ABSTRACT
In this chapter we look at the management of costs on projects, and in particular at the use of the Earned Value Management system. Earned Value Management (EVM) is a methodology used to measure and communicate the real physical progress of a project and to integrate the three critical elements of project management (scope, time and cost management). It takes into account the work completed, the time taken and the costs incurred to complete the project and it helps to evaluate and control project risks by measuring project progress in monetary terms. The basic principles and the use in practice have been comprehensively described in many sources (for an overview, see Fleming and Koppelman (2005)). Although EVM has been set up to follow up both time and cost, the majority of the research endeavors and practical applications have been focused on the cost aspect. It is only recently that the time dimension has received attention from both practitioners and academics. This chapter reviews the basic key metrics used in EVM, describes their usefulness for measuring both a project’s time and cost performance and highlights the importance of integrating EVM with risk management.
