Earned Value Defined
Measuring the budgeted cost of work actually performed
A project is 60% complete. But what does that mean in dollars? Earned Value translates progress into budget terms.
The core EVM measures
Earned Value Management tracks project performance using three key measures: Planned Value (PV) is the budgeted cost of work scheduled, Earned Value (EV) is the budgeted cost of work performed, and Actual Cost (AC) is the actual cost of work performed.
Reading the formula
Earned Value (EV) is calculated by multiplying the Budget at Completion ($BAC$) by the percentage of work completed (Percent Complete). It tells you how much of the budget should have been spent for the work actually accomplished.
Earned Value measures what you GOT for your money in budget terms. Actual Cost measures what you PAID. Comparing them reveals cost efficiency.
- 1. Identify the BAC: $800,000.
- 2. Identify the percent complete: 60% (or 0.60).
- 3. Apply the formula: EV = BAC x Percent Complete.
- 4. Calculate: $800,000 x 0.60 = $480,000.
💡 Hint
Check your understanding
- EVM relies on three measures: PV (scheduled), EV (performed), and AC (actual).
- EV is the budgeted cost of work performed.
- EV is calculated as BAC multiplied by the percent complete.