Most of the construction projects are exposed to time and cost overruns due to various factors and this is a major problem. As a solution to this, the Earned Value Management (EVM) method is considered. EVM is a powerful and well-known method used in monitoring and controlling the project. EVM gives an early indication that either project is delayed or not and the project is either over budget or under budget at any particular day by tracking it. Thus, it helps to improve the management control system of a construction project, to detect and control the problems in potential risk areas and to suggest the importance and purpose of monitoring the construction work.
This paper explains the main parameters of the EVM system involved in the calculation of time and cost for construction projects. In this study, the Primavera P6 software is used to deals with the project monitoring process of a seven-storeyed (G+6) faculty building whose construction is in progress at Istanbul, Turkey. A comparison between the planned progress of construction activities and actual progress is performed and the analysis results are interpreted. This case study justifies the benefits of using EVM for project cash flow analysis and forecasting.
Performance Evaluation of Construction Projects by EVM Method, Using Primavera P6 – A Case Study in Istanbul, Turkey
1. PER FOR M A N C E EVA LU ATION OF
C ON S TR U C TION PR OJ EC TS BY EV M M ETHOD ,
U SIN G PR IM AV ER A P6 – A C A S E S TU D Y IN
IS TA N BU L, TU R KEY
Presentation Date : 02/10/2020
Authors:
M.Sc. Civil Eng. Mohammad Lemar ZALMAI
Assist. Prof. Dr. Cemil AKCAY
Assist. Prof. Dr. Omer GIRAN
Dr. Osman Hurol TURKAKIN
2. Contents
Introduction
Earned Value Management (EVM)
Important Earned Value Management Terms
Case Study
Steps involved in monitoring and control of our construction project
Result and Discussion
Conclusion
2
M. L. Zalmai, C. Akcay, O. Giran & O.H. Turkakin
3. Introduction
3
Most of the construction projects are exposed to time and cost overruns due
to various factors and this is a major problem. As a solution to this, the
Earned Value Management (EVM) method is considered. EVM is a powerful
and well-known method used in monitoring and controlling the project. EVM
gives an early indication that either project is delayed or not and the project is
either over budget or under budget at any particular day by tracking it. Thus,
it helps to improve the management control system of a construction project,
to detect and control the problems in potential risk areas and to suggest the
importance and purpose of monitoring the construction work.
M. L. Zalmai, C. Akcay, O. Giran & O.H. Turkakin
4. 4
This paper explains the main parameters of the EVM system involved
in the calculation of time and cost for construction projects. In this
study, the Primavera P6 software is used to deals with the project
monitoring process of a seven-storeyed (G+6) faculty of dentistry
building whose construction is in progress at Istanbul, Turkey. A
comparison between the planned progress of construction activities
and actual progress is performed and the analysis results are interpreted.
M. L. Zalmai, C. Akcay, O. Giran & O.H. Turkakin
5. Earned Value Management (EVM)
5
Earned Value Management (EVM) is a project management technique for
measuring project performance and progress.
Earned value project management is a well-known management system
that integrates cost, schedule and technical performance. It allows the
calculation of cost and schedule variances and performance indices and
forecasts of project cost and schedule duration. The earned value method
provides early indications of project performance to highlight the need for
eventual corrective action (Vandevoorde & Vanhoucke, 2006).
M. L. Zalmai, C. Akcay, O. Giran & O.H. Turkakin
6. Important Earned Value Management Terms:
6
EVM monitors the project’s progress against a baseline. It includes the following basic
elements to evaluate projects technical performance. The basic terms related to earned
value management are; (PMI, 2011)
Planned Value (PV): It is the amount of money budgeted to be spent at a particular
point in time. or in a simple way, the cost of the project according to the schedule of the
project. PV is also known as budgeted cost of work scheduled (BCWS). Planned value is
calculated before actually doing the work, which also serves as a baseline. Total planned
value for the project is known as budget at completion (BAC).
Actual Cost (AC): It is the actual amount of money spent for the corresponding
planned and earned value or the amount spent on the project to date. This actual cost
must correspond to whatever was budgeted for the planned value and earned value (e.g.
all labor, material, equipment and indirect costs). It is also known as the actual cost of
work performed (ACWP).
M. L. Zalmai, C. Akcay, O. Giran & O.H. Turkakin
7. Important Earned Value Management Terms:
7
Earned Value (EV): It is the amount of work in terms of cost that is actually
accomplished at a particular point of time with respect to the planned value or
the planned value of actually completed work. It is also known as budgeted cost
of work performed (BCWP).
Cost Variance (CV): It is the difference between earned value and actual cost.
(EV-AC)
Schedule Variance (SV): It is the difference between earned value and planned
value. (EV-PV)
Cost Performance Index (CPI): It is the ratio between earned value and actual
cost. If CPI greater than 1 then the project is under budget and CPI less than 1,
then the project is under budget.
M. L. Zalmai, C. Akcay, O. Giran & O.H. Turkakin
8. Important Earned Value Management Terms:
8
Schedule Performance Index (SPI): It is the ratio between earned value and planned
value. It indicated how much ahead or behind schedule, the project is at a particular
time.
Critical Ratio (CR): It is the product of the cost performance index and schedule
performance index. It indicates the overall performance of the Project with respect to
both cost and time.
Estimate at Completion (EAC): It’s a prediction of the total project cost based upon
the current trends in project performance.
Variance at Completion (VAC): It is the difference between the planned budgets at
the beginning of the project to the estimate at completion. This value denotes how
much more profit or loss the contractor will make on that Project.
Time Estimate at Completion (EACt): It predicts the completion time of a project
based on its current performance. EACt = (BAC / SPI) / (BAC / months)
M. L. Zalmai, C. Akcay, O. Giran & O.H. Turkakin
9. Earned value management formula and interpretation
9
Name Formula Interpretation
Cost variance (CV) EV – AC Negative is over budget, positive is under budget.
Schedule variance
(SV)
EV – PV Negative is behind schedule, positive is ahead of schedule.
Cost performance
index (CPI)
EV / AC
Less than 1 poor performance is greater than 1 good
performance.
Schedule
performance index
(SPI)
EV / PV
Less than 1 poor performance is greater than 1 good
performance.
If SPI = 1, SV = 0 On proper schedule
SPI < 1, SV < 0 Behind the schedule
SPI > 1, SV > 0 Ahead of schedule
If CPI = 1, CV = 0 Project is on budget
CPI < 1, CV < 0 Project is over budgeted
CPI > 1, CV > 0 Project is under budgeted
Estimate at completion
(EAC) AC + ETC
As of now how much do we expect the total project to cost ₺ .
Actual plus a new estimate for remaining work.
Estimate to complete
(ETC)
EAC – AC How much more will the project cost?
Variance at
completion (VAC)
BAC – EAC How much over budget will we be at the end of the project?
Table 1. Earned value management formula and interpretation. (Bhosekar & Vyas, 2012)
10. EVM GRAPH
10
M. L. Zalmai, C. Akcay, O. Giran & O.H. Turkakin
Figure 1: Three basic curves used in the EVM. A standard EVM graph.
11. Case Study
11
M. L. Zalmai, C. Akcay, O. Giran & O.H. Turkakin
In this study, a seven-storeyed (G+6) a university faculty of dentistry
construction project which is in progress in Istanbul selected as a case
study. The project duration is 28 months and the budget at completion
(BAC) is ₺ 104,947,000.00
Construction, electrical and mechanical disciplines are included in the
project planning. The number of activities of the project considered in
the EVM analysis is 543 activities. Earned value analysis was done at 5
different points of time. Here the last EVM analysis of the project
which was done at the end of the twentieth month is given.
12. Steps involved in monitoring and control of our construction project
12
M. L. Zalmai, C. Akcay, O. Giran & O.H. Turkakin
1) Create a new project: A project is a collection of activities and related
information that forms a plan for creating a product or service. The
project is made under the related department in Enterprise Project
Structure with project ID and project name. Planned start and must finish
dates can be given to the project. A calendar is assigned to the project
which can be global, resource, or project calendar.
2) Work breakdown structure (WBS): WBS is a hierarchical structure
of work that must be able to complete a project. Each project has its own
WBS hierarchical structure. Each WBS element may include more
detailed WBS levels, activities, or both in it as shown in figure 2.
13. Steps involved in monitoring and control of our construction project
13
M. L. Zalmai, C. Akcay, O. Giran & O.H. Turkakin
Figure 2: Work breakdown structure.
14. Steps involved in monitoring and control of our construction project
14
3) Determining activities: Activities are the basic work elements of a project. They are the
smallest part of a project. An activity has mainly the following characteristics such as activity ID,
name, start and finish dates, activity calendar, activity type, activity codes, constraints, expenses,
predecessor and successor relationships, resources, roles, etc, shown in figure 3.
Figure 3: Determination of activity.
15. Steps involved in monitoring and control of our construction project
15Figure 4: Relations between activities.
4) Relations between activities: To constitute a network, the activities should be linked to each
other, which is done by allocating relationship to the activities.
• Finish to start a relationship (FS). • Finish to finish the relationship (FF).
• Start to start relationship (SS). • Start to finish relationship (SF). As shown in Figure 4
16. 16
Figure 5: Resource assignment.
5) Finding activity duration: when planning the activity duration is entered in
the original duration field.
6) Activity dates: The following are the types of activity dates primavera;
actual start, actual finish, planned start, planned finish.
7) Activity cost: The activity cost is the addition of all the costs incurred to
finish the activity.
8) Resource assignment:
Resources are the general name of
the factors required for the
completion of the activity. Labor,
equipment and material are
resource types. In Primavera
software first, the resources are
defined, then the required
resources are assigned to each
activity . As shown in Figure 5.
17. Steps involved in monitoring and control of our construction project
17
9) Creating baselines: Baseline is a standard benchmark based on the
standard performance of the project is the measure. To create a baseline
select project option in the activity toolbar and then select baseline after
creating baseline assign baseline to the project.
10) Update schedule: After assigning a baseline again, the project is
scheduled to update the project baseline for analysis.
11) Tracking: The tracking window is utilized for monitoring a project’s
progress by updating and periodic data entry of activities.
M. L. Zalmai, C. Akcay, O. Giran & O.H. Turkakin
18. 18
Earned value analysis is done on a university faculty of dentistry
construction projects in Istanbul. The case study project was analyzed
using Primavera P6, based on the Earned Value Analysis Method. CPI -
Cost Performance Index, PD - Planned Duration, AD - Actual
Duration, CV - Cost Variance, PV -Planned Value, AC - Actual Value,
and EV - Earned Value variables were selected.
Results and Discussion
M. L. Zalmai, C. Akcay, O. Giran & O.H. Turkakin
19. 19
Results and Discussion
M. L. Zalmai, C. Akcay, O. Giran & O.H. Turkakin
Figure 6: Earned value analysis (EVA) for foundation works.
In this study, the main works of the case study project are examined and
the EVM analysis was done. The cost variance of the foundation works
was higher than any other main works. Thus the EVM analysis
parameters for foundation work are given in table 2 and the results are
interpreted.
20. 20
Results and Discussion
M. L. Zalmai, C. Akcay, O. Giran & O.H. Turkakin
Original duration 28
Budgeted total cost ₺ 7,195,955.40
Earn value ₺ 7,195,955.40
Actual cost ₺ 7,558,664.40
Cost Variance ₺ -362,709.00
Schedule performance index 1
Cost performance index 0.95
Table 2. Results of EVA parameters for foundation works.
The project is on the schedule but it is over budgeted.
21. Conclusions
With the introduction of Earned Value Analysis to the monitoring of
this project, the actual return of investment for the work done is found
out. It also brings to light if the project is going as per what was
originally planned. It shows how much ahead of schedule or behind
schedule, the project is at a particular point of time. Consequently
earned value analysis enables the contractor to monitor the progress of
work in terms of cost and time in a much more effective.
21
M. L. Zalmai, C. Akcay, O. Giran & O.H. Turkakin
22. Conclusions
This research on the earned value management in Primavera P6 software
helps the manager to find the problems in potential risk areas in early
stages which can be controlled and gives detailed progress of variances in
every single activity. After the analysis, the managers can make a decision
about future works of the project which are to be achieved and control the
budget of the project. Earned value in Primavera P6 software results in
faster and true results when compared to manual calculations.
This study also demonstrated that EVM has considerable value and
presents extraordinary properties that can benefit clients, consultants and
industries. 22
23. References
Bhosekar, S. K., & Vyas, G. (2012). Cost Controlling Using Earned Value Analysis in Construction Industries.
International Journal of Engineering and Innovative Technology (IJEIT), 1(4).
Burtonshaw-Gunn, S. A. (2009). Risk and financial management in construction. England: Gower Publishing, Ltd.
CIOB. (2011). Code of Practice for Project Management for Construction and Development. (4th Editio). Wiley-
Blackwell.
Fewings, P. (2013). Construction project management: an integrated approach. (2nd edition). London and New
York: Routledge.
Karaman, A. E., & Son, S. (2018). Kazanılmış değer analizi ile inşaat projelerinin performans değerlendirmesi
[Performance evaluation of construction projects with earned value analysis]. Journal of Balıkesir University Institute
of Science, 20(1), 1–9.
Levy, S. M. (2012). Project Management in Construction (McGraw-Hill Professional Engineering). McGraw-Hill
Professional.
Nagrecha, S. (2002). An introduction to earned value analysis. PMI, Great Lakes.
PMI. (2008). A Guide to the Project Management Body of Knowledge (Fourth edi).
PMI. (2011). Practice Standard for Earned Value Management (2nd ed.). Pennsylvania, USA: Project Management
Institute, Incorporated.
Saini, H., Singh, K., & Malik, U. (2019). Project Management in Construction Using Primavera. International
Journal of Civil Engineering and Technology (IJCIET), 8(8).
Subramani, T., Jabasingh, D. S. S., & Jayalakshmi, J. (2014). Analysis of Cost Controlling In Construction
Industries by Earned Value Method Using Primavera. Journal of Engineering Research and Applications, 4(6), 145–
153.
Vandevoorde, S., & Vanhoucke, M. (2006). A comparison of different project duration forecasting methods using
earned value metrics. International Journal of Project Management, 24, 289–302.
Vyas, A. B., & Birajdar, B. V. (2016). Tracking of Construction Projects by Earned Value Management.
International Journal of Engineering Research & Technology (IJERT), 5(03), 829–831.
Waris, M., Khamidi, M. F., & Idrus, A. (2012). The Cost Monitoring of Construction Projects through Earned Value
Analysis. Journal of Construction Engineering and Project Management, 2(4), 42–45.
23
24. THANK YOU FOR
YOUR PATIENCE
24
Yrd. Doc. Dr. Cemil AKcAY (cakcay@istanbul.edu.tr)
Assist. Prof. Dr. Ömer GİRAN (ogiran@istanbul.edu.tr)
Dr. Osman Hürol TÜRKAKIN (turkakin@istanbul.edu.tr)
MSc. Mohammad Lemar ZALMAI (lemar_zalmai07@hotmail.com)
PER FOR M A N C E EVA LU ATION OF
C ON STR U C TION PR OJ EC TS BY EV M M ETHOD ,
U SIN G PR IM AV ER A P6 – A C A SE STU D Y IN
ISTANBUL, TURKEY