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Growing Science » Journal of Project Management » A modified earned value management using activity based costing

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Journal of Project Management

ISSN 2371-8374 (Online) - ISSN 2371-8366 (Print)
Quarterly Publication
Volume 1 Issue 2 pp. 41-54 , 2016

A modified earned value management using activity based costing Pages 41-54 Right click to download the paper Download PDF

Authors: Vahid Aminian, Amir Rahimi Nejad, Seyyed Taha Hossein Hossein Mortaji, Morteza Bagherpour

DOI: 10.5267/j.jpm.2017.3.002

Keywords: Earned value management, Activity based costing, Overhead cost, Revised schedule performance index, Revised cost performance index

Abstract: Earned Value Management (EVM) has been a well-known methodology used since the 1960s when the US department of defense proposed a standard method to measure project performance. This system relies on a set of often straightforward metrics to measure and evaluate the general health of a project. These metrics serve as early warning signals to timely detect project problems, or to exploit project opportunities. A key aspect of EVM is to estimate the completion cost of a project by considering both cost and schedule performance indices. However, good performance of cost and schedule performance indices does not necessarily guarantee cost effectiveness of the project regardless of the overhead costs. The reason is because, in most project-based organizations, overhead costs constitute a significant proportion of the total costs. However, EVM indices are usually calculated in the absence of the so-called overhead costs. This paper, first, seeks to remedy this problem by proposing a practical procedure of allocating overhead costs in project-based organizations. Then the traditional EVM indices are revised by consider-ing the allocated overhead costs. Finally, a case study demonstrates the applicability of the proposed method for a real-life project.

How to cite this paper
Aminian, V., Nejad, A., Mortaji, S & Bagherpour, M. (2016). A modified earned value management using activity based costing.Journal of Project Management, 1(2), 41-54.

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Journal: Journal of Project Management | Year: 2016 | Volume: 1 | Issue: 2 | Views: 3496 | Reviews: 0

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