Title: Earned value management under risk

Authors: Viktor K. Diamantas, Konstantinos A. Kirytopoulos, Vrassidas N. Leopoulos

Addresses: Department of Mechanical Engineering, National Technical University of Athens, 9 Iroon Polytechnioy Street, 15780 Athens, Greece. ' Department of Financial and Management Engineering, University of the Aegean, 31 Fostini Street, Chios, Greece. ' Department of Mechanical Engineering, National Technical University of Athens, 9 Iroon Polytechnioy Street, 15780 Athens, Greece

Abstract: This paper presents a newly developed project monitoring and controlling method based on the synergy between project risk management (PRM) and earned value management (EVM). Its fundamental attribute is the introduction of the criticality index in EVM, which effectively models a dynamic aspect of the project frequently ignored in practice that is the existence of multiple critical paths. Two new stochastic indices are introduced, namely the weighted EACt and the weighted SPI that utilise the criticality index of each project activity, as calculated through simulation. The objective of the proposed method, which is an enhancement to standard EVM rather than a replacement, is to expose the uncertainty under which decisions are taken and hence, to increase the quality of decision-making. The new indices, EACt,w and SPIw, are further illustrated through a case study revealing the superiority of the synergy between EVM and PRM to the typical EVM.

Keywords: earned value management; EVM; criticality index; schedule development; project monitoring; project control; project risk management; multiple critical paths.

DOI: 10.1504/IJPOM.2011.042037

International Journal of Project Organisation and Management, 2011 Vol.3 No.3/4, pp.335 - 351

Received: 29 Sep 2009
Accepted: 16 Aug 2010

Published online: 21 Aug 2011 *

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