An application of Earned Value Management (EVM) with Monte Carlo simulation in engineering project management

Abstract

The fast changes in the Market make companies increasingly focus on project structures. A project differs from a routine activity because it is unique and must be managed and structured to provide expected benefits at no greater cost than anticipated. Therefore, it must be planned and controlled by identifying the deviations between the planned and the accomplished. In order to provide this monitoring, Earned Value Management (EVM) has been increasing accepted. In addition to showing indicators of progress, EVM can be used to forecast the project’s final costs through simulated scenarios. This work aims to integrate and apply EVM with Monte Carlo simulation to predict the final costs of three detailed engineering projects, evaluating the performance of the model and the projects, in each specific case study. The results of the three projects simulations were evaluated in a qualitative and comparative way, showing that the integration between the tools generates useful forecasts for project management.