Comparison of the Stability and Accuracy of Deterministic Project Cost Prediction Methods in Earned Value Management

Abstract

Completing a project on time and on budget are essential factors for the success of any project. One technique that allows predicting the final cost of a project is earned value management (EVM). In this technique, different mathematical methods for predicting the final project cost have been proposed over the last 30 years. These formulas make use of activities’ actual costs and durations as the project progresses. EVM is a technique widely used by many project management professionals. However, very few studies have compared the stability and accuracy of the multiple existing methods for predicting the final cost of the project (commonly abbreviated as estimated cost at completion, EAC). This study compares the stability and accuracy of 30 deterministic cost prediction methods (EAC) in EVM. For this purpose, a representative database of 4100 simulated projects of various topological structures is used. Our results suggest that the methods with the simplest mathematical configurations achieve better stability and accuracy performance. Knowing which EVM methods are the most stable and accurate for predicting the final cost of the project will help project practitioners choose the most reliable cost prediction techniques when they are managing their own projects in real contexts.