Robert A. Marshall Ph.D. Thesis Defense August 20, 2007
2. Candidate’s appreciation of the committee Philippe Ruiz, Ph.D., Committee Chairman and Professor of Statistics Christophe Bredillet, Ph.D., Dean’s Representative and Program Director Frank Anbari, Ph.D., Professor of Project Management George Washington University Wayne Abba, MPA, EVM Subject Matter Expert
3. Candidate’s appreciation of the committee cont. Russell Archibald, Ph.D. PMI/APM/IPMA Fellow Darren Dalcher, Ph.D. Professor of Project Management Middlesex University Lynn Crawford, DBA Professor of Project Management Univ. of Technology Sydney
4. Three part outline of the presentation PART A Background, framework, results and contribution PART B Technical aspects of research and data PART C Summary and directions for future research
7. The domain is in need of more research generally “ The area of contracts is one aspect of project management that is in definite need of new ideas and tools.” (Abu-Hijleh and Ibbs, 1989) Only 2.4% of project management conference papers presented in the US and abroad from 1996-1998 were classified as procurement (Zobel & Wearne, 2000) Only 4% of project management research articles printed in English between 1960-1999 were classified as procurement (Kloppenborg & Opfer, 2002)
8.
9. EVM is actively promoted by major project management organizations Project Management Institute (PMI) Association of Project Management (APM) Association for the Advancement of Cost Engineering (AACE) Project Management Association of Japan (PMAJ)
10. Accumulation of evidence indicates a low level of EVM use Less than 1% of projects (Fleming and Koppelman, 1996) “ If such a favorable view (merits of EVM) is so strongly stated, why then is EVM methodology still not used widely as suggested by existing literature? (Kim, 2000) High potential; low usage (Besner and Hobbs, 2006)
17. Variable No. 1: Principles of EVM (ANSI/EIA-748) a. Plan all work scope for the project to completion; b. Decompose the scope into finite pieces that can be assigned to a responsible person or organization to control; c. Integrate program work scope, schedule, and cost objective into a performance measurement baseline plan against which accomplishments may be measured. Control changes to the baseline; d. Use actual costs incurred and recorded in accomplishing the work performed;
18. Variable No. 1: Principles of EVM (ANSI/EIA-748) cont. e. Objectively assess accomplishments at the work performance level; f. Analyze significant variances from the plan, forecast impacts, and prepare an estimate at completion based on performance to date and work to be performed; g. Use EVMS information in the company's management processes.
19. Variable No. 2: Work Breakdown Structure (WBS) with respect to Contract Formation Items a. Scope development (wbs1) b. Risk assessment (wbs2) c. Should cost-estimates (wbs3) d. Schedule planning (wbs4) e. Payment planning (wbs5) f. Evaluating bids and negotiating with bidders (wbs6) g. Ensuring fairness and equity to contract (wbs7)
20. Variable No. 2: “S” Curves with respect to a single Contract Administration item a. Monitoring work (scurve)
21. Variable No. 2: EVM Performance metrics with respect to multiple Contract Administration items a. Controlling schedule (metric1) b. Controlling scope (metric2) c. Controlling cost (metric3) d. Evaluating and processing change orders (metric4) e. Evaluating and processing payment requests (metric5)
22. Variable No. 2: EVM Performance metrics with respect to multiple Contract Administration items cont. f. Evaluation and analyzing delays (metric6) g. Evaluating and analyzing claims (metric7) h. Acceptance of completed work (metric8) i. Contract close-out (release of claims) (metric9) j. Post-project audits (metric10)
23. Variable No. 3: Project Success (Shenhar et al., 1997) a. Meeting Schedule and Budget Goals - how well the project satisfied the resource constraints of schedule and budget. b. Benefit to Customer – how well the project satisfied the functional requirements and technical specifications of the organization that benefit from the project’s realization.
24. Variable No. 3: Project Success (Shenhar et al., 1997) cont. c. Commercial Success. How well the project satisfies the desired business results (includes return on investment for performing organization; or enhancing the profits of the benefiting organization). d. Preparing for the Future - The contribution the project made to the performing organization in developing new business opportunities; technologies or increasing core competencies.
27. Research hypotheses based on low EVM usage and belief that a bias may exist – H3, H4 and H5 H3: There will be no significant difference between Fixed-price and Cost-plus contracts on the contributions of EVM’s Work breakdown Structure during Contract Formation H4: There will be no significant difference between Fixed-price and Cost-plus contracts on the contribution of EVM’s "S” Curve during Contract Administration H5: There will be no significant difference between Fixed-price and Cost-plus contracts on the use of EVM’s Performance Metrics during Contract Administration
28. Findings: H1 Results offered support for H1. Linear correlation-regression showed a moderately strong relationship between the independent variable Principles of EVM and dependent variable Project Success ( r = .474; β = .474, t = 6.443, n =145). The results were significant setting p at p < .05 ( a = .000). The independent variable explains 22.47% of the variation in the dependent variable (R² = .2247). As predicted, Principles of EVM are significant positive predictors of Project Success
30. Findings: H2 Results did not offer support for H2. Contrary to the prediction, a difference exists between fixed-price and cost-plus contracted projects with respect to the contribution of Principles of EVM to Project Success , measured separately. The results favor fixed-price contracted projects. Linear correlation-regression showed a moderately strong positive relationship between the independent variable Principles of EVM and the dependent variable Project Success for the cost-plus group ( r = .405; β = .405, t = 4.432, n =102); and a moderately strong and relatively higher positive relationship for the fixed-price group ( r = .585; β = .585, t = 4.622, n =43). The independent variable explains 16.40% of the variation in the dependent variable in cost-plus contracted projects; and 34.22% in fixed-price contracted projects. The results are statistically significant setting p at p < .05 ( a = .000), separately
31. Findings: H3 Results offered support for H3, with exceptions. As predicted, there are no significant differences between fixed-price and cost-plus contracted projects on the contributions of EVM’s Work Breakdown Structure to Contract Formation items with the exception of wbs4 (Schedule Planning) and wbs5 (Payment Planning) (Wilks’ λ = .936, χ² = 9.389, df2, p = .009)(eigenvalue = .068; canonical correlation = .253). Five items were removed leaving a single canonical root with two discriminant coefficients (wbs4 and wbs5). No significant differences between fixed-price and cost-plus contracts were observed with respect to the contribution of EVM’s WBS to Contract Formation items for wbs1, 2, 3, 6, and 7
32. Two canonical coefficients distinguish fixed-price from cost-plus contracted projects with respect to the use of the WBS The contribution of wbs5 (Payment Planning) was relatively greater in FP as compared to CP contracted projects The contribution of wbs4 (Schedule planning) was relatively greater in CP as compared to FP contracted projects
33. Findings: H4 Results offered support for H4. As predicted, there is no significant difference between fixed-price and cost-plus contracted projects on the contribution of EVM’s "S” Curve to Contract Administration items (single item included in H5 analysis)
34. Findings: H5 Results offered support for H5, with exceptions. The results show no significant difference between fixed-price and cost-plus contracted projects on the contributions of EVM’s Metrics to Contract Administration (Wilks’ λ = .943, χ² = 8.434, df1, p = .004) (eigenvalue = .061; canonical correlation = .240), with the exception of metric5 ( Evaluating and Processing Payment Requests ). A total of ten items were removed during the analysis leaving a single canonical root with one discriminant coefficient (metric5). No significant differences between fixed-price and cost-plus contracts were observed with respect to the contribution of EVM’s Metrics to Contract Administration items for scurve, metric1, 2, 3, 4, 6, 7, 8, 9, and 10
35. A single canonical coefficient distinguishes fixed-price from cost-plus contracted projects with respect to the use of the S-curve and EVM performance metrics The contribution of metric5 ( Evaluating and processing payment requests ) was relatively greater in FP as compared to CP contracted projects
36. Multiple implications stem from this research EVM directly and measurable contributes to project success EVM is dynamic (not a checklist) EVM alone does not explain project success Both CP and FP contract types benefit from EVM EVM optimized in FP contracts
37. Multiple implications stem from this research cont. EVM planning is as important as EVM control Emphasize WBS schedule planning in CP projects Emphasize WBS payment planning in FP projects Emphasize metrics in processing payment requests in FP projects
38. This research increases the body of knowledge regarding project procurement management Five publications to date have stemmed from this research which have reached a global audience
39. Related publishing's Marshall, Robert A. (2005). “The Case for Earned Value Management with Fixed Price Contracts.” C ontract Management Magazine. Marshall, Robert A. (2006). “The contribution of earned value management to project success on contracted efforts: A quantitative statistics approach within the population of experienced practitioners.” Proceedings of the International Research Conference on Organizing by Projects (IRNOP7). Marshall, Robert A. (Editor, 2nd Ed.). (2007). Professional Practice Guide to Earned Value. Association for the Advancement of Cost Engineering International. AACE: Morgantown, WV.
40. Related publishing's cont. Marshall, Robert A. (2007). “The Principles of Earned Value Management as Predictor Variables of Project Success.” Transactions o f the 51st Annual International Meeting of the Association for the Advancement of Cost Engineering (AACE). Morgantown, WV. Marshall, Robert A. (2007). “The contribution of earned value management to project success on contracted efforts: A quantitative statistics approach within the population of experienced practitioners.” Journal of Contract Management. (September Issue)
41. This research offers nine specific contributions The unique (and repeatable) testing of the ANSI-748 principles of EVM as predictor variables of project success The unique inference that fixed-price contracted projects benefit as much as, if not more, than cost-plus contracts when applying EVM Unique quantitative approach with respect to the contribution of the principles of EVM to project success which solidify beliefs through methodological triangulation
42. This research offers nine specific contributions cont. The unique inference that the contribution of the mechanics of EVM (WBS, S-curve and metrics) do not significantly differ between fixed-price contracted projects and cost-plus contracted projects (with three exceptions noted below) The unique inference that the contribution of the WBS to payment planning is greater in fixed-price contracted projects as compared to cost-plus contracts The unique inference that the contribution of the WBS in schedule planning is greater in cost-plus contracted projects as compared to fixed-price contracts
43. This research offers nine specific contributions cont. The unique inference that the contribution of the EVM metrics to evaluating and processing payment requests is relatively greater in fixed-price contracted projects as compared to cost-plus contracted projects The mechanics of EVM contribute as much to project planning (WBS) as they do to control (S-curve and metrics)
44. The results are timely and relevant EVM shown to have high potential; low usage (Besner and Hobbs, 2006) Schedule management techniques are more important to high-uncertainty projects (Shenhar, et, 2002) “ Schedule risk is often under appreciated for its contribution to driving contract performance and cost overruns” (U.S. DoD EVM Implementation Guide, 2005) Budget and scope management techniques more important with projects with low uncertainty (Shenhar, et al, 2002)
46. Technical aspects of research and data Pre-survey tasks Research approach and methodology determination Survey instrument development Data collection strategy determination and effort Post-survey tasks Survey instrument testing Sample testing for social desirability of group responses Data testing for reliability and assumptions Data treatments Statistical analysis
47. Research approach selected was quantitative Appropriate for testing hypotheses Lends itself to relatively short duration studies Uses known measurement and analytic techniques Needed representative sample available Compliments existing research and strengthens knowledge through methodological triangulation
48. Three primary statistical methods were used Pearson’s product-moment correlation - r Bivariate linear regression – β Canonical discriminant analysis - Wilks’ λ
49. Survey instrument developed for ease of use and analysis Thirty-eight (38) questions (plus MC-10 battery) Likert-type semantic differential scaling Interval level scale for continuous data Available on-line (July 6, 2005 - March 10, 2006) Approx. 7-10 minutes to take
50. Data collection strategy included attributes of random and purposive sampling Deliberate sampling frame included four subgroups with requisite experience DAU EVM Community PMI CPM APM EVM SIG AACE EVM SIG Approximate sampling frame size of 2500 Participants solicited via email without bias on two separate occasions
51. Survey data attributes 148 of 256 respondents completed survey - 57.8% 145 of potentially 2500 samples used - 5.8% Three outlier data points (residual values > 3 σ removed) Less than one percent missing values ( μ - imputation) Residuals displayed normal homoscedasticity and normal linear relationship to expected value
52. Survey data predominantly public projects, defense and information technology Industry 3 2.1 2.1 2 1.4 3.4 19 13.1 16.6 67 46.2 62.8 16 11.0 73.8 10 6.9 80.7 15 10.3 91.0 7 4.8 95.9 6 4.1 100.0 145 100.0 Description Heavy construction Light construction (residential and commercial) Government/public works Military/defense Information technology Professional services (banking, consulting, management, etc.) Aerospace Software development Other Total Frequency Percent Cum. Percent
53. Independent samples t-test of MC-10 social desirability data indicating no significant different in scores about CR and FP groups Independent Samples Test 2.597 .109 .520 143 .604 .20565 .39546 -.57606 .98736 .487 68.9 .628 .20565 .42217 -.63658 1.048 Assumptions Equal variances assumed Equal variances not assumed Dependent variable Contract type F Sig. Levene's test for equality of variances t df Sig. (2-tailed) M Difference SE Difference Lower Upper 95% CI of the Difference t-test for equality of means
65. Directions for future research Qualitative or quantitative study as they relate to EVM or are otherwise affected by the core project management processes of initiating or closing The depth to which scope should be defined. The question yet to be answered regarding EVM is whether an optimal level of WBS exists. Second, how the utility curve for varying degrees of WBS decomposition might look
66. Directions for future research cont. Greater stratification of contract types as categorical variables with respect to the principles of EVM and project success Exploration of variables and dimensions not covered by this study Predictive ability of EVM principles for the specific achievement of project financial objectives