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