I have discussed earned value management in my previous blog post in detail and also provided a short brief of its three elements: Planned Value (PV), Actual Cost (AC), and Earned Value (EV).

We are going to look at these elements in detail. From this point onward, you’re going to see mathematical calculations. Therefore, I request you go through every step thoroughly.

If you miss any step or don’t understand the concept, further calculations will be very difficult for you and you may have problems with understanding more advanced cost management concepts. Therefore, understand the concepts well before proceeding further.

The calculations for finding Planned Value, Earned Value, and Actual Cost are simple, and once you understand them, the rest will be simple.

Although I’m going to explain them thoroughly, I suggest you obtain a good PMP exam reference book for further reading and practice questions.

### Planned Value (PV)

This is the first element of earned value management. Planned Value is the approved value of the work to be completed in a given time. It is the value that you should have been earned as per the schedule.

As per the PMBOK Guide, “Planned Value (PV) is the authorized budget assigned to work to be accomplished for an activity or WBS component.”

You calculate Planned Value before actually doing the work, which also serves as a baseline. Total Planned Value for the project is known as Budget at Completion (BAC).

Planned Value is also referred to as Budgeted Cost of Work Scheduled (BCWS).

#### Formula for Planned Value (PV)

The formula to calculate Planned Value is simple. Take the planned percentage of the completed work and multiply it by the project budget and you will get Planned Value.

Planned Value = (Planned % Complete) X (BAC)

#### Example of Planned Value (PV)

*You have a project to be completed in 12 months. The budget of the project is 100,000 USD. Six months have passed and the schedule says that 50% of the work should be completed.*

*What is the project’s Planned Value (PV)?*

Given in this question.

Project duration: 12 months

Project cost (BAC): 100,000 USD

Time elapsed: 6 months

Percent complete: 50% (as per the schedule)

Planned Value is the value of the work that should have been completed so far (as per the schedule).

In this case, we should have completed 50% of the total work.

Planned Value = 50% of the value of the total work

= 50% of BAC

= 50% of 100,000

= (50/100) X 100,000

= 50,000 USD

Therefore, the project’s Planned Value (PV) is 50,000 USD.

#### Application of Planned Value (PV)

Planned Value is used to calculate Schedule Variance and Schedule Performance Index.

### Actual Cost (AC)

This is the second element of earned value management. Actual Cost is the total cost incurred for the actual work completed to date. Simply put, it is the amount of money you have spent to date.

As per the PMBOK Guide, “Actual Cost (AC) is the total cost actually incurred in accomplishing work performed for an activity or WBS component.”

Actual Cost is also known as Actual Cost of Work Performed (ACWP).

#### Formula for Actual Cost (AC)

Finding Actual Cost is the simplest of all.

There is no special formula to calculate Actual Cost. It is an amount that has been spent and you can find it easily in the question.

#### Example of Actual Cost (AC)

*You have a project to be completed in 12 months. The budget of the project is 100,000 USD. Six months have passed and 60,000 USD has been spent, but on closer review, you find that only 40% of the work has been completed so far.*

*What is the project’s Actual Cost (AC)?*

Actual Cost is the amount of money that you have spent so far.

In the question, you have spent 60,000 USD on the project so far.

Hence,

The project’s Actual Cost is 60,000 USD.

#### Application of Actual Cost (AC)

Actual Cost is used to calculate Cost Variance and Cost Performance Index.

### Earned Value (EV)

This is the third and last element of earned value management. Earned Value is the value of the work actually completed to date. If the project is terminated today, Earned Value will show you the value that the project has produced.

As per the PMBOK Guide, “Earned Value (EV) is the value of work performed expressed in terms of the approved budget assigned to that work for an activity or WBS component.”

Although all three elements have their own significance, Earned Value is more useful because it shows you how much value you have earned from the money you have spent to date.

Earned Value is also known as Budgeted Cost of Work Performed (BCWP).

There is a difference between Planned Value and Earned Value. Planned Value shows you how much value you have planned to earn in a given time, while Earned Value shows you how much value you have actually earned on the project.

#### Formula for Earned Value (EV)

The formula to calculate Earned Value is also simple. Take the actual percentage of the completed work and multiply it by the project budget and you will get the Earned Value.

Earned Value = % of completed work X BAC (Budget at Completion).

#### Example of Earned Value (EV)

*You have a project to be completed in 12 months. The budget of the project is 100,000 USD. Six months have passed and 60,000 USD has been spent. On closer review, you find that only 40% of the work has been completed so far.*

*What is the project’s Earned Value (EV)?*

In the above question, you can clearly see that only 40% of the work is actually completed, and the definition of Earned Value states that it is the value of the project that has been earned.

Earned Value = 40% of the value of total work

= 40% of BAC

= 40% of 100,000

= 0.4 X 100,000

= 40,000 USD

Therefore, the project’s Earned Value (EV) is 40,000 USD.

#### Application of Earned Value (EV)

Earned Value is used to calculate Schedule Variance, Cost Variance, Schedule Performance Index, Cost Performance Index, Estimate at Completion, and To Complete Performance Index.

In your PMP exam, you will be given a scenario and asked to identify these three elements. Please note that these elements are also known by different names, such as: Planned Value referred to as Budgeted Cost of Work Scheduled (BCWS), Actual Cost as Actual Cost of Work Performed (ACWP), and Earned Value as Budgeted Cost of Work Performed (BCWP).

It is unlikely that you will see these terms in your PMP exam, so concentrate on the terms mentioned in the PMBOK Guide rather than these outdated names.

### Summary

Earned Value, Planned Value, and Actual Cost are basic elements of earned value management. They can be used to generate a basic overview of your project status. Earned Value is the value of the work actually completed to date, Planned Value is the value that you should have earned as per the schedule, and Actual Cost is the amount spent on the project to date. Once you have this information on hand, you can find the current status and compare it with the planned progress.

You can now move on to the next blog post on schedule variance and cost variance which explains if you are ahead of schedule or behind schedule and whether you are under budget or over budget.

If you are interested in learning all the mathematical formulas for the PMP exam, you can try my PMP Formula Guide. You can also try my PMP Question Bank and PMP Mock Test to practice PMP exam sample questions.

Teressa says

You are working as an intern and have 10 Servers to upgrade. It is estimated that it will take you 5 hours per Server and you are scheduled to work 5 hours a day. You are paid $10 per hour. After 6 work days you have spent 15 hours and completed 5 Servers.

Calculate the following:

BAC

PV

EV

AC

I came up with $500 for the BAC, but I cannot calculate the PV.

Nouman Zia says

hi,

below is data for PV/BCWS and % of completed work. Could you please tell me what would be the cumulative EV until 7 weeks. I’m waiting for your reply. Thanks a bunch

System planning 3,520( week1) 4,800(week2) 8,000(week3) 5,000(w4)

User interface planning 1,000(w4) 3,040(w5) 2,000(w6) 1,000(w7) 3,000(w8) 1,340(w9)

System planning 10%(w1) 30%(w2) 70%(w3) 90%(w4) 100%(w5) 100%(w6) 100%(w7)

User interface planning 10%(w4) 30%(w5) 65%(w6) 80%(w7)

Mohamed Gamal says

Thanks a lot for the Simplified explanation.

Deepak says

Hi,

Can you please let me know why project schedule is input for determine budget process. It is planning process so why we are not using schedule baseline as input.

Thanks

Deepak Banga

Fahad Usmani says

What is the difference between project schedule and schedule baseline?

Mujahid says

hahaha

Project Schedule, Baseline, Planned dates, are all the same i believe..??

Fahad Usmani says

Project schedule is how you are performing and schedule baseline is your planned schedule.

Hemang says

Need your help in understanding the planned value (PV) with the example :

a. Project started in Oct 2014;

b. Project will be completed in 28 months from Oct 2014;

c. Below was the month on month Budget value, Earned Value and Actual cost;

Particulars Oct 2014 Nov 2014 Dec 2014 Jan 2015 Feb 2015 Mar 2015 April 2015 Total

Budget (BAC) 3450 3000 3200 3000 3500 3400 3500 26550

Earned Value (EV) 3450 2800 3000 2800 3200 3200 3400 21850

Actual Cost (AC) 3450 0 3000 2500 3000 2000 1000 14950

With your above practical example in this article, it seems that PV = EV for the period already passed.

Please advice.

Thanks & Regards,

Hemang Shah

Mujahid says

BAC = 23050(upto Apr’15) + 26550 = 49600

Duration complete is 7 months out of 28 months = 25%

PV = 25% of BAC

i.e., PV = (25/100) * 49600

therefore, PV = 12400

EV = 21850

AC = 14950

is this correct..???

Zoltan says

It helped me so much. Thank you a lot.

Fahad Usmani says

Thanks Zoltan.

Tauseef Qureshey says

In order to find Future Value which formula is correct to calculate from PMP point of view

1. FV=PV(1+r)n where n is the power of (1+r) and PV is Present value, r is rate of interest & n is time period i.e number of years

2. FV=PV(1+r/100)n where n is the power of (1+r/100)

3. FV=CF [1-1/(1+r)n]/r + CF[1/(1+r)n] where n is the power of (1+r) , CF is the cash flow

Fahad Usmani says

The second formula is correct.

Mujahid says

Hi Fahad

Thank you very much for your efforts if breaking down complicated topics into simpler forms. You can’t imagine what it feels like for a beginner like me.

I have just started to prepare myself for PMP.

Thanks once again..

Mujahid

Fahad Usmani says

You are welcome Mujahid.

Aalok says

Hi Fahad,

I am working on actual project in which I am using MPP 2010. I have created Task with their Start and End date, Budgeted Cost as well as Baseline. Now when I am going on EVM from Table option, MPP list all the Colum of EVM. In that I can able to see values in AC,CV,EAC and VAC. but PV,EV,SV and BAC are coming $0 for each task. Can you tell me why MPP is reflecting $0 for above?

Thanks

Tessy says

Thanks for your explanation. It really helped.

Fahad Usmani says

You are welcome Tessy.

LAMINE says

very good explanation . It’s helping well.

Fahad Usmani says

Thanks Lamine.

Peter M Bok says

Thanks, proved to be very useful

Fahad Usmani says

You are welcome Peter.

carl says

Sir,

Earned value cost is = activity % complete x budgeted cost. Why is it in my P6 I cannot get a correct answer?

Example: ithe budgeted cost is 6,222,390.02, and in my progress update the activity % complete is 24%, my earned value is 1,493,341.60..

If i calculate 24% x 6,222,390.02= 1,493,373.605

Please help me how to fix this problem??

Thanks

Fahad Usmani says

Check if this 24% is rounded.

Anyway this is not a major issue, discuss with your boss or planner.

cb suresh says

simple to UNDERSTAND.cngrts

Fahad Usmani says

Thank Suresh for your comment.

Ntosh says

Hallo Sir,

Thanks for the information.

Please help me here with this question,I am preparing for my exams on 10/11/2015:

On a day 60 a project has a cost variance of minus $50, and schedule variance of $40, and a planned value of $ 560.

Compute the earned value, CPI and SPI.

What is your assessment of the project on day 60 as project manager?

sanjay says

sv = ev – pv

40 = ev – 560

ev = 40+560= 600

earned value = 600

SPI = 600/560 = 1.0 on schedule

CPI = 600/650 = .92 over the budget

cv = ev – ac

-50 = 600 – ac

ac = 600+50 = 650

mark says

I have the following values, EV=500, AC=?, PV=400,BAC=3,000 , SV=?, CV=200, EAC=?

Can you please confirm my calculations.

Thank You

Mark

Jim Slade says

I saw this question as a sample but not sure how the EV of $678,461.50 came to be???????

planned cost of $735,000 the actual cost is only $550,000. Estimate the

schedule and cost variances. Re-estimate the variances if the actual cost had been $750,000.

Fahad Usmani says

Is this the exact question?

Jacq says

I’m working on a similar problem. The question is: A project is 5 days behind schedule at day 65. Planned cost is $735,000 for this point in time, actual cost is $550,000. Find the variances and what they say about the health of the project.

PV= 735000

AC= 550000

Not sure if EV=550000 or EV=678461.4 (735000/65=11307.69 which would be the planned cost per day so at day 60 the EV would be 678461.4)

Help please!

Jacque says

I’m working on the same problem.

I believe the question is: A project is 5 days behind at day 65. It had a planned cost of $735,000 for this point in time, but the actual cost is only $550,000. Find the Variances. Re-estimate if the actual cost to date had been $750,000.

PV = 735,000

AC = 550,000

Would EV also be $550,000 since it reflects the amount of work that has actually been accomplished, or would it be $678,462 (735000/65 = 11,307.7 daily budget; 11307.7*60 = $678,462)

Once we know the EV it would be easy to compute the variances.

Jose Torres says

Hi!! What is the difference between Variance Formulas EV-xx (AC or PV)

and what is the relation between Index Formulas EV/xx (AC or PV)

THANKS

Fahad Usmani says

It is already explained in below given blog post:

https://pmstudycircle.com/2012/05/schedule-variance-sv-cost-variance-cv-in-project-cost-management/

https://pmstudycircle.com/2012/05/schedule-performance-index-spi-and-cost-performance-index-cpi/

joy first says

pls how do you calaculate for earned value where the pecentage of work done is not given i mean when you are given AC, CV, SP, and BAC to calculate the earned value

Fahad Usmani says

If not in the percentage, it means the value will be given in USD. In this case you can easily separate them as well.

Jane Doe says

Hi Fahad Usmani!

If project ahead 50%, its planned duration is 5 days and it costs $100 a day. so what is EV and AC

Thanks.

Ibrahim Alameh says

Hello Mr. Fahad

My Boss asked me to make estimate for 1000m2 of marble tiles, provide and install,

Is there any formula for that?

thank you

Fahad Usmani says

Hello Ibrahim,

This estimation requires simple mathematical calculation. You can do it manually.

mahesh says

Thanks a lot brother , this is the simplest explanation available on the internet

Fahad Usmani says

You are welcome Mahesh.

IQRA ASLAM says

Thanks DEAR its very good and simple context that you have given and easy to understand thank you so much.

Fahad Usmani says

You are welcome Iqra.

Maheswara says

thank you frd

Fahad Usmani says

You are welcome Maheshwara.

Tai Nguyen says

In section “Planned Value (PV)”,

you said that you can say that it is the money that you should have earned as per the schedule”.

But under “Summary”,

you mentioned “Planned Value is the money that you should have spent as per the schedule”.

I think it is just a typo and “earned” should be used under “Summary” section, in stead of “spent”.

Please correct me if any. Thanks for your great posts. Keep up this excellent work, colleague.

Fahad Usmani says

Corrected.

Thanks Tai for letting me know about this typo.

Nick says

I need help to find the SPI with the following information

Actual work completed to date $ 45,000

Budget cost for this activity $ 90,000

Elapsed time since the activity commenced 4 months

Scheduled duration of this activity 9 months

Im struggling to figure out the PV

Ellise Chetty says

Hi,

Consider the table below:

ACTIVITY/ TASK DATE SCHEDULED BUDGETED AMOUNT CASH FLOW ACTUAL COST COST VARIANCE

Activity A

Task a 15/04/16 R5500.00 R5500.00 R6000.00 -R500.00

Task b 06/05/16 R2500.00 R3500.00 R3000.00 -R500.00

Task c 30/06/16 R2000.00 R2000.00 R2000.00 R0.0

Task d 16/07/16 R5000.00 R5000.00 R4500.00 R500.00

TOTAL R15000.00 R16000.00 R15500.00 -R500.00

Is the total BCWP R15,000.00 or R16,000.00?

Thank you,

Ellise Chetty says

I find my table is obscured in previous post. In short I would like to know if BCWP is determined using the budgeted amount or cash flow amount?

vhusa says

Did you manage to get the answer?

Narayanan says

Given an activity in an advertising project whose planned cost was $12,000 but actual cost to date is $10,000 so far and the value completed is only 70 percent, calculate the cost and schedule variances. Will the client be pleased or angry?

Mohsen says

Hi,

In some papers we can see the fuzzy earned value. in other word the authors turn EV into a fuzzy number that is uncertain. can I do this for PV or AC?

Thank you

Fahad Usmani says

I did not understand your question Mohsen.

mehdi says

One question

project duration is 12 month.

but project have delay after 12 month, how i can calculate PV?

Thanks

Fahad Usmani says

In this case you will have to update the schedule and then you will be able to see the PV.

nelly says

can you help me i have a schedule of values and we have complete 40% of the job but he says that on my schedule of values i have to charge the 40%of just what i have done ex: if it is demolition just to apply my 40%to the demolition and the changes everything of what i have done on my pay application

musad says

Hi fahad,pls can a project manager assume d progress of a project as 90% because it was done in 90 hours out of the planned 100hrs.

Thanks

Fahad Usmani says

Progress in terms of schedule or cost?

Zipho says

With a PV=R300 000, EV=R360 000, AC=R348 000 AND BAC=R1 200 000, How do I calculate an index which will allow me to determine whether the project is on schedule? How do I see whether its over or under budgeted? How do I calculate the expected cost to complete the remaining work?

Som says

Dear Fahad,

is there any correlation between earn value management and profitability?

i received a PO value of $100,000 (4,000 hrs) for a project duration of 1 year and hourly rate is $25.

Now 100% of work is completed on time, so my EV became $100,000 however i have spent 5000 hrs instead of 4000 hrs. what could be AC? is it $25*5000 = $125,000?

Also, i have direct cost of $80,000 which gives me 20% ($20,000) profitability.

with respect to above example, how do we arrive AC. if i consider AC is the direct cost then what is $125,000 (25*5000)? please suggest

Regards,

Som

polly says

I have aqn and need an answer

People in the team

Dan

Piky

Sarah

Agnes

Money to be paid per monthmonth by each

40000

40000

40000

40000

Money actually paid by each at the end of the month

20000

10000

60000

50000

QN: find the variance of all de people based on there contribution.

godfrey mponzi says

the project of developing and installing ten printers drivers has the burget of $10,000 (10 k per printer driver)

and dulation of 10 weeks (1 printer driver per week) project report after 5 weeks implementation 4 printers drivers have been develop and installed at the cost of $47,500 calculate

present value,actual value , earn value the schedule variance, cost variance

Feri says

Hi Fahad,

Could you tell me about the project cost mean. Are the project cost including staff salary, operation, insurance etc? and how to measure EV and PV of that item? Thanks.

Fahad Usmani says

Yes, they are included and EV and PV are measured against cost baseline and actual baseline. You do not measure PV or EV for salary, operation, or insurance, etc.

hessa says

hey

i want to ask you some question about (accounting managerial)?

Fahad Usmani says

Hello Hessa,

Sorry, I am experienced in accounting related activities.

Zubair says

Is there a correction needed to earned value if scope removed is % completed being updated or redistributed

MD.Mehedi Hasan says

Donor approved 15 % variance in each line of cost category keeping the total approved budget unchanged.Calculate the maximum personal & other cost line items from the following budget if the budget variance limit is 15% in each cost category ,personnel-30000.supplies-50000,travel-15000,other-5000

Deepthi says

Hi Team,

I want to understand how to calculate EV manually by looking at the values in the project plan. Should i use % complete or % work complete for the below

EV = % complete * BAC

I know the BAC, but i am not sure if i have to use the %complete or %work complete to calculate the earned value.

This is to determine the CPI = EV/AC.

Can you kindly let me know asap.

Fahad Usmani says

The work you have completed is the earned value.