Project cost forecasting based on earned value management and Markov chain

The most issue in project management is estimating the required budget for the project. Today, despite all the progress and relative achievement of forecasting models, project managers face many problems in financial and planning which sometimes lead to non-completion and abandonment. In recent years, several methods have been presented to estimate the cost of projects, but the uncertainty and ambiguities in projects are rarely taken into account while some studies emphasized that the actual cost of a project is independent of time and varies randomly under various uncertainties. Therefore, in this study, a framework for project cost forecasting considering the uncertainty is proposed using earned value management concepts combined with Markov chain concepts. In fact, it has been tried to use the concepts of the Markov chain to involve the uncertainty in project cost forecasting, so that the limitations of the traditional methods could be reduced. Finally, in order to compare the efficiency of the proposed method and traditional methods, the values obtained with the total final cost in a large project in a case study have been presented and evaluated. The results show that the use of this method on average estimates the final cost of the project more than 50% higher and more realistic than the estimate made by classical formulas.