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.

Manishi Sarma says

good, in the simplest form and style, easily understandable. No complicated long solution or words.

Fahad Usmani says

Thanks Manishi for your appreciation.

Wonder says

Hi Fahad please assist how do you go about calculating cash flow if given EV, AC, and CV?

Fahad Usmani says

How much has been spent – outflow

Whatever you have earned – inflow

frank bicocchi says

how can i get actual cost if i only have Assume that A project has planned value of $628,000 and earned value of $590,000 and that you have calculated a CV of negative $50,000. also what is ssume a typical variance

Assume an atypical variance.

Fahad Usmani says

CV = EV – AC

-50,000 = 590,000 – AC

AC = 640,000

Ekhlaque Hashmi says

Dear Fahad Usmani

frank bicocchi is asking about “Actual Cost” which is still unknown amount through out the life cycle of any project where as all our BAC is based on assumption, Actual Cost or Actual Expense on any project will comes out after closing of project as you know.

Fahad Usmani says

You always have an account to show that how much you have spent to date.

Tiago says

Really? Dear God….please study a bit before commenting on this…

Daniel Trujillo says

A appreciate the information and found exactly what I needed. Thank you.

Fahad Usmani says

You’re welcome Daniel.

Zaid Jamal says

Thanks for the concise and clear explanations! Very helpful

Fahad Usmani says

You are welcome Zaid.

anjish says

excellent!! simple to the point

Fahad Usmani says

Thanks Anjish.

toni says

thank you soo much for sharing your knowlegde Fahad. you have no idea how many people you’re helping with this information. Blessings!!!

Fahad Usmani says

You are welcome Toni.

Qliner says

This was very helpful, thank you!

Fahad Usmani says

You are welcome!

Scott Brand says

Great examples! Helped me understand

Fahad Usmani says

I am glad that it helped you understand the earned value analysis concepts.

Linh An says

Thank you!

milind says

Understanding in simple language.

Ahamba Ihuoma says

Thanks alot for this Explanation it really helps me

Fahad Usmani says

I am glad that it helps you.

Atul Verma says

Thanks for the wonderful explaination…

Gabriela Garcia R says

Thank you so much! This was very easy, helpful and awesome explaination!

In a very comprenhensible text!

🙂

Fahad Usmani says

🙂

ali says

dear

i’d like to thank you for your effort and time

best regards

Sam Lee says

What table/field corresponds to EV, PV and AC in the SQL database?

Fahad Usmani says

Sorry Sam, I have no idea about the SQL database.

Sam Lee says

For a project, I have Planned Value :1725.02

Actual Cost is: 1709.02

Can we figure out Earned Value from this?

The system yielded 1865.91 which is higer than both numbers. Is this possible?

Thanks

Fahad Usmani says

No, you can not figure out the earned value from the given data.

Yes, it is possible to have earned value more than the actual cost and the planned value.

Hope it helps.

Athar Ali Khan says

Dear Sir,

Why cant we calsulate EV from the given information????

I mean, is NOT really possible OR the question require more information…

BAC’s planned completion is PV

BACs actual completion is EV

Money spent so far from BAC is AC…

So, is there no banlance equation combining ALL four in it…

Something like PV + EV + AC = BAC???

Fahad Usmani says

Let us say that you have completed the project. Just think that in this case how much you have spend, how much you have earned, and what is your planned value.

If we go by your formula

BAC = PV + EV + AC

BAC = 3 times of BAC (approximately)

This is so because at the end of your project, planned value will be equal to BAC, and about equal amount has been spent to complete it same amount is earned.

Therefore your formula is not correct.

V. John says

Very well explained, simple, straight to the point and with relevant, brief examples. Exactly what students would look for. Thumbs up

Fahad Usmani says

Thank you Mr. V. John.

jesus says

Me parace muy bien que nos ayuden a interpretar los conceptos de la guia del PMBOK lo leia y me era complicado enterderlo.Gracias

xpressphilip says

Thanks for the explanation, I am most obliged.

Fahad Usmani says

You’re welcome and thanks for stopping at PM Study Circle.

mani says

simple to understand, good work, keep going 🙂

melissa says

Wow, I can’t thank you enough. I was staring at my CAPM study guide, and pretty stumped about Rita’s definitions on this one. You saved me!

adeyanju azeez says

very simple and straight forward. thank u sir

Adeola says

An amount of 25,000$ was given to a small project team to produce an application for the duration of 12months. Rate of performance for the project is 20,000$. The budget at completion (BAC) is 120,000$. Please how do i find the cost variance (CV), earned value (EV) and actual cost (AC)?

Thank you.

Fahad Usmani says

Hello Adeola,

This question has some contradictory statements. You’re saying that project team has been given a 25,000$ money to produce an application within 12 months. According to this statement, BAC is 25,000$.

Now again in same question, you are saying that BAC is 120,000$. How is this possible?

Adeola says

Yes it got me confusing. Its actually a question from an assignment given to me.

The original question is “Amount of 25,000$ (PV) was given to a small project team to produce simple android mobile application for the duration of 12 months. Rate of performance for the project is 20,000$(RP). The budget at completion is 120,000$.”

I omitted (PV) from the earlier message. Does it make any sense now?

Fahad Usmani says

Sorry Mr. Adeola but it still don’t make sense to me.

The $25,000 is BAC for the project team, because project team has to complete the product from this amount.

Now again you are saying that BAC is $120,000. How is it possible?

Jacobia O. says

Fahad,

I hope you do not mind but I wanted to get in touch with you and could not find a way to directly email you. You wrote a very helpful article on this site regarding the three estimating methods and I would like to know if you know of any resources that show actual examples with each method applied.

I am trying to understand the difference between Parametric estimating and Bottom Up as both seem to provide the same output to me. Please help me to understand if there is any difference.

I appreciate any help you can provide and thank you for reading my message.

Hiren P. says

This site is extreamly useful,

Thank you kindly for your efforts !!

Hiren

Fahad Usmani says

You’re welcome Hiren.

Muhammad Ali says

Dear Fahad,

Thanks for the great efforts you did, the material is very easy to digest and useful. you saved our time to understand complex things in a simplest way.

Fahad Usmani says

Thank you Muhammad. I always try to put concepts in simple way so that people can easily digest them.

Thanks again for appreciating my efforts.

Saad says

I m still confused that what is the major difference between earned value and actual cost. What i perceived from you article is that earned value is in terms of the work which was performed/achieved at any spontaneous time and it has no concern with the cost involved in it whereas in actual cost the major parameter is the cost. Do correct me if i am wrong

Fahad Usmani says

Let’s say that you have $100 project. At certain point you notice that you have spend $50.

Therefore this $50 is you Actual Cost (AC).

Now, on closer review you notice that only 40% of the project is completed. Therefore, Earn Value (EV) will be the 40% of total work; i.e. $40.

Athar Ali Khan says

Thanks Fahad Sb… for a moment Saad got me confused as well… BUT saved my undersading going off tarck..

Can we say!!! AC is the amount of MONEY you have spent on a project at any pointif time???? BUT “EV” is the % completed by spending that MONEY???

cause it might be possible that you have spent $80 but the completed work is only 30%

So 80 becomes teh AC and 30% becmes the EV

Right Sir??

Fahad Usmani says

You are right, EV is amount of money that you have earned by spending the AC.

Mujahid says

in that case, Earned Value is of more significance, which helps you understand your Project’s performance at any point in time. Whereas Actual Cost only gives you the realistic data..

in simpler terms, EV is how much i should have spent for this work, AC is how much i actually spent.

Please correct me if iam wrong..!

Thanks Bro Fahad

Fahad Usmani says

Earned Value is how much you got from the completed work to date.

Nouman Zia says

Thank you very much for such a wonderful and simple elaboration of these concepts.

Fahad Usmani says

Thanks Nouman for visiting and leaving your comment.

Imran Khan says

Your project has a BAC of $400,000 and is expected to last one year. The project work is scheduled to be completed in equal amounts each month. Currently, the project is in month three, but is only 20% complete. You have spent $35,000 to completed the work. What is the PV for this project?

Sweta says

$8750

Fahad Usmani says

Hello Imran, sorry for this late reply. I was thinking that I have already replied.

Anyway, solution is as follow:

As the question says, the project work is scheduled to be completed in equal amounts in each month. Therefore, Planned Value to be spent in any single month is 400,000/12 which is $33,333.00

Now, you’re saying that the project is in third month.

Therefore, the money spend till the end of third month will be three times the money spend in one month; i.e. 3*33,333.000 which will be $100,000 USD.

Hope this helps.

Imran says

Thanks!

Athar Ali Khan says

Sir can we:

(100% / 12) x 3 = 25%

PV = 25% of 400,000 => $100,000 USD

Will it be a right apporach to follow in future???

Fahad Usmani says

If concept is clear, you can calculate it anyway you like..

hakkeem says

one year project

pv=130000

ev= 100000

ac= 150000

bac= 900000

Q1. how long the project doing?

Q2. use the CPI to calculate the EAC?

Q3. use the SPi to estimate how long it will take to finish this project?

could you help me to find answer?

Fahad Usmani says

Please review my cost management blog posts. These concepts are already explained in detail.

Sulaiman says

Many thanks indeed

Fahad Usmani says

You’re welcome Sulaiman.

Rio R says

Thank you very much, Fahad…

This is definitely the simplest and clearest way to explain PV, EV, and AC.

Very very helpful article.. 🙂

Fahad Usmani says

I am glad you liked it.

Pavan says

Fahad,

Very nice way of explaining the concepts. Anyone can clearly understands the concepts with the examples provided. This is a very useful article. Thank you!!

Pavan S

Fahad Usmani says

Thank you Pavan for you comments and stopping by…

Neha says

thanks Fahad… i am a complete fresher just joined an organization. I saw these words in measurement and metrics analyses… When i googled it out, found your explaination most simplest one….. Thanks a lot!

Fahad Usmani says

You are welcome Neha.

Sanjay Kumar says

Hello Fahad..

Can we apply the PV and EV concepts on FP projects using Fixed Milestone Billing (FMB) ?

If yes, then could you please let me know how this would need to be calculated?

Fahad Usmani says

Earn Value concepts provide you status of project and Fixed Milestone billing is way of making payment.

It is up to you that how you plan to make payment. You may make payment on monthly basis based on status report or based on some other parameters….

Sesha says

Dear Fahad,

Your Examples on PV, EV & AC and very clear.

I was struggling to know whats the difference between EV & AV, now you made me clear..

thank you very much for the detailed explanation.

Sesha.

Fahad Usmani says

This was the first article of series of few posts in cost management. I suggest you read all articles in this series to gain understanding of cost management concepts; e.g. SPI, CPI, EAC, ETC, TCPI, etc.

Fahad

peggy says

Can you help me to understand how the “0.375” in the answer was calculated.

You are a project manager who is in charge of an important project for your company. The project is 40% complete after 3 months and has cost $350,000. The budget for the project is $950,000 and is scheduled to last 8 months. How is the project performing?

Reason

The project is ahead of schedule and under budget

CPI=EV/AC CPI=(950,00*40%)/350,000 CPI=380,000/350,000 CPI=1.09(under budget); SPI=EV/PV SPI=380,000/(950,00 x 0.375) SPI=380,000/36,250 SPI=1.07 (ahead of schedule

Fahad Usmani says

Hello Peggy,

Let us calculate the Planned Value from the given question:

Question says that the total budget is 950,000 USD, and the duration is 8 months.

It means, you have to spend 950,000 USD in 8 months,

Therefore, money to be spend in one month = 950,000*1/8

and, money spend in three months = (950,000*1/8)*3

= 950,000*3/8

=950,000*0.375

=356,250 USD

Hope this helps.

Andy Furman says

Need to answer this questions

1. What is the actual cost to date? Is the project over or under budget?

2. What is the SV for the project? Is the project ahead of or behind schedule?

3. Calculate CPI and SPI.

4. Assume a typical variance and calculate ETC and EAC.

5. Assume an atypical variance and calculate ETC and EAC.

Assume that A project has earned value of planned value of $628,000 and earned value of $590,000 and that you have calculated a CV of ($50,000).

Fahad Usmani says

This is a very simple question, just apply the formula and get the answer.

I suggest you read this blog post and the links given inside it.

https://pmstudycircle.com/2012/05/fast-forward-earned-value-management-evm-forecasting-tcpi/

And, to calculate the EAC you need the BAC (Budget).

Rantz says

I can’t seem to determine what the BAC is from the information given in this question. Fahad?

Fahad Usmani says

Yes, you are right Rantz, BAC is missing from the given question. This is what I told to Andy.

Enrique says

How do you call the difference between Actual Cost (AC) and Planned Value (PV)?

The answer is not Cost Variance

Fahad Usmani says

For cost variance, you can refer this blog post:

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

venkat says

Good one.

Easy to understand and start over.

Fahad Usmani says

Thank you Venkat for your comment.

Michael says

Thank you for your very good explanation.

Question: When we are talking about percentage of completion are we talking with regards to output, expenditure or time?

For example, if my project is to make 100 cars in one year, but i buy all my materials upfront and this accounts for half my expenditure, then when is the project 50% complete? Is it:

1) After ive made 50 cars

2) After half a year

3) After the first month when ive spent 50% of my planned budget

Thank you.

Fahad Usmani says

We are talking about the Values. For example, Earned Value, Actual Cost and Planned Value.

Producing cars is an example of operation.

Anyway I understand what you want to ask…

You will always measure your performance against approved plan. If your plan says that you should have done these things to date, and you do not able to do so, you’re in bad shape.

Michael says

Thank you for your reply, im just trying to establish that where you have put ‘Percent complete – 50% (as per the schedule)’ how i can tell im 50% of the way through my project.

Yes i agree if your plan is saying you should have completed more by a certain date then your behind schedule but that dosen’t tell you your percentage completion, just that your not where you planned to be.

I’m sure it differs between projects but my question is whats the generic way of dividing up your project into 20%, 30%, 50%, before the project has begun…is it time related?

Again thank you

Fahad Usmani says

Yes it is time related with cost factor melted in…

iSayed says

I still don’t understand the difference between PV and EV. Isn’t EV the same as AC – i.e. the actual amount of work that has been done? The definition of EV is very vague in the PMBOK as well as everywhere on the internet.

Fahad Usmani says

Difference between these terms is very clear.

Earned Value is the value of the completed work. Let us say that by this time you have completed 10% of the project and total worth of the project is 100,000 USD. In this case the Earned Value will be 10,000 USD.

However, you notice that, to complete this much of work you have spend 15,000 USD. This is your Actual Cost.

Again when you see your schedule, which says that by time you should have completed 13% of the work. This means that your Planned Value is 13,000 USD.

Hope it helps.

Manish Katole says

Dear Sir,

Could you please explain the ways to get the ‘planned percent complete’ and ‘percent of work completed’.

Thanks and Regards,

Manish

Fahad Usmani says

Usually these information are given in the question itself. Otherwise you can get it with either variance formulas or the performance index formulas.

Tony says

Hi, thanks for helping out in this forum. I do understand EV from theoretical discussions but in practical terms have some few questions. Now, for a contractor working on a project for a client. The contractor has a budget given by the client which is the PV, in respect to actual cost am a bit confused. Will the AC be the cost (internal cost) to the contractor or to the client, knowing that the contractor makes a margin from the client based on rate to client minus internal rate.

Any help on this?

Fahad Usmani says

The budget is known as BAC not PV.

Tony says

Thanks Fahad. You are correct I should have stated this is BAC and not PV which is time phased baseline. However, I am still concerned about the actual cost as described in my previous post. Can you please enlighten me on that.

So from my previous post it means EV can be different from client and contractor? Also, if the project goes to plan, it means also AC=EV?

Kindly let me know if I am correct.

Fahad Usmani says

There will be one EV.

If everything goes as plan, EV=PV=AC.

Venu says

Very simple and straight forward explanation. Got the help from you at the right time. Thank you.

Fahad Usmani says

You are welcome Venu.

Biliamin says

Hi Farad, I am highly impressed with all you posts… It seems you just handpicked all the areas I had issues with…

Gina says

How do I calculate the PV, EV and AC for an activity tha finished 2 weeks behind schedule with a cost of $100,000. It was to have a cost of $110,000.

Fahad Usmani says

Your AC is $100,000 because this is what you have spent.

~~And EV is $110,000, because this is what you should have spent.~~And $110,000 is the PV, because this is what you have planned to spend. (corrected)

Taro says

Wasn’t the $110,000 should be the PV instead??

Fahad Usmani says

Ohh…

Yes, you’re right.

$110,000 is the Planned Value.

I have corrected my comment.

farhan ap says

thank you sir.. this is the most simplest way to understand the logic behind this..

Fahad Usmani says

You are welcome Farhan.

sumit says

Can you please tell me how we can work out in this question ??

An activity on the critical path of a project was scheduled to be completed within 16 weeks, with a budget of £8000. During a performance review, which took place 8 weeks after the activity was initiated, it was found that 60% of the work had already been completed and that the actual cost was £6000.

(a) Calculate the Earned Value (EV) of the activity.

(b) Calculate the Cost Performance Index (CPI) and the Schedule

Performance Index (SPI) for the activity.

(c) Based on the performance so far, provide an estimate for the expected budget at completion.

(d) The management argues that the expected budget at completion could stay at £8000. Discuss the assumptions behind this argument.

Fahad Usmani says

Budget at Completion (BAC) is £8,000

Earned Value (EV) = 60% of 8,000 = £4,800

Actual Cost (AC) = £6,000

Planned Value (PV) = 50% of £8,000 = £4,000 (Since 50% of time has passed, so let us assume that 50% of work should be completed).

I hope now you can calculate the rest of things…

Lyra says

Your blog is so helpful! You really broke concepts down in a very simple way! I’m not a math person, so formulas don’t quickly make sense to me. But conceptual explanations do! The examples you give and what definitions mean in a practical sense are great ways of breaking it down! Good Job! Please keep writing! Thanks!

Fahad Usmani says

Thanks Lyra for your comments.

Nikhil Jain says

Hi Fahad

Greetings!!

I am preparing for my PMP examinations I need more practise on such sums\calculations. Please help me out with the same which websiteshould I visit. I have tried a lot but failed.

regards

Nikhil

Fahad Usmani says

Hello Nikhil,

You can visit this blog post to find more PMP exam resources:

https://pmstudycircle.com/2014/12/list-of-best-free-pmp-exam-study-resources/

YarAbu says

Thanks!!

Had a hard time understanding this before you made so simple….thanks a gazillion!

Fahad Usmani says

Thanks YarAbu for coming and leaving your comment.

yousef says

very Good examples

Fahad Usmani says

Thanks Yousef for your visit and comment.

nandi tom says

Please assist in this case:

Which formula would be appropriate?

You are working on a new short course project. The allocated budget for the project is R500,000; however, it has come to your attention that the initial cost estimation was flawed. There are four broad phases in this project:

• Complete written module content: R125,000

• Film module videos: R150,000

• Initiate marketing campaign: R75,000

• Confirm external guest lecturers: R50,000

The cost estimate for each project phase has been calculated based on the estimated costs for all the sub-activities that fall under each phase. You need to re-estimate the total project cost in order to determine an accurate budget.

nandi tom says

Hi Fahad,

I sorry I am so rude didn’t even greet. I am in south Africa currently doing a Project management course and am completely new to the program so I am struggling a little. I have been following your blog and it has been helping me make scene of so much.

Fahad Usmani says

Hello Nandi,

You have to add cost of each module to get the cost of the project.

balaji ramulu says

hi all, i’m new to this post and i found the conversation and calcualtion was very detail and simple. im doing my pmp prep and i want someone to help me out on the below actual project scenario to find out PV and EV.,

project duration – 4months authority approval + 8 months construction = 12months total

project total cost = 13,500,000 (BAC)

at the end of 75th day, i’ve obtained 5 authority approvals out of 7 and ongoing.

i paid so far = 12,000 (AC)

advance payment = 20 % of BAC, not paid.

i got confused while calcualting the PV and EV, as i’ve only so much details as per the current project situation.

help me out in find out the PV, EV

Bala

Fahad Usmani says

With the given data, I believe it is difficult to get the value of PV and EV.

lina says

Hi Fahad;

I would like to thank you for the extra help that your blog gave me, to pass my PMP exam on the first attempt.

You do an amazing job, keep doing!!

Fahad Usmani says

Congratulations Lina for passing the exam, and I am glad that I could be of help.

Teressa says

I need help with help calculating the PV, EV and AC for my project

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