Earned Value Management

INTRODUCTION

The objective of the paper is to explain in detail that how to implement Earned Value management in construction Projects in an effective manner, which includes the limitations & advantages and how to improve the performance of earned value management. This has been done based on the experience of the author in the same industry and other useful references from various books, technical papers and web which are listed under References. The concept of Earned value management (EVM) was introduced in early 1900s by the industrial engineers working as project managers in factories. “In 1967 it was the major component of the cost/schedule control system criteria for the acquisition by government” [1].Thus the origin of Earned

This could be explained by considering an example of a project where time and cost progress is reported separately. The accounts department has reported the project is under spent, with planned expenditure is 50% and the actual expenditure figure is 45%.This result certifies that the project to be completed under Budget. On the other hand the project progress performance may be negative. The planned progress was 50% and the actual achieved progress till date is 40%. The project is lagging behind the schedule. Now analyze the result after integrating cost and time, the actual project expenditure is 45% and progress is only 40%/This clearly indicates project manager to apply the control for project to correct the divergences. The decision taken by project manager will be supported by the evidence obtained through earned value analysis. EVM enables the simple measurement across the complex project. Due to common units of measurement the direct comparison of progress of two different trades can be done. Earned value synthesizes the measure of work done into consistent and comparable

At this point of time it is very difficult to assess the overall progress of project visually and it could be argued that subjective analysis on a complex project is bound to be discrepant.

PRE REQUISITES TO IMPLEMENT EARNED VALUE ON ALL PROJECTS.

The earned value analysis is a powerful tool for the project control and progress performances evaluation of Project. However to gain satisfactory result from EVM requires following of some prerequisites.

The Work Breakdown Structure:

The concept suggests disintegration of whole project in to small manageable chunks or work packages. The breakdown of the work generally down in a hierarchical structure into which bottom most level are the activities of the project. These small work packages assigned to individual or team through the Organization Breakdown structure. The work package will include the details of resources, time and cost required to complete the particular work. Hence work package are efficient tools to excises planning, monitoring and controlling the budget, schedule and project performance at the activity level of project. If Schedule and cost performance share a common WBS then integrated view of schedule, time and cost variances can be built