Establishing Control Limits on Time Performance Indicators of Projects through Monte Carlo Simulation and Earned Duration Management

Abstract

Earned Duration Management (EDM) method has been developed to enhance Earned Value Management and to solve some of its problems, such as separation of measuring time and cost dimensions. By providing performance indicators, this method makes it possible for managers to accurately measure the progress of a project and to calculate the time and cost required to complete it. Nevertheless, the accepted rate of progress indexes of a project is not specified in this method, which brings about ambiguity. Intending to improve earned duration management performance, statistical quality control charts were used, which had previously been applied in Earned Value Management to determine the acceptable cut-off points of indexes of project management. Using Monte Carlo simulation, these charts were calculated at the time of project planning, but not during project implementation. Such calculations give project managers prospective view; in addition, they provide a basis for evaluating and comparing the performance of projects during their progress.

Keywords

• project management
• earned duration management
• monte carlo simulation
• statistical quality control
• control limits.