Abstract:The Planning and implementation of construction projects are difficult processes and are burdened with many risk elements. The budget spread over time, which is developed on the basis of the schedule, presents the expected distribution of costs throughout the duration of the works, which during the implementation of the project is subject to constant changes resulting from time, cost, and organizational factors. Managing construction contracts requires managers to be able to analyze on an ongoing basis the var… Show more
“…The Earned Value Method allows for the control of the progress of project implementation in terms of its scope, cost, and duration [25]. This method involves comparing the planned (scheduled) progress of the work (scope) with the planned and actual time (schedule) and cost (budget) [26].…”
Planning the course of cumulative cost curves and effectively monitoring the implementation process and the incurred financial outlays are still significant problems in the management of construction projects. This is particularly noticeable during the execution phase of construction works. Therefore, it is worthwhile to correctly determine the shape of the cost curve before starting this stage and to periodically examine its fitting to the scheduled course of the budgeted cost curve, the envelope of cost curves characterised by the best-fit curve. There are many methods of forecasting and estimating the costs of construction works, but they are very often complicated and require the decision-maker to use and elaborate mathematical tools. The aim of the research was to determine the shape and course of the cost curves for selected construction projects. Based on the analysis of the collected data on investment projects in 3 facilities research groups (collective housing, hotels and retail service facilities), an original attempt was made to determine the best fit curve and the area of the curve, which in turn indicates the limits of the correct planning of the cumulative costs of construction projects. The Three Sigma rule was applied, correlations and determinants were determined, and the area of the cost curves was described with a third degree polynomial. The conducted research showed that: 1. the optimal formula for determining the best-fit curve, which allow to determine the cost and time of construction works, is a 3-degree polynomial; 2. cost curves, within a certain bounding box, determine the area of the most likely cash flow; 3. when planning the course of a cost curve, it is advisable to use the bounding box of cost curves rather than a single, model, theoretical, or empirical mathematical expression describing the cost curve.
“…The Earned Value Method allows for the control of the progress of project implementation in terms of its scope, cost, and duration [25]. This method involves comparing the planned (scheduled) progress of the work (scope) with the planned and actual time (schedule) and cost (budget) [26].…”
Planning the course of cumulative cost curves and effectively monitoring the implementation process and the incurred financial outlays are still significant problems in the management of construction projects. This is particularly noticeable during the execution phase of construction works. Therefore, it is worthwhile to correctly determine the shape of the cost curve before starting this stage and to periodically examine its fitting to the scheduled course of the budgeted cost curve, the envelope of cost curves characterised by the best-fit curve. There are many methods of forecasting and estimating the costs of construction works, but they are very often complicated and require the decision-maker to use and elaborate mathematical tools. The aim of the research was to determine the shape and course of the cost curves for selected construction projects. Based on the analysis of the collected data on investment projects in 3 facilities research groups (collective housing, hotels and retail service facilities), an original attempt was made to determine the best fit curve and the area of the curve, which in turn indicates the limits of the correct planning of the cumulative costs of construction projects. The Three Sigma rule was applied, correlations and determinants were determined, and the area of the cost curves was described with a third degree polynomial. The conducted research showed that: 1. the optimal formula for determining the best-fit curve, which allow to determine the cost and time of construction works, is a 3-degree polynomial; 2. cost curves, within a certain bounding box, determine the area of the most likely cash flow; 3. when planning the course of a cost curve, it is advisable to use the bounding box of cost curves rather than a single, model, theoretical, or empirical mathematical expression describing the cost curve.
“…Earned value management in project management is a methodology that integrates cost, schedule, and scope to gain a better understanding of how to measure project performance (Bagherpour et al, 2020). Project management includes the planned and actual values that allow managers, who use EVM, to predict the opportunity for projects to complete on time and within budget (Przywara & Rak, 2021).…”
This research proposed analyzing projects from a risk uncertainty perspective by using EVM to predict the systemic (Epistemic Risk) and provisioning (Aleatory risk) uncertainties to achieve project success. The results of the study synthesized empirical findings with theories and concepts. To bridge the gap, this research study focuses on minimizing or alleviating epistemic and aleatory risk uncertainties. The research method included a qualitative exploratory study with thematic analysis. The participants for the study were project managers with a PMP certification and EVM knowledge who worked on government contract requirements and members of the local chapter of the Project Management Institute.
“…Errors and uncertainty arise as a result of subjectivity in measuring PC, but they can be eliminated by employing linguistic variables [ 15 ]. PV is determined prior to the start of the project, whereas EV and AC are determined while the project is being executed and can only be determined until the status date [ 16 ]. Many applications in the real world are imprecise, vague, and ambiguous [ 17 ].…”
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