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Critical Success Factors for Earned Value Analysis

in Managing Construction Projects

 

SECOND EDITION

By Mohamed Morad and Sameh El-Sayegh

American University of Sharjah

Sharjah, UAE

 


 
Abstract

Completing construction projects on time and within budget is important to achieve project objectives. Project Managers use Earned Value Analysis (EVA) in order to evaluate project performance at certain points in time to ensure successful project completion. The use of EVA, in construction projects, is on the rise due to its importance. Several barriers make it difficult to implement EVA in construction projects. This paper evaluates the main barriers and critical success factors for implementing Earned Value Analysis in construction projects in the United Arab Emirates (UAE). The main barriers and success factors were identified through literature review. A survey was then developed and distributed to construction professionals in the UAE. Thirty-Five surveys were analysed since their companies are implementing EVA. The results indicate that the main benefits of using earned value analysis include providing a database of completed projects that can be used for comparative analysis, achieving project cost objectives and providing early warning signals for performance problems. The main limitations of EVA include dependency on past performance for forecasting, independency of activities and difficulty in incorporating scope changes. The results also indicate that the main barriers to EVA implementation include cultural resistance, ill scope definition and lack of expertise. The Critical Success Factors (CSFs) include top management support, high level of acceptance among project managers and strong administrative and technical ability of project managers. The paper also presents recommendations for the successful implementation of Earned Value Analysis (EVA) in construction projects.

Key words: Earned Value Management, project management, construction projects, United Arab Emirates (UAE)

JEL code: L74: Construction; O22: Project Analysis

Introduction

The early phase of Earned Value Management (EVM) goes back to the 1960s. It became a standard in 1998. In May 1998, an earned value management commercial standard was approved and it was adopted in 1999 as the official US Department of Defence (DOD) approach (Webb, 2003). EVM consists of a framework which integrates project’s scope, cost, and schedule together. Earned Value Analysis (EVA) is a quantitative technique that is used in project management to evaluate performance and predicate final project outcomes, by comparing executed work and their cost against planned work and their cost (Lukas, 2008). Earned Value management is a management methodology of integrating scope, schedule and resources, for objectively measuring project performance and progress (Storm, 2008). The method depends on quantitative approach to measure preformed work. Managing using Earned Value Method considered as “managing with open eyes” because project manager and site team can obviously see the difference among what have been accomplished, what was planned and actual cost (Snog and Shalini, 2009). EVM is a powerful tool that assists the decision process by providing indicators (indexes) which act as alarms to keep the project on time and budget (Kerzner, 2006). Studies showed that the application of Earned Value Management is successful in projects that have clear and tangible objectives; these projects indicate better results in the use of EVM (Vargas, 2003). EVM is considered as a crucial method for project management that can facilitates project control and forecasts the expected final project cost and duration (Lipke, 2009). EVM works as supportive tool for forecasting future cost depending on schedule and budget although many authors has critiqued the assumptions of forecasting in EVM.

The UAE experienced a period of construction boom. Many construction companies had participated in breaking the ground for new buildings and facilities. Dubai has built outstanding projects that no any city can do such as Burj Khalifa, Palm Jemeriah, and world’s islands. Our concern is what kind of system did construction companies used to control the project budget and duration. The objective is to determine the status of Earned Value Management in UAE and especially in Dubai, including its barriers, limitations and success factors. EVM has been widely used in construction companies. Construction companies in Dubai have been controlling their projects through control systems. Although it has been developed long time ago, the method has some imperfections and weaknesses. This paper focuses on the barriers that prevent the proper implementation of earned value management. These barriers considered as obstacles such as company’s qualification, people culture, staff responsibility, project conditions, processes and procedures, and measuring methods. Furthermore, the paper addresses the several limitations in earned value management concept. The paper also presents recommendations for the successful implementation of Earned Value Analysis (EVA) in construction projects.

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Second Editions are previously published papers that have continued relevance in today’s project management world, or which were originally published in conference proceedings or in a language other than English.  Original publication acknowledged; authors retain copyright.  This paper was originally presented at the most recent Scientific Conference on Project Management in the Baltic States at the University of Latvia in Riga in April 2018.  It is republished here with the permission of the authors and conference organizers

How to cite this paper: Morad, M. and El-Sayegh, S. (2018). Critical Success Factors for Earned Value Analysis in Managing Construction Projects; Proceedings of the 7th Scientific Conference on Project Management in the Baltic States, University of Latvia, Riga, Latvia, April 2018; republished in the PM World Journal, Vol. VII, Issue IX – September.  Available online at https://pmworldjournal.net/wp-content/uploads/2018/09/pmwj74-Sep2018-Morad-ElSayegh-critical-success-factors-for-earned-value-analysis.pdf

 



About the Authors


Mohammed Morad

Ontario, Canada

 

 

Mohamed Morad is currently a project manager with Castlewall Developments in Ontario, Canada.  He holds a Masters and Bachelor’s degrees from the American University of Sharjah, UAE and an MBA, Project Management from the University of New Brunswick, Canada

 


Dr. Sameh El-Sayegh

Sharjah, UAE

 

 

Dr. Sameh El-Sayegh is a professor of construction and project management in the Department of Civil Engineering, College of Engineering, American University of Sharjah, United Arab Emirates.  He hold a PhD in Civil Engineering (Construction Engineering and Project Management), Texas A&M University, USA, 1998; MSc (Construction Management), Texas A&M University, Texas, USA, 1996; BSc (Construction engineering), American University in Cairo, Cairo, Egypt, 1993

Prior to his academic career, Sameh Monir El-Sayegh worked in the construction industry in Greece and Yemen with CCIC and in the US with the Morganti Group. His areas of research and teaching interest are construction and project management, project control and construction contracting. He is a certified Project Management Professional (PMP) from the Project Management Institute.  Contact: [email protected]