An extension of earned value management for forecasting of project performance
Date
2014
Authors
Aming’a, Mary Moraa
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
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.
Description
A Thesis submitted in partial fulfillment of the requirements for the Degree of Master of Commerce
Keywords
Earned Value Management, Forecasting, Project performance, Projects