Skip to main content

Planned Value (PV) and Earned Value (EV)

 Budget at Completion (BAC) is the total estimated cost of a project after it's completed, including all allocated budgets and any remaining budget. It's a key factor in client project planning, helping to understand the total expected expenses. BAC is established early in the contract at the control account level and can be rolled up and reported at any level of the Work Breakdown Structure (WBS).

Planned Value = (Planned % Complete) X BAC (Budget at Completion)

Example:

Project cost (BAC): 100,000 USD

Project duration: 12 months

Time elapsed: 6 months

Percent complete: 50% (as per the schedule)

= 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.


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

Example:

Project cost (BAC): 100,000 USD

Project duration: 12 months

Time elapsed: 6 months

Percent complete: 40% (as per current status)

= 40% of BAC

= 40% of 100,000

= (40/100) X 100,000

= 40,000 USD

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

If the project going in same trend it will take 3 months additional timeline to complete the project.

 


There is no special formula to calculate the 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.

The Actual Cost is the amount of money that you have spent so far. You have spent 60,000 USD on the project so far.

Hence,

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

Comments

Post a Comment

Popular posts from this blog

New way of product development

Today is the era of fast-paced world and competitive world. Companies are realizing that the old sequential approach to developing new products won’t get the job done and product can’t be reached to market when compared to competitors. The 4 stages of product development are as follows – R&D, Growth, Maturation, and Decline. Instead of sequential approach, companies are using holistic approach – as in rugby game, the ball gets passed within the team as it moves as a unit up the field. This holistic approach has six characteristics: 1)     Build-in-instability 2)   Self-organizing project teams 3)   Overlapping development phases 4)   Multi-learning 5)   Subtle (very clear and strong) control 6)   Organizational change to explore and learning The above six characteristics forming a fast and flexible process for new product development with advantage of act as a change agent, creative, market driven ideas, flexi...
Post a Comment
Read more

Product Manager vs Product Owner

Both the product manager and the product owner work towards a common goal, to build and improve products that create meaningful value for customers and all stakeholders within the company. This usually happens by delivering and optimizing product features. Product Manager Product Owner The product manager discovers what users need, prioritizes what to build next, and rallies the team around a product roadmap. The product owner is responsible for maximizing the value of the product by creating and managing the product backlog. This person creates user stories for the development team and communicates the voice of the customer in the Scrum process.      Product Manager and Product Owner's work on below vacuum. Product manager focus on: Business Strategy Long term Product Vision Long term Product Strategy Product Roadmap Alignment with Product Owner Product owner focus on: Release Plan (Product Backlog ie: ...
Post a Comment
Read more

Data & Analytics

Data and analytics is the management of data for all uses and the analysis of data to drive business processes and improve business outcomes through more effective decision making and enhanced customer experiences. Four Types of data analytics: 1.         Predictive data analysis Predictive analytics may be the most commonly used category of data analytics. Businesses use predictive analytics to identify trends, connections between data, and relationship between data. 2.        Prescriptive data analytics Prescriptive analytics is where AI and big data combine to help predict outcomes and identify what actions to take. Prescriptive analytics can help answer questions such as “What if we try this?” and “What is the best action?” You can test the correct variables and even suggest new variables that offer a higher chance of generating a positive outcome. 3.        Diagnostic data analyti...
Post a Comment
Read more