An extension of earned value management for forecasting of project performance
The inherence of risks in every type of project due to the uncertain Project Management (PM) environment may affect the performance of a project leading to cost, time, and scope overruns. Thus, PM needs a technique that will cater for these problems and hence improve the performance of projects. Earned Value Management (EVM) is one of the best techniques for monitoring and forecasting of project performance. However, given a number of studies that have been done, EVM predicts the future performance of a project from its past performance without considering the possibility of other factors (risks) that may affect the performance of a project during the project life cycle. Therefore, the study sought to extend Earned Value Management in forecasting of project performance by advancing its forecasting formulae to incorporate the risk element into it for better forecasting of project performance. This was achieved by examining the risk factors that influence forecasting of project performance, assessing the ability of EVM in respect to forecasting of project performance, and developing a combined approach of EVM and Enterprise Risk Management for forecasting of project performance. The study found out a number of factors affecting the performance of projects such as equipment shortages, staff turnover, and climatic conditions among others. Further, the study ascertained that EVM has a weakness in forecasting of project performance because it does not take notice on the likelihood of risk elements that may affect the performance of a project in the cause of a project life cycle. The EVM-ERM model was found out to forecast project performance with reductions in completion time and cost. From the findings of the EVM-ERM model subjection to the infrastructure projects in Kenya funded by the World Bank, the study ascertained that the performance of the individual projects was enhanced with reductions in completion time and cost. Additionally, in comparing the efficiency of EVM and EVM-ERM, the study deduced that the latter model stood out in forecasting of project performance depicting an improvement in forecasting of completion time and cost of a project. Hence, it is imperative for the risk element to be incorporated to the EVM technique to enhance the performance of projects.