A New Approach to Z-number Based Earned Value Management

Abstract

Purpose: We propose an extension of the Earned Value method that takes into account both intangible and undocumented factors of project cost increase that occur during project execution and the credibility/reliability of cost estimations.

Methodology: Credibility or reliability of cost estimations used in the Earned Value Method is modelled by means of Z-fuzzy numbers. They model both the information scope available to the experts and the credibility of the experts, their individual features and the nature of information sources used.

Findings: The proposed version of the Earned Value Method can provide substantially earlier and more reliable warnings about future cost overruns in projects.

Value: The proposed method may decrease the probability and impact of cost overrun risk in the everyday practice of project management. This is an important contribution, as considerable cost overruns occur in numerous projects.

KEYWORDS:

• Earned value
• Z-number
• project control
• project cost uncertainty
• project cost risk

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by National Science Centre (Poland) [grant number 394311, 2017/27/B/HS4/01881] Grant title: Selected methods supporting project management, taking into consideration various stakeholder groups and using type-2 fuzzy numbers.

Notes on contributors

Dorota Kuchta

Dorota Kuchta MSc in Mathematics and Industrial Engineering, PhD and ScD in Management Science, Professor at Department of Computer Science and Management, Wroclaw University of Science and Technology, Poland. She is the author or co-author of over 200 publications and 5 books in project management, management science, and managerial accounting. Her research interests cover project management and optimization in situations of risk, uncertainty, or lack of information.

Adam Zabor

Adam Zabor MSc in Finance and Accounting, PhD Student in Management in the Department of Computer Science and Management, Wroclaw University of Science and Technology, Poland. Research interests include project management, particularly project control by means of Earned Value Management, and the use of fuzzy sets theory.