Earned Value Method and Customer Earned Value.

  • Kim Y
  • Ballard G
  • 11

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Abstract

The Earned Value Method (EVM) is considered an advanced project control technique for integration of schedule and cost. However, prevailing project control, including the earned value method, is an effective tool only under the limiting assumption that every activity (or cost account) is independent. EVM lacks flow and value generation concepts in that value is created only if what a customer wants is made when the customer needs it. This paper shows that EVM does not differentiate between value generating work and non-value-generating work. The study suggests a new cost measure, Customer Earned Value (CEV), which can differentiate between value and non-value-generating work. With the use of CEV, managers can get information on work-in-process inventory levels and co-ordination between trades. CEV motivates trades to consider their internal customer's needs, thereby it can contribute to improvement of work flow. The critique of EVM and creation of CEV is part of an on-going research effort, the next step in which will be development of a methodology for implementation of the CEV concept. [ABSTRACT FROM AUTHOR]

Author-supplied keywords

  • CUSTOMER services
  • PROJECT management
  • VALUATION

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Authors

  • Yong-Woo Kim

  • Glenn Ballard

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