### Incorporating Earned Value Management (EVM) into Income Statements to Improve Project Management Profitability and Elevate Application in the Business and Management**1. Introduction****1.1 Background and Significance**Project management (PM) is a highly specialized field that has evolved significantly in recent years. Despite its importance, project management research receives limited attention in leading business and management journals. The project management manifesto urges collaboration between social scientists and business and management experts to enhance the relevance of project research to society.One of the key challenges in project management is profitability measurement. Traditional EVM indicators are limited and do not adequately address quality, uncertainty, and profitability. In response, integrating EVM with the income statement has emerged as a promising solution.**1.2 Research Objectives**This research aims to:- Improve project management profitability by integrating EVM into income statements.- Determine whether EBITDA is the appropriate profitability metric for project management and its benefits.- Integrate EVM and EBITDA to maximize daily project management profitability and enhance performance.- Explore the advantages of using EBITDA to measure PM profitability.- Identify strategies to enhance strategic decision-making using EBITDA.**2. Literature Review and Theoretical Framework****2.1 Project Management, Earned Value Management (EVM), and Agency Theory**Project management is a multifaceted field involving complex tasks within tight constraints. It is often embedded in organizational structures and involves interactions with stakeholders. Agency theory provides insights into the principal-agent relationships between project owners and contractors, highlighting the potential for information asymmetry.EVM is a structured project management approach that measures key performance indicators such as Planned Value (PV), Earned Value (EV), and Actual Costs (AC). While EVM is a valuable tool, it lacks profitability indicators, creating information gaps.**2.2 Integration of EVM into Income Statements**Integrating EVM into income statements addresses the profitability gap in EVM. The proposed framework aligns EVM indicators with income statement components, providing a comprehensive view of project performance and profitability. This integration enhances project managers' understanding of profitability and aligns it with organizational objectives.**2.3 EBITDA as a Profitability Metric**Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is a widely accepted measure of operating profitability. It is calculated by subtracting operating expenses from operating revenue. EBITDA excludes non-operating expenses, providing a focused view of operational efficiency and profitability.**2.4 Integrating EVM, Income Statements, and EBITDA**Integrating EBITDA into EVM and income statements enables project managers to track profitability more effectively. By defining a target EBITDA, project managers can align project objectives with overall business goals. This integration empowers project managers to manage profitability and intervene promptly if necessary.**2.5 Maximizing Daily EBITDA**To maximize daily EBITDA, project managers can focus on improving cost efficiency, productivity, quality, delivery, and safety. They can establish clear targets, set high expectations, leverage objective data, and provide timely feedback.**2.6 Benefits of Using EBITDA**Integrating EBITDA into EVM offers several benefits:- Improved performance measurement and profitability assessment- Reduced information asymmetry between project managers and stakeholders- Enhanced coordination, cooperation, and interdependency among activities within the project- Facilitated communication and information sharing- Improved project success evaluation**3. Methods****3.1 Data Collection**Data collection involved two phases of surveys with 220 participants from shipbuilding and aircraft manufacturing companies. Qualitative data was also gathered through interviews with project management professionals and observations at company premises.**3.2 Data Analysis**The data was analyzed using IBM-SPSS for quantitative analysis and NVivo for qualitative analysis.**4. Results and Discussion****4.1 Quantitative Results**- EBITDA is a suitable measure of project management profitability because it excludes non-operating expenses.- Integrating EBITDA into WBS and applying target EBITDA margins can maximize daily EBITDA in project management.- Using EBITDA as a measure of project management profitability allows project managers to manage and maximize profitability.- Sharing daily target and actual EBITDA results with the supporting units and the board of directors improves the ability to support and make strategic decisions for project management.**4.2 Qualitative Results**- Integrating EVM into income statements enhances project management profitability and reduces information asymmetry.- EBITDA is a key metric for assessing project management profitability and aligns it with organizational objectives.- Integrating EBITDA into WBS allows project managers to track profitability and intervene if necessary.- By maximizing daily EBITDA, project managers can improve performance, productivity, and profitability.- The integration of EVM, income statements, and EBITDA broadens the application of EVM in the management and business fields.**5. Conclusions**Integrating EVM into income statements and incorporating EBITDA into WBS provides a comprehensive and practical approach to enhancing project management profitability. This integration improves profitability measurement, facilitates communication, aligns project objectives with business goals, and empowers project managers to manage profitability effectively. The study contributes to the field of project management by introducing a novel approach to profitability assessment and its practical applications.