The Impact of Uncertainty in the Measurement of Progress in Earned Value Analysis

Abstract

Abstract Earned value management (EVM) is a project management methodology that integrates scope, cost and time, and requires the periodic measurement of cost and work performed. It is supported by a quantitative technique, earned value analysis (EVA), to evaluate project’s performance and to forecast its final results thru the monitoring of: planned value (PV), earned value (EV) and actual cost (AC). In EVA, the EV of an activity represents the amount of work performed in a period and, if defined as the product of percent complete (PC) by PV, it represents the project’s progress. Thus, the error associated with EV may result from the uncertainty in any of those values. Although the uncertainty with PV has been widely discussed, the impact of the uncertainty associated with progress measurement has not. Progress is hard to measure, especially in an integrated vision of scope, cost and time. It results from people’s judgment and, therefore, it comprises uncertainty. Nevertheless, EV is a deterministic measurement technique. This paper intends to contribute for this discussion by evaluating the error in EV driven by the uncertainty of progress measurement, with a ceteris paribus analysis of the PC of activities, and its impact on EVA performance metrics.