Earned Value

Earned Value

Earned value reporting allows project managers to measure and track actual versus planned costs, schedule, and work. Present the factors, metrics, and formulas that may be used to determine earned value.

Earned Value Management (EVM) is a technique that measures project performance against the project baseline. The Earned Value calculations are studied and memorized by all project managers seeking PMP certification. However, their use in practice is inconsistent. EVM is considered to be one of the “critical few” best practice areas for monitoring project performance from both a cost and schedule perspective.

Software packages like Microsoft Project can perform Earned Value calculations automatically, and they are simple calculations that can quickly be performed manually as needed. Earned Value calculations require the following:

Planned Value (PV) = The budgeted amount through the current reporting period

Actual Cost (AC) = Actual costs to date

Earned Value (EV) = Total project budget multiplied by the % complete of the project


Analyse how earned value may be used to determine if a project is on time or within budget. Provide a real-world example, including the formula calculations, to support your response.

For the benefits of Earned Value Management to be fully realized, thorough planning combined with the establishment of and disciplined maintenance of a baseline for performance measurement are needed. This baseline is the result of a true integration of the work scope, schedule, and cost elements of the project. When this is successfully accomplished we can readily correlate our performance as reported from the perspective of earned value to that reported via our integrated project schedule.


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