Research On Cost Evaluation Method Of Project Cost Based On Earned Value Analysis

Project Cost Management (PCM) is the base of the modern Project Management (PM)theory and the one of the nine PM knowledge areas. We all know that we have to complete the project with limited budget, so we must have a good schedule and Project Cost Control (PCC). The traditional method of Project Cost Control is Variance Analysis Technique. This approach only provides information for one aspect of Project Cost Control. Because of the single information, It can’t reflect the overall situation of the project and sometimes the information is misguided.So The traditional method brings the potential; risks to the project management.With the reform and opening-up, more and more scientific management methods are well-known, many advanced PM techniques are accepted by our project managers. Among these methods, the Earned Value Technique (EVT) is a very effective technique in PCC process. This article studied the EVT’s application in PCC in order to analyze and improve thefeasibility of the EVT’s application in PM practice. The EVT is the most scientifictechnique for cost control. The aim is to analyze the earned value method in the real feasibility of the project, and whether it can really achieve the target of cost control, and the issues that we need to focus on when we use it. We know the EVT is a science system, it’s capable to reflect the changes in project cost, because EVT introduces the "earned value" concept. It canevaluate the cost performance of certain control point, and then it determines whetherthe project goes well. Meanwhile,it can forecast the Estimate at Completion (EAC) by "earned value" analysis. According to those, project managers understand the development trend of the future cost. We all know EVT is a pretty good method, but why don’t we universally apply? What is the difficultywhen we use this method? Why EVT can’t reflectthe real situation of the project, and what is the reason?Weneed to explore these issues. In the final analysis, the problem is:how do we determine the "earned value" by the project cost evaluation. How to determinate? Using the earned value method, we need to follow certain principles and processes, and pay attention to computing method. This article states the detail. At the end part of this article,I analyze the process of the earned value method and hope it’s helpful for business.The EVT is a practically integrated technique which is a systematic process,Thisarticle constructs an unsophisticated prqrect cost control model based on EVT tocombine the EVT application with progress tracking and evaluation. And exampleproves that it is practical.