Applicability of earn value management in Sri Lankan construction projects

Abstract

Earn Value Management is a globally accepted and well established integrated planning and control methodology that combines the measurement of cost, schedule and technical performance. It enables early detection of performance issues and allows corrective actions to be implemented in a timely manner. The objective of this study is to establish the possibility of introducing Earn Value Management as an ICTAD Condition of Contract for Major Contracts for the performance reporting and evaluation. In literature review derived the several important benefits of the EVM as an effective performance measuring technique, the problems in implementing and commonly used practice standards in the globe. The construction industry was an early private industry adopter of EVM. EVM is commonly used in United States of America, United Kingdom, Australia and other European and Asian countries to evaluate construction projects. EVM is a flexible and universally applicable project management technique. However, in Sri Lankan construction industry there is a need of a globally established performance monitoring technique for the development of the industry and better performance. Under these circumstances, it is important to find out the feasibility of introducing EVM as an ICTAD condition for the construction industry. The effectiveness of the ICTAD document to the industry is high. The level of acceptance is significant; the responses show that 64% of respondents accept the Time Schedule as an effective tool and 37.3% submit it on-time for all projects to fulfil the ICTAD requirement. However, Sri Lankan construction industry doesn’t have a proper understanding and knowledge about the use of Time Schedule and its limitations. The lack of knowledge about the technique hinders the getting appropriate use of the technique. However, respondents believe effective performance measuring technique should not have these limitations. The result of this study confirms the possibility of introducing the EVM in Sri Lankan construction industry for performance reporting and evaluation. Further, results highlight that the importance and necessity of Earn Value Management to enhance the efficiency and effectiveness of Sri Lankan construction industry. The majority of respondents believe the most important aspect of the EVM is, it helps projects to be completed within time and cost constraints compared to other benefits. The survey results illustrate that more than 80% of respondents believe Sri Lankan construction industry need EVM concept for effective and accurate performance management. The cost performance management is the primary concern of the Industry. The Industry’s perception on the possibility of EVM implementation is satisfactory.