Page 206 - Project+

EVM looks at schedule, cost, and scope project measurements together and compares

them to the actual work completed to date. EVM is usually performed on the work
packages or other WBS components. To perform the EVM calculations, you need to
first gather these three measurements: planned value, actual cost, and earned value.

Planned Value The planned value (PV) is the cost of work that has been authorized
and budgeted for a specific schedule activity or WBS component (such as a work
package) during a given time period or phase.

Actual Cost Actual cost (AC) is the actual cost of completing the work component in a
given time period. Actual costs might include direct and indirect costs but must
correspond to what was budgeted for the activity. For example, if the budgeted amount
did not include indirect costs, do not include them here.

Earned Value Earned value (EV) is the value of the work completed to date as it
compares to the budgeted amount (PV) for that period. EV is typically expressed as a
percentage of the work completed compared to the budget. For example, if our

budgeted amount is $1,000 and you have completed 30 percent of the work so far,
your EV is $300. EV cannot exceed the total project budget, but it may exceed the PV
for a work component or period of performance if the team is ahead of schedule
because they completed work planned for a future period during the measurement
period.

The concepts of PV, AC, and EV are really easy to mix up. In their
simplest forms, here’s what each means:

PV The approved budget assigned to the work to be completed during a given time
period

AC Money that’s actually been expended during a given time period for completed
work

EV The value of the work completed to date compared to the budget

Cost Variance

Cost variance (CV) tells you whether your costs are higher than budgeted (with a
resulting negative number) or lower than budgeted (with a resulting positive number).
It measures the actual performance to date against what’s been spent.

The formula for CV is as follows:

CV = EV – AC

Suppose that as of December 1 (the measurement date), the performance
measurements are as follows:

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