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Earned value management insights using inferential statistics

Marshall, Robert A. , Ruiz, Philippe , & Bredillet, Christophe (2008) Earned value management insights using inferential statistics. International Journal of Managing Projects in Business, 1(2), pp. 288-294.

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Abstract

Purpose – The purpose of this paper is to summarise a successfully defended doctoral thesis. The main purpose of this paper is to provide a summary of the scope, and main issues raised in the thesis so that readers undertaking studies in the same or connected areas may be aware of current contributions to the topic. The secondary aims are to frame the completed thesis in the context of doctoral-level research in project management as well as offer ideas for further investigation which would serve to extend scientific knowledge on the topic.

Design/methodology/approach – Research reported in this paper is based on a quantitative study using inferential statistics aimed at better understanding the actual and potential usage of earned value management (EVM) as applied to external projects under contract. Theories uncovered during the literature review were hypothesized and tested using experiential data collected from 145 EVM practitioners with direct experience on one or more external projects under contract that applied the methodology.

Findings – The results of this research suggest that EVM is an effective project management methodology. The principles of EVM were shown to be significant positive predictors of project success on contracted efforts and to be a relatively greater positive predictor of project success when using fixed-price versus cost-plus (CP) type contracts. Moreover, EVM's work-breakdown structure (WBS) utility was shown to positively contribute to the formation of project contracts. The contribution was not significantly different between fixed-price and CP contracted projects, with exceptions in the areas of schedule planning and payment planning. EVM's “S” curve benefited the administration of project contracts. The contribution of the S-curve was not significantly different between fixed-price and CP contracted projects. Furthermore, EVM metrics were shown to also be important contributors to the administration of project contracts. The relative contribution of EVM metrics to projects under fixed-price versus CP contracts was not significantly different, with one exception in the area of evaluating and processing payment requests.

Practical implications – These results have important implications for project practitioners, EVM advocates, as well as corporate and governmental policy makers. EVM should be considered for all projects – not only for its positive contribution to project contract development and administration, for its contribution to project success as well, regardless of contract type. Contract type should not be the sole determining factor in the decision whether or not to use EVM. More particularly, the more fixed the contracted project cost, the more the principles of EVM explain the success of the project. The use of EVM mechanics should also be used in all projects regardless of contract type. Payment planning using a WBS should be emphasized in fixed-price contracts using EVM in order to help mitigate performance risk. Schedule planning using a WBS should be emphasized in CP contracts using EVM in order to help mitigate financial risk. Similarly, EVM metrics should be emphasized in fixed-price contracts in evaluating and processing payment requests.

Originality/value – This paper provides a summary of cutting-edge research work and a link to the published thesis that researchers can use to help them understand how the research methodology was applied as well as how it can be extended.

Impact and interest:

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ID Code: 54540
Item Type: Journal Article
Keywords: Value analysis, Project management, Contracts
DOI: 10.1108/17538370810866386
ISSN: 1753-8378
Subjects: Australian and New Zealand Standard Research Classification > BUILT ENVIRONMENT AND DESIGN (120000)
Divisions: Current > Schools > School of Civil Engineering & Built Environment
Current > QUT Faculties and Divisions > Science & Engineering Faculty
Deposited On: 05 Nov 2012 11:35
Last Modified: 05 Nov 2012 11:35

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