The increasing need for efficient monitoring of project costs that derives from poorly predictable construction execution, frequent interruptions of work from the client’s side, poorly defined needs in the design phase, the uncertainty of sales and the current crisis in the construction industry dictates the development of methodology for financial analysis and control to be used during construction project execution.
The developed methodology is based on technique of earned value analysis (EVA) and net present value (NPV) method. By merging these two methods, a new, improved methodology, the so-called net present earned value (NPEV), that takes into consideration the value of money over time is obtained.
By using NPEV, it is possible to monitor project costs by comparing the basic real discounted cash flow (discounted to the initial term, i.e. to the beginning of the project), to the planned cash flow. The new methodology therefore includes the time component, and enables the comparison of income and expenditure amounts at different times.
The proposed methodology has the potential to reduce the project risks and helps to keep costs under control. Since it is relatively simple to use, it will facilitate the day-to-day work of a project manager throughout the life cycle of a construction project.