Project Efficiency Estimation Based on Dynamic Simulation Model of Earned Value Management

Subject Areas : Project Management

Mojtaba Bakhshandeh ¹ , Yahya Zare Mehrjerdi ²

1 - Ph.D. candidate, Department of Industrial Engineering, Faculty of Industrial Engineering, Yazd University,Iran
2 - Professor,Department of Industrial Engineering, Faculty of Industrial Engineering, Yazd University, Iran.

Received: 2021-07-28 Accepted : 2022-03-02 Published : 2023-03-21

Keywords: Simulation model, System Dynamics, earned value management, project efficiency,

Abstract :

Earned Value Management (EVM) is known as an efficient and well-known tool for project management. Examining various sources, it was observed that although the EVM analytical model has introduced good indicators for measuring project progress, it is weak in estimating the final cost of the project and does not predict the process of cost change and project efficiency. On the other hand, nothing has been done so far to use system dynamics in EVM.Therefore, considering the capacity of system dynamics in modeling complex systems and setting parameters dynamically based on model variables, the main problem of modeling research is the value model obtained by simulating system dynamics. The dynamic hypothesis of the research was that there are dynamics between the main indicators of EVM. Identifying these dynamics and the way they affect each other can lead to estimating the process of changing costs and project efficiency by the end of the project.Through presenting the causal loop diagram and the stack flow diagram of the proposed model, the variables were determined and after simulation, the model was validated by performing various tests and different policy scenarios were presented.The comparison of the results of the research simulation model with the results of the EVM analytical model revealed that there is a slight difference between the results and the efficiency. The main contribution of the research is the creation of a simulation model based on system dynamics as the core of the simulation to estimate the trend and the final amount of efficiency and cost of the project, which can be part of a more comprehensive simulation model.This can be used to determine the impact of various project management functions on improving project efficiency, which is the main suggestion for further research.

References:

Acebes, F., Pajares, J., Galán, J. M., and López-Paredes, A. (2012), Beyond earned value management: a graphical framework for integrated cost, schedule and risk monitoring. 26th IPMA World Congress, Crete, Greece, 74, 181-189.

Balali, A., Valipour, A., Antucheviciene, J., and Šaparauskas, J. (2020), Improving the results of the earned value management technique using artificial neural networks in construction projects. Symmetry Journal, 12(10), 1745.

Ballesteros-Pérez, P., Sanz-Ablanedo, E., Daniel Mora-Melià, M.C., González-Cruz, Fuentes-Bargues, J.L., and Pellicer, E. (2019), Earned schedule min-max: two new EVM metrics for monitoring and controlling projects. Automation in Construction, 103, 279–290.

Batselier, J. and Vanhoucke, M. (2017), Improving project forecast accuracy by integrating earned value management with exponential smoothing and reference class forecasting. International Journal of Project Management, 35(1), 28–43.

Bhatia, S. M., and Nagare, M. R. (2021), Earned Value Management (EVM) technique in oil and gas construction project: a critical analysis. International Journal of Research Publication and Reviews, 1098-1102.

Forrester, J. W. (1998), Designing the future. At University Seville, Spain, December, 15, 1998.

Forrester, J.W. (1958), Industrial dynamics: a major breakthrough for decision makers. Harvard. Bus. Rev. 36, 37-66.

Hasan, R., Chowdhury, Sh. A., and Akter, J. (2021), Construction project monitoring: the cost and schedule control by Earned Value Method (EVM). Journal of Technology Management and Business, 8, 1, 1-9.

Hendiani, S.,  Bagherpour, M., Mahmoudi, A., and Liao, H. (2020), Z-number based earned value management (ZEVM): A novel pragmatic contribution towards a possibilistic cost-duration assessment. Computers and Industrial Engineering, 143.

Hines, J., Malone, T., Gonçalves, P., Herman, G., Quimby, J., Murphy-Hoye, M., and Ishii, H. (2011), Construction by replacement: a new approach to simulation modeling. System Dynamics Review, 27(1), 64-90.

Moradipour, T. (2012), Acquisition policy design; an application of system dynamics for a heavy equipment dealer in Southeast Asia.  Master Thesis,  The University of Bergen, 1-96.

Netto, J. T., Fernandes, N. L., Aleluia, A. P., and Santos, J. A. (2020), Critical factors and benefits in the use of earned value management in construction. Brazilian Journal of Operations & Production Management, 17(1), 1-10.

Pascual, J. L., Rodríguez, J. C., and  Rambaud, S. C. (2021), The Enhanced-Earned Value Management (E-EVM) Model: a proposal for the aerospace industry. Symmetry journal, 13(2), 232.

Priyo, M. (2021), Earned value management system in Indonesian construction projects. International Journal of Integrated Engineering, 13, 3, 37-45.

Project Management Institute, (2017), A guide to the project management body of knowledge. 6th Edition, PA: Author.

Sackey, S. (2020), Duration Estimate at Completion: Improving earned value management forecasting accuracy. KSCE Journal of Civil Engineering (2020), 24(3), 693-702.

Sterman, J.D. (2000), Business dynamics: systems thinking and modeling for a complex world. Vol: 19, Irwin/McGraw-Hill, Boston, 1-1008.

Song, J., Martens, A., and Vanhoucke, M. (2021), Using earned value management and schedule risk analysis with resource constraints for project control. European Journal of Operational Research, 297(2), 451-466.

Taheri, Sh. (1999), Productivity and analysis in organization (total prodictivity management). Tehran, Hastan pld (In Persian).

Tariq, S., Ahmad, N., Ashraf, M. U., Alghamdi, A. M., and Alfakeeh, A. S. (2020), Measuring the impact of scope changes on project plan using EVM. IEEE Access, 8, 154589 – 154613.

Varshney, K. (2020), Performance management & improvement strategies for construction projects. International Journal of Architectural Design and Management, 3, 1.

Zhao, M., and Zi, X. (2021), Using earned value management with exponential smoothing technique to forecast project cost. Journal of Physics: Conference Series, 1-5.

Zuhra, F., and Thomas D. (2020), Analysis of factors affecting cost overrun and reducing cost and rsk of highway construction projects using monte carlo simulation methods earned value management techniques. International Research Journal of Engineering and Technology, 7, 6, 6151-6154.