Empirical Evaluation of Earned Value Management Forecasting Accuracy for Time and Cost

Abstract

The ability to accurately forecast a project’s final duration and cost is essential to successful project management. The technique of earned value management (EVM) is considered to provide an effective methodology for obtaining such forecasts; however, this has not yet been adequately tested on empirical data. Therefore, the accuracy of the most commonly used EVM time and cost forecasting methods is evaluated on a diverse and qualitative database consisting of 51 real-life projects. As most projects originate from the construction industry, an explicit focus on these construction projects is provided. Moreover, the desired real forecasting outcomes based on the actual project progress data are also supported by a Monte Carlo simulation study. It is demonstrated that highly accurate time and cost forecasts can be obtained by applying the EVM methodology. Furthermore, the best performing forecasting methods for the projects in the considered database are identified, also taking into account timeliness and the influence of the project network structure.