Dynamic Control Thresholds for Consistent Earned Value Analysis and Reliable Early Warning

Abstract

Earned value management (EVM) facilitates practicing management-by-exception by triggering control actions only when they are needed. The efficiency and effectiveness of project control actions are influenced by the control thresholds used to identify meaningful performance deviations or trends from the plan. This paper presents a quantitative method for establishing dynamic control thresholds (DCTs) that change at different percent completion points according to the degree of achievability of the project objectives in time and money. The DCTs in this paper overcome two limitations of conventional fixed control thresholds. First, the DCTs provide consistent measures of risk and early warning signals for different EVM performance measurements and forecasts. Second, the DCTs provide additional information to detect false warnings from deterministic performance analysis and forecasting monitored by fixed control thresholds, especially early in a project. This paper mainly focuses on schedule performance and addresses cost performance application as an extension.