Evaluation Of Project Cost Control System (A Case Of Desalegn Asrade Construction Plc)

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Date

2017-06

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Addis Ababa University

Abstract

The purpose of this research is to assess the traditional status quo cost control system practiced in DAC PLC, evaluate how effectively the system measure performance, and predict the future project health based on the past performance. Identify gaps and limitations in the system, demonstrate EVM as an alternative cost control approach using a real time project data, show the effectiveness of EVM approach in terms measuring the project cost and schedule variances, efficiencies as well as predicating future performance trends along with the main parameters involves in the calculation. Consequently, recommend adoption of the Earned Value Management system to the construction firm so as to reap its comparative advantage over the traditional approach in minimizing project cost overrun and schedule delay. The research used quantitative cost and schedule related data which put into an Excel template prepared for EVA calculations. The project variance, efficiency and forecast indicators generated by Excel tool, depicted in graphs, tables and dashboard and the interpretation of results provided. In the whole process of EVA determination of performance indicators as well as interpretations of results, the effectiveness EVM approach against the traditional method is clearly compared. The findings showed that EVM approach has come more effective cost monitoring and control tool compared to the traditional system in order to identify potential schedule slippages and areas of budget overruns. In traditional project cost control system one determines the budget and measures the cost against that budget as project goes on while the EVM approach differs from conventional performance measurement practices by combining a project’s cost and schedule parameters into a common framework, i.e. the measurement of the budgeted value of the work actually carried out, and its comparison with the budgeted value of the work that should have been carried out and what it actually costs. The study demonstrated the earned value technique, as it provides objective, realistic assessment of project status information for management using parametric generated with combination of (Earned Value), (planned Value), (Actual Cost), (Budget At Completion) and (Original Duration). So, t is an important component of any effective project management system, with its early warning status approach, resulting in significant improvements to its performance and contributing to a company’s competitiveness and overall profitability. By adapting Earned Value concept DAC and similar construction projects will benefit the fast and accurate project performance indicators using the mathematical approach provided by Earned Value Management. Therefore, this easier and better accurate EVM method enables the project make periodic monitoring of the project health and to take prompt actions on performance discrepancies before problems grow to unrecoverable level or need major scope changes.

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Keywords

construction projects, cost control, project performance

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