iEVM (Integrated Earned Value Management) An approach for integrating quality with traditional EVM for effective program and project management

International Research Journal of Engineering and Technology (IRJET) e-ISSN: 2395 -0056
Volume: 04 Issue: 03 | Mar -2017 www.irjet.net p-ISSN: 2395-0072
© 2017, IRJET | Impact Factor value: 5.181 | ISO 9001:2008 Certified Journal | Page 176
iEVM (INTEGRATED EARNED VALUE MANAGEMENT)
AN APPROACH FOR INTEGRATING QUALITY WITH TRADITIONAL EVM
FOR EFFECTIVE PROGRAM AND PROJECT MANAGEMENT
Vanshika T
Department of Information Technology
Barkatullah University, Bhopal
---------------------------------------------------------------------****-------------------------------------------------------------
Abstract: Earned Value Management (EVM) is a simple
yet powerful performance management and feedback tool
which provides the project progress in terms of scope, cost and
time/schedule. EVM enables project managers in predicting
the future of the project from trends and patterns of the past.
Though EVM addresses and integrates three critical element
of project management – scope, cost and schedule – the
quality aspect is not explicitly considered in EVM and is
supposed to be implicitly included in the scope. Ignoring
Quality explicitly may result in escalated Cost of Quality (COQ)
and nullify the efforts put in during monitor and control of
projects in traditional EVM. Therefore the aim of this paper is
to introduce a new EVM model, iEVM (Integrated Earned
Value Management) which integrates Quality along with
Time, Scope and Cost as in traditional EVM to monitor,
control and predict the projects better and more accurately.
The model utilizes the concept of Cost of Quality (COQ) and
integrates the same in EVM to make fool proof.
Keywords: Program Management, Project Management,
EVM, Earned Value Management, Cost of Quality
1. INTRODUCTION
Project management is application of processes,
methods, knowledge, skills and experience to achieve
specific project goal/objectives. Project is a unique and
transient endeavor with specific objectives which are
generally defined as outputs or benefits.
Project Management discipline has 8 key components:
1. Stakeholder Management
2. Risk Management
3. Issues Management
4. Resource Management
5. Task Management
6. Quality Management
7. Project Change Management
8. Project Team Management
These project management disciplines are applied in
would be applied in each of the project phases.
In order to manage the projects effectively, ensuring
100% success of achieving planned objectives / goals,
project management discipline requires objective tools and
techniques to ascertain the status/health of project at any
point in time. An experienced project manager has to apply
objective tools and techniques across each of the 8
disciplines to measure the performance of project execution
and ensure success. This is where Earned Value
Management (EVM) technique comes as handy tool to
measure the performance of project at any point of time and
also predict the future state of project execution based on
past trends and patters.
Earned Value Management (EVM) is a simple yet
powerful performance management and feedback tool
which provides the project progress in terms of scope, cost
and time/schedule. EVM also enables project managers in
predicting the future of the project from trends and patterns
of the past. The Earned Value technique takes into
consideration the project context for the planned and actual
expenditures and integrates the project scope, schedule and
resource characteristics into a comprehensive set of
measurements.
The Earned Value technique allows for the temporary
and intermittent nature of project work by scheduling the
expenditures based upon the project plan, including the
spikes and valleys in resources requirements. Further,
Earned Value tracks how much money has been spent on the
project in relation to how much project work has been
accomplished. This takes into consideration all that has
happened on the project such as schedule delays or
acceleration. The variances that have occurred can then be
separated into those due to timing, either ahead or behind
schedule; and those due to mis-estimating the work; true
under-runs or over-runs. Finally, the indices and variances
generated by the Earned Value technique will aid the project
management team in forecasting the financial conditions at
project completion.
Even though EVM addresses and integrates three critical

varying degrees through the project phases. An experienced
project manager would understand the nuances of each
discipline and knows when and to what extent each disciple
element of project management – scope, cost and schedule –
the quality aspect is not explicitly considered in EVM and is
supposed to be implicitly included in the scope. This
approach may work for several industries where
rework effort is minimal or non-existent. However in
practical aspects there are not many industries where the
rework is non-existent; in fact the most projects at the start
will not even have clearly defined project scope; taking the
example of software project management where there is
substantial rework owing to specific characteristics. These
reworking costs are directly related with the Quality. Thus
Quality affects the project progress and future significantly.
In this study, I am proposing a new EVM model, iEVM
(Integrated Earned Value Management) which
integrates Quality along with Time, Scope and Cost as in
traditional EVM to monitor control and predict the projects
better and more accurately. The model utilizes the concept
of Cost of Quality (COQ) and integrates the same in EVM
concept to make fool proof. The paper tries to theoretically
identify and explain the shortcoming of the traditional EVM
model and also tries to theoretically integrate the COQ into
traditional EVM model to make in comprehensive. iEVM
model can realistically provide feedback about the health
and future of project at any given point during project
execution. The model thus developed can be further
implemented in real projects & evaluated from practical
perspective and usefulness.
2. PROBLEM BACKGROUND
Information Technology / Software development
industry is suffering from unsuccessful projects with
exceeded budget, late in delivery and with low quality.
Almost every year billion dollars are wasted on failed
projects. Poor project management is usually addressed as
the main reason causing project failures and overruns. The
main objective of information technology / software project
management is to deliver the project successfully, in other
words, in agreed scope, on time and within budget and in
accordance to customer requirements. Hence, the project
management success basically depends on integrating four
dimensions of projects, scope, time, cost and quality.
There are several tools and techniques that are used in
the project management to achieve project objectives
successfully. EVM/EVA is leading industry standard method
for monitoring and control of projects. It has the ability to
combine the measurement of the 3 constrains of project
namely, Scope, Time and Cost. EVM/EVA method of
monitoring and control assumes Quality as part of scope and
thus does not lay any emphasis separately on how to
monitor & control Quality. In the project management
discipline; Scope Management and Quality Management are
two separate disciplines and have different tools and
IT projects entities are remarkably complex compared to
any other construct since there are no two parts alike in
general. IT projects cannot ignore or simplify details of the
real world. Complexity grows exponentially as the size of the
system increases. Since there is no physical reality, it cannot
be accurately modeled as in the case of, for example,
construction. The projects are continuously subject to
change even after being completed. It represents all the
changes to the existing system as well as corrective actions
of defective, failed or non-conforming items. Reworking
itself introduces further complexity in terms of planning,
estimating, monitoring and controlling. It could also cause
further rework in a recursive cycle that can affect the project
timeline.
Even though the tools, techniques and methods used in
the traditional project management have been utilized in IT
projects for years, in general, these traditional project
management approaches cannot be sufficient for IT projects
in their traditional forms without adapting according to the
difficulties of IT projects. Even though EVM is commonly
accepted in project management and has been employed to
a wide variety of projects of different sizes and complexities
around the world, this powerful technique is still little used
in IT industry. The main issue of EVM here is the volatility of
the value earned. Any kind of reworking i.e. unpredictable
changes, requirement and design errors, software bugs
affect the EV. If we would do it 100% correct in every aspect
for the first time, we would not have such an issue and we
would have exactly the same EV in every calculation.
Example; At a given time in the project, the task is completed
and the scope is achieved, but after some time, it is changed
due to defects, and more effort is spent. The scope is still the
same but cost spent is more, it is not the cost of scope, it is
the cost of quality for scope was not complete before.
EV is particularly significant and key data of EVM in
order to reveal the current status as well as predicting the
future of the project. It is vital to have EV as accurate as
possible and as illustrated in the paras above, it is difficult to
get the same EV at any time of project progress because of
the rework or the changes that are inherent of any IT
project. For that reason, we need an improved EVM
approach for IT projects to calculate more accurate EV, to
provide enhanced current and future estimates of the
projects and to have an idea about the project quality status.
3. INTRODUCING iEVM
The purpose of this paper is to develop a new EVM
model, called iEVM, as an extension to traditional EVM that

techniques for management, monitoring and control. The
tools and techniques of the two disciplines are independent
and outcome of one is no way related to the outcome of
other. Thus EVA/EVM method of monitoring and control
should also treat scope and quality as 2 different parameters
and provide mechanism to monitor and control both
separately and effectively and which is a problem.
incorporates the quality aspect by means of CoQ (Cost of
Quality) and provides quality related measures during
tracking project progress and performance. Such model shall
enable measuring project performance by means of quality
aspect in addition to existing scope, schedule and cost.
Design of the iEVM model is also such that it is compatible
with project management principles and goes further by
including quality costs explicitly.
The objectives of iEVM model are:
 to provide a model, which is integrating quality element
into traditional EVM
 to discern the quality status of the project by means of
EVM in addition to scope, schedule and cost
 to estimate project progress more accurately at any
given time using past quality cost data
 to offer more realistic future forecasts
The quality element makes use of the concepts of CoQ.
CoQ has four parts under two main categories, conformance
costs and non-conformance costs. Non-conformance costs,
which include IFCs (internal failure costs) and EFCs
(external failure costs), are the main focus to estimate
reworking cost and integrate quality dimension into the new
model. Also, CCs (conformance costs) are also the interest of
the model, especially in terms of providing benchmarking.
iEVM could have three different approaches depending
on the relation of reworking effort to the origins, which are
task-based, phase-based and project based:
 Task-based approach tracks the FCs (failure costs) for
every task.
 Phase-based approach requires the FCs of the tasks that
are completed in the specific phase.
 Project-based approach needs the FCs of the whole
project.
The project manager has to decide the approach at the
beginning of the project and collect data accordingly. It is
possible to apply the project-based approach in any case but
the phase-based and task-based approaches require the link
of the reworking with the origin phases or tasks.
iEVM and Project Management Process
In project management cycle, iEVM has two main key
practices; Establishing a PMB (performance baseline) in the
planning process and measuring and analyzing performance
against the baseline in executing and controlling processes.
In project planning process, EVM needs planning all the
work and establishing PMB. Initially, project work is
decomposed into executable and manageable tasks using
At the end, PMB is established with the all work scope
including reworking and marking quality investment related
tasks as preventive and detective ones.
During project execution process, EVM requires
recording all execution data of planned work including
actual start and finish dates, efforts and resource utilization
for the performed work. iEVM adds two new activities to
project execution process:
 Recording the data of internal and external failures
including their occurrence and fix dates, the origin of the
failure, efforts of fixing
 Gathering the actual investment costs as well as actual
costs
In project controlling process, EVM assesses performed
work based on the completion rates and calculates EV.
Consequently, EV analysis is performed with this EV data,
planned value data from PMB of the planning process and
actual cost data from execution process. iEVM focuses on the
FCs here and recalculates past EVs based on the FCs
gathered in execution. iEVM observes EV changes according
to FCs and analyzes their trend. It assumes this change will
occur for the calculated current EV and predicts its value
based on the potential FCs. iEVM adds five new quality
performance related activities to controlling process and
updates all schedule and cost related ones incorporating
quality metrics into EV:
 Calculating quality performance index (QPI) and quality
cost factor (qcf), based on the FCs
 Recalculating past EVs retroactively using qcf
 Analyzing quality performance based on EV deviations
in time
 Estimating current EV (EVest) based on quality
performance trends
 Analyzing and forecasting cost/schedule performance
 Reporting performance problems and taking action
 Benchmarking quality CC
 Benchmarking FCs

work break down structure and resources are assigned to
the tasks. After all the project work is scheduled, the project
scope, schedule and cost are integrated into a time-phased
budget, which is PMB.
iEVM adds three new activities to the planning process:
 Identifying the tasks related with prevention and
appraisal activities
 Calculating and benchmarking quality investment cost
 Planning rework explicitly at the beginning based on the
historical data in order to have more realistic plans
Using iEVM
The three key data points of traditional EVM, which are
PV, EV and AC, are also the key data elements for iEVM since
this new model is an extension to traditional one by
improving it with quality aspect. In addition to these three
key data points, iEVM defines the following key elements
and measures:
 Failure Cost: FCs are the total effort spent for correcting
errors after activities are completed. It covers all
reworking efforts.
 Actual Cost of Failure (ACF) : ACF is the total effort of a
task, phase or project at a specific time, which is the sum
of the initial cost for completion (AC) and reworking
cost needed afterwards for fixing defects or improving it
(FC) till that specific time.
 Estimated EV (EVest) : The aim of calculating Estimated
EV is to adjust current EV by utilizing reworking trends
of the project.
 Conformance Cost: CCs represent the total cost that is
planned to achieve good quality in a project by means of
preventing failures or detecting them.
List of FCs (failure cost)
Failure Cost Items
Internal Failure Cost Items
(prior to delivery to the customer/or milestone)
Any development rework; errors, changes, improvements
Failure analysis
Re-designing
Fixing errors
Improving and changing features
Updating documents due to the changes
Re-integration
Re-testing
…
External Failure Cost Items
(after the delivery to the customer/or milestone)
All IFC items mentioned above
Activities regarding issues from customer
Technical support
Re-integration
Re-production
Upgrade
Updating documents due to the changes
…….
ACTUAL COST OF FAILURE (ACF)
ACF = AC + FC
ACF could increase through the time as soon as reworking
occurs, so it is possible to display its status as the following:
retroactive EV of current EV, which is estimated EV.
Estimated EV is only meaningful for the current
application phase. It is the specialized form of retroactive EV
at the present time. Retroactive EVs uses the occurred
reworking related with the specific task or phase but
estimated EV is a prediction using the past reworking trends
that are not happened yet for the new ones. qcf is the
depiction of this reworking trend. Estimated EV does not
make sense for the tasks. After EV calculated for the tasks
and total EV aggregated, estimated EV is calculated using the
factor, qcf.
iEVM calculates qcf only for past phases and based on
iEVM application approach, qcf value could be selected
differently as the following:
 If the task-based approach is followed, qcf and
retroactive EV values for the tasks are calculated
separately. Afterwards, total retroactive EV is calculated
summing up retroactive EVs of all the tasks. qcf is
calculated by dividing total retroactive EV to total EV.
 If the phase-based approach is followed, qcf is calculated
based for the phase using the failure cost of the phases.
Regression models could be used to find the appropriate
qcf and qcf of the phase with the similar characteristics
could be chosen.
 If the project-based is followed, only one qcf is available
and used for estimated EV calculation.
 iEVM favors estimated EV and assumes that it gives a
better, clearer and more accurate status of the project
than EV does and so uses estimated EV for all future
estimates.
QUALITY COST FACTOR (qcf)
qcf is the reworking factor of a specific task, phase or
project. qcf represents the ratio of the tasks that cannot be

Task/Phase 1 2 3 … n
T1 ACF1 ACF2 ACF3 … ACFn
…
Phase1 ACF11 ACF12 ACF13 … ACF1n
…
Phase2 ACF22 ACF23 … ACF2n
…….
ESTIMATED EV
Estimated EV aims to represent the actual EV based on
the assumption that quality cost trends in the past will occur
in the future. iEVM uses two significant concepts during
Estimated EV calculation: Retroactive EV, and qcf.
Estimated EV is the projected value of EV by means of
retroactive EVs. In other words, it corresponds to the future
retroactive EV of the current calculated EV. The idea is to
track EV and retroactive EV differences for earlier phases
and then apply this pattern to the current EV to estimate
completed right at the first time and earned the claimed
value considering the work and the ratio of rework for that
particular task or phase.
The steps for qcf are described as the following:
 Collect AC of the completed tasks, all the FCs for the
completed tasks and keep the relation of the completed
tasks and their reworking effort
 Calculate qcf with the following formula (at a specific
time, t):
Qcft = FCt-1/ACFt-1
RETROACTIVE EV (EVr)
Retroactive EV, EVr, is a significant concept of iEVM
originated from the finding that EV is changing over time. It
represents the recalculated value of EV retroactively at a
specific time by means of incorporating FCs that has
occurred after the initial EV was calculated.
The steps for EVr are described in the following:
 Collect AC, FC, ACF and then calculate qcf.
 If iEVM is applied task-based, FC is needed to be
related with the tasks. If iEVM is applied as phase-
based, FC is needed to be related with the phases.
 Otherwise, if iEVM is applied project-based, total FC
is enough and EVr of the project is calculated. qcf is
calculated for the previous period.
 Calculate EVr with the following formula:
EVr= EV * (1-qcf)
 If the task-based approach followed, we have qcf and
EVr values for the tasks. For the application period of
QEV, total EVr is found by summing all the tasks. In that
case, total qcf is calculated using this total EVr by the
following formula and this final one is used calculating
EVest .
qcf = 1 – (ΣEVr / ΣEV)
 If the phase-based approach followed, we have qcf value
for the phases obtained from FCs. EVr are found by
using qcf.
qcf = 1 – (ΣEVr / ΣEV)
based on EVest and ACF rather than EV and AC in order to
decide whether the project is under or over budget.
CVest = EVest - ACF
CVest > 0, under budget
CVest < 0, over budget
CPIest (Estimated Cost Performance Index) is an index
showing the efficiency of the utilization of the resources
allocated to the project. It is an improved version of CPI of
traditional EVM. CPIest is defined to consider FCs during
calculating the efficiency of cost performance.
CPIest = EVest/ACF
CPIest > 1, efficiency in utilizing the resources allocated to the
project is good
CPIest < 1, efficiency in utilizing the resources allocated to the
project is poor
ETCest (Estimate to Complete) is the estimated effort
required to finish all the remaining work, calculated when
the initial assumptions are not valid anymore and revised
estimates are needed. It is an improved version of ETC of
traditional EVM. ETCest is defined to consider FCs during
remaining work calculation.
ETCest = (BAC – EVest) / CPIest
EACest (Estimate at Completion) is the estimated final effort
of the project that is required to finish all the work. It is
calculated using the performance indices. It is an improved

CONFORMANCE COST
iEVM includes CC concept to give insight to the project
manager at the beginning of the project about their quality
investment and benchmark this cost with the other projects.
CCs represent the total cost that is planned to achieve good
quality in a project by means of preventing failures or
detecting them.
The steps regarding CC calculation are:
 Mark preventive and detective tasks during project
planning or PMB generation.
 Calculate PCs, APCs and so CCs and benchmark CC/PV
with the organizational /industry values by means of
CCI.
COST ANALYSIS AND FORECAST
iEVM improves EV by estimating EVest which is
supposed to be the actual current EV. CVest (Estimated Cost
Variance) shows whether a project under or over budget. It
is an improved version of CV of traditional EVM. CVest is
defined in iEVM to consider FCs and calculate cost variances
version of EAC of traditional EVM including FCs.
EACest = BAC / CPIest
= ACF + ETCest
= ACF + ((BAC – EVest) / CPIest)
VACest (Variance at Completion) represents the variance on
the total budget at the end of the project. It is the difference
between the cost that is initially planned and the cost that is
now estimated. It is an improved version of VAC of
traditional EVM including FCs.
VACest = BAC – EACest
SCHEDULE ANALYSIS AND FORECASTS
This section describes the updated and new schedule
analysis and forecasts of iEVM by estimating EVest.
SVest (Estimated Schedule Variance) shows whether the
actual costs of the work accomplished exceed the initially
planned costs. It is important to identify the significant
variances to take action.
SVest = EVest – PV
SVest > 0, ahead of schedule
SVest < 0, behind of schedule
SVest is the improved version of traditional SV. Even SV
displays objectively how much the project is ahead or
behind schedule for new features, SVest improves it including
reworking costs.
SPIest (Estimated Schedule Performance Index) is an index
showing the efficiency of the time utilized on the project.
SPIest = EVest/AC
SPIest > 1, efficiency in utilizing the time allocated to the
project is good
SPIest < 1, efficiency in utilizing the time allocated to the
project is poor.
4. CONCLUSION
iEVM, which is the extension of traditional EVM and
incorporates quality cost metrics into the model. iEVM
provides the usable and valuable model for software
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projects since it takes the significant quality costs into
consideration. Even though the software projects suffer
from a lot of reworking, those costs are not incorporated
into traditional EVM. iEVM provides the quality related
metrics to the project manager in order to not only track the
quality status but also integrate the cost of quality with the
project cost status.
iEVM will deliver more visibility to effort and costs, more
accurate forecasts and better predictions of future. Including
FCs into total costs will increase the visibility of the project
aspects, quality status and effort should become visible. The
revealed FCs will result in more accurate total cost, schedule
and cost indices and so improves the accuracy of the project.
Accuracy in current progress information will enable more
accurate estimations of future values of project.
ACKNOWLEDGEMENTS
I would like to express my deepest gratitude to HOD IT &
EC Dept. BUIT, Barkatullah University Bhopal & my project
guide for their guidance, encouragement, endless patience
and continuous support through the years of study and for
making this paper.
I would also like to acknowledge the collaborations of
my colleagues and friends directly and indirectly associated
with me during the course of my study.
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