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EFFECT OF EARNED VALUE MANAGEMENT AND CRITICAL CHAIN FACTORS ON SUCCESSFUL PROJECT IMPLEMENTATION IN CONSTRUCTION COMPANIES IN SOUTH EASTERN NIGERIA

CHAPTER ONE
 INTRODUCTION 
1.1 BACKGROUND OF THE STUDY 
 The crucial need to reduce project delay and costs in project implementation and the need to improve project performance in terms of time of delivery, within budget, and scope while attaining the required quality led to the idea of implementing new methods of project management techniques in an organization. As a project monitoring, scheduling and controlling techniques, the earned value management (EVM) and critical chain (CC) propel the project management and implementation success. In this sense, EVM and critical chain helps an organization reduce project development time, utilization of limited resources, handle technological complexity, respond to stakeholder satisfaction and increase global market competition (Cleland, 1998). To execute a project successfully, a project manager has to become adept at initiating, planning, executing, monitoring and controlling and closing (PMI, 2008). In doing so, project managers typically use several tools and techniques to aid them orchestrate activities along a project life cycle. This seems to be the correct approach since several studies have suggested that the proper use of project management tools and techniques impact on the success of a project (Cash and Fox, 1992). At this point it becomes pertinent to discus and adopt an operational definition for the three principle terms, Project, EVM, and CC that shall form the basics of this studies. In this vein, Duncan (1996a) see projects as a temporary endeavour undertaken to create a unique product or service where it has definite start and end time and also the end product itself is unique and different from others. For a construction industry, any project must be completed in record time (time bound) as it can gain advantage from the competitors. The Project Management bodies of knowledge have defined a project as a temporary endeavour undertaken to create a unique product, service or result and unique, transient endeavours undertaken to achieve a desired outcome (APM, 2006). Kerzner (2003) defines a project more specifically, as any series of activities and tasks that (1) have a specific objective to be completed within certain specifications, (2) have defined start and end dates, (3) have funding limits (if applicable), (4) consume human and non-human resources, and (5) are multi-functional (i.e. cut across several functional lines). This is our operational definition of projects in this study as it typifies an EVM traditional recognition of projects as it involves the creation of a physically large and technically complex deliverables within multi-faceted organizations. Though, Kerzner appears to be unnecessarily prescriptive. For example: some projects have vague objectives or lack defined end dates; many do consume only human resources; others are delivered by just one functional group. So, these five stipulations may be useful in forming an image of a typical project, but tend to eliminate many valid projects that do not fit the mould to be propelled by EVM. Turner (1999) defines a project as an endeavour in which human material and financial resources are organized in a novel way, to undertake a unique scope of work of given specification, within constraints of cost and time, so as to achieve unitary, beneficial change, through the delivery of quantitative and qualitative objectives. Projects have a purpose, a life cycle, interdependencies, uniqueness and conflicts (Meredith and Mantel, 2003). Those five characteristics respectively lead to: dedicating resources for their completion, time schedules for their organization, relationships between their components, responses to their uncertainty and the communication between their stakeholders. EVM as a management technique was initially conceived by industrial engineers in United States of America (USA), such as Fredrick W. Taylor, Henry L. Gantt, and others in late 19th century (Fleming and Koppelman, 2005). They compared ‘planned standards’ with ‘earned standards’ and ‘actual expenses’ in their early concepts, and identified ‘cost variance’ as the difference between the actual costs of performing work, and value of the achievements according to their estimated or budgeted costs (Moski, 1951). The earned value approach was found to be more valuable in a project environment – rather than ongoing operations (Fox, 1996). Program Evaluation and Review Technique (PERT) was introduced by the US Navy in 1958. The technique simulated development planning with a logic diagram, and could assess statistical probability of achieving the project plan objectives. Unfortunately, computers were not widely available to implement the complex PERT calculations. The PERT approach was not as successful as the Critical Path Method (CPM) which was being used in construction at the time. PERT/Cost in 1962 included calculation of actual cost, and comparison of that with the value of work performed (now EV) to indicate cost status. It also compared value of work performed with the cost and work value budget (now PV) to show schedule status (Paige, 1963). PERT/Cost was ultimately not widely adopted, but its underlying concepts became the basis for EVM. Similarly the US Air Force in 1965 initiated the Cost/Schedule Control Systems Criteria (C/SCSC) which included earned value methodology (Christensen, 1990). It was later developed by US Department of Defense (DoD) in 1967 and applied to new weapons systems development, such as the Minuteman Missile program. C/SCSC established 35 criteria or standards for compliance by industry contractors, and provided DoD with some assurance of the final cost of new systems on open-ended contracts. At the same time, corporations in the USA were investigating planning and control systems such as Cost and Schedule Planning and Control (CSPC) (Saitow, 1969) and the Accomplishment/ Cost Procedure (ACP) (Block, 1971) for reporting cost and schedule to executive levels in meaningful ways. Both of these approaches have marked similarities to EVM techniques. Indeed the Earned Value Management System (EVMS) was developed by US industry associations in 1996, with the National Defense Industry Association (NDIA) as the lead In the process, the team rewrote and simplified the 35 criteria in C/SCSC into 32 criteria, but retained the essential components. Some key terms were renamed (e.g. BCWS to Planned Value) in order to increase acceptance in industry. At the same time, many practitioners and academics were documenting the costs and benefits of EVM (Christensen, 1998). The EVMS standards were issued (NDIA, 1998) by ANSI/EIA (American National Standard Institute / Electronic Industry Association) and were subsequently adopted by the Project Management Institute as a Practice Standard (PMI, 2005). Kerzner (2003) recognizes the value of EVM as a risk monitoring tool. Specifically, “it provides a basis to determine if risk handling actions are achieving their forecasted results.” According to Kerzner, (2003) one of the best ways of reducing executive meddling on projects is to provide executives with frequent, meaningful status reports. He suggests that variance reports should be as brief as possible, and provides an example that includes the following items: Variance Analysis Chart, Estimate at Completion (cost only), Cost Summary, Schedule Summary, and Milestone. Admittedly, Earn value management (EVM) is one of the performance measurement tool or technique used to measure project performance. As a result, EVM is one of the effective performance measurement and feedback tool for managing projects. EVM can give answer to project managers on whether the project is ahead or behind schedule, either the project is under or over budgeted or what the remaining work is likely to cost. The Project Management Institute defines earned value management (EVM) as a management methodology for integrating scope, schedule, and resources, and for objectively measuring project performance and progress. Performance is measured by determining the budgeted cost of the work performed (i.e. earned value) and comparing it to the actual cost of the work performed (i.e. actual cost). Progress is measured by comparing the earned value to the planned value (PMI, 2004). Earned value management (EVM) is a project performance evaluation technique that has origins in industrial engineering, but which has been adapted for application in project management. Earned Value Management (EVM) is a method that enables measuring the performance of a project in terms of cost and time during its execution. EVM is widely recognized as a core project management technique with obvious benefits; however, its utilization is not widespread beyond a few specific industries, notably the defence and aerospace organizations in the United States. Earned Value Management (EVM) systems have been developed to provide project managers with crucial information on the performance and progress of their projects through the unique interaction of three project management elements - the holy trinity - scope, cost and time. In addition, it provides project managers with an early warning sign for poor performance. Corrective actions can be taken in time to bring their projects back on track. Where traditional performance measures compare only actual and budgeted costs, in EVM however, actual and budgeted costs are compared to the earned value. Since its introduction in 1967 by agencies of the US Federal Government, EVM has seen a rapid growth in government and later on also in private industry projects. The development and maturation of earned value project management systems has led to a broad field of study.

Project detailsContents
 
Number of Pages234 pages
Chapter one Introduction
Chapter two Literature review
Chapter three  methodology
Chapter  four  Data analysis
Chapter  five Summary,discussion & recommendations
ReferenceReference
QuestionnaireQuestionnaire
AppendixAppendix
Chapter summary1 to 5 chapters
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