Premium Resources

Earned Value Measurement

 The benefits of Earned Value include:

  • Provides the ability to the project manager to track the project cost very well

  • Allows the project manager to look at other more productive aspects of the project

  • Does not allow any space for guestimation of project progress numbers The performance measurement baseline is a combination of scope, schedule and cost baselines.

Earned value measures project performance against scope, schedule and cost baselines (performance measurement baseline). Earned value measurement is better, because it integrates cost, time and the work done (or scope) and can be used to forecast future performance and project completion dates and costs.

Let us understand a few important terms of Earned Value:

  • PV - Planned Value -

The estimated value of work planned to be done as of today

  • EV - Earned Value -

The estimated value of work actually accomplished as of today

  • AC - Actual Cost (total cost) -

The actual cost incurred for the work accomplished as of today ]

  • BAC - Budget at Completion (the budget) -

The total BUDGET of the TOTAL project

  • EAC - Estimate at Completion -

A current forecast of total project cost

  • ETC - Estimate to Complete -

An estimate of additional cost required to finish the project (a forecast)

  • VAC - Variance at Completion -

A forecast of over or under budget at the end of the project

NOTE: There are many ways to calculate EAC, depending on the assumptions made. Notice how the purpose of the formulas really is to focus create forecasts based on part performance on the project  

Related Topics