Lessons · Project management · planned value, earned value, actual cost
PV, EV and AC: what you planned to have done, what you did, what it cost
Planned value is the budgeted cost of the work scheduled to date; earned value is the budgeted cost of the work actually done; actual cost is what that work really cost.
Hone is a place to practise a career, one idea a day. This is one of its lessons, written out in full and free to read without an account.
What it is for
Spent $100,000 of a $200,000 budget, the team says they are half done. Are they? Only if the work done is worth $100,000 of the plan. Earned value is the number that separates we have spent half from we have done half, and they are different more often than not.
How to think about it
Three questions, in order: by today, what was scheduled to be done, in budget dollars (PV)? What is actually done, in budget dollars (EV)? What has been paid for it (AC)? EV is always measured in the plan's dollars, never in what was spent.
Worked example
BAC = $200,000. By today the plan says 50% should be donePV = 50% × 200,000 = $100,000. What the plan said would be done, priced at plan rates.
The work done so far is 40% of the scopeEV = 40% × 200,000 = $80,000. What is done, priced at plan rates.
The invoices for that work total $100,000AC = $100,000. What it actually cost.
Spent half, done 40%, and the plan wanted 50%Three numbers, one story: behind, and paying more than planned for what is done.
Your turn
BAC is $300,000 and 30% of the work is done. Write the earned value.
EV = 30% × = $90,000
Solve one, graded on the server
The trap
Using actual cost as earned value. Spending $100,000 does not mean $100,000 of work is done; that is the exact mistake earned value exists to catch.