A New Approach to Z-number Based Earned Value Management

Abstract

Purpose: We propose an extension of the Earned Value method that takes into account both intangible and undocumented factors of project cost increase that occur during project execution and the credibility/reliability of cost estimations. Methodology: Credibility or reliability of cost estimations used in the Earned Value Method is modelled by means of Z-fuzzy numbers. They model both the information scope available to the experts and the credibility of the experts, their individual features and the nature of information sources used. Findings: The proposed version of the Earned Value Method can provide substantially earlier and more reliable warnings about future cost overruns in projects. Value: The proposed method may decrease the probability and impact of cost overrun risk in the everyday practice of project management. This is an important contribution, as considerable cost overruns occur in numerous projects.