Earned Value Management

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komal
Participant Posts: 73
Joined: Wed May 31, 2017 4:34 pm

Earned Value Management

Could not get difference between Actual Cost and Earned Value?
nazrulq
Contributor Posts: 272
Joined: Sun Feb 26, 2017 6:06 am

Re: Earned Value Management

Actual cost is the money you have spend or cost incurred during the certain time of the project . Denotes as AC
CV =EV-AC ;CV= Cost Variance

Earn Value is the work done till the certain time of project in terms of \$ amount. Sum of the
planned value of completed work usually denotes as EV

SV= EV-PV; SV= Schedule Variance

Performance index cost ,
CPI =EV/AC

Performance index schedule ,
CPI =EV/PV
Prachi Bansal
Beginner Posts: 29
Joined: Wed Dec 21, 2016 7:06 am

Re: Earned Value Management

Actual Cost is the money spent/incurred to complete a part of the project. While, Earned Value is the \$ value you have earned while doing that part of the project or according to the plan how much \$ amount of work you have completed.

For Eg:

You have to complete a project in 10 months and budget for the same is \$10,000. Now, At the end of 2nd month you have spent \$3,000 and you have only completed 20% of the total work.

So in this case, At the end of 2nd Month :

AC = \$3,000
EV = 20% of \$10,000 = \$2,000

You were suppose to complete the work in \$2,000 i.e. this is the value of work you have gained/done so far. But you have spent \$3,000 already. That means there's a cost variance. You are not going as per the plan.

That CV is calculated as :

CV = EV - AC = \$2000 - \$3000 = - \$1000

Hope this was helpful to you. 