rEVaMp : Risk Elicited Earned Value Management procedure -- A systematic framework for accounting for project uncertainties

Background: Project and program budget estimation and execution within the estimated budget are critical functions in any organization, in particular those dealing with fixed cost contracts. During planning, the functional organization estimates the baseline cost and schedule by considering the project as a number of interacting tasks and rolling up resource estimates for completing these tasks and the senior management allocate contingency or management reserve to account for project risks. During execution, project organization measures the project performance against the baseline cost and schedule to prevent cost overruns. One of the methods for monitoring project performance is the Earned Value Management (EVM) methodology which uses conceptually simple parameters like Cost Performance Index (CPI) and Schedule Performance Index (SPI) to monitor and articulate project performance and to compute estimated cost at completion (EAC). Motivation: The budgeting approach as outlined above does not explicitly account for emerging project uncertainties and as a result contingency allocated by the organization at the planning stage may not be sufficient, as the allocation is based on prior experience and does not take the impact of the emerging risk on the project into account. During planning differences in perceptions of risks with regards to requirements, work scope, maturity of technology, engineering effort and organizational capacity introduce uncertainties.