Earned Value
is the the industry standard for measuring progress, earned value is the Actual cost of the activities that we've completed. It gives us an accurate depiction of how much money we've spent accomplishing our tasks. Earned value provides us with:
- Progress of status of work being done
- Comparison of planned schedule and cost to, actual schedule and cost based on the work completed
- Objective data from the baseline compared to actual progress
- A forecasting method for estimating project completion
- Comprehensive insight into cost and schedule portions of the project
Earned Value Terminology
- Planned Value (PV): the amount you planned to spend based on your baseline estimates up to the current point in time.
- Budget at Completion (BAC): the amount you planned to spend on the entire project.
- Actual Cost (AC): the amount you've actually spent on the project up to the current point in time.
- Earned Value: the value of what you've accomplished based on your original estimates, what the cost should be based on how much work is accomplished.
the relationships between these values will indicate the health of a project
- EV = PV: on schedule, earned the value planed up to this point in time
- EV = AC: on budget, earned the value for the cost planned up to this point in time
- EV < PV: Behind schedule, accomplished less then planned up to this point in time
- EV < AC: Over budget, paid more for the value than planned up to this point in time
- EV > PC: Ahead of schedule, earned more then planned up to this point in time
- EV > AC: Under budget, earned more value for our cost then planned up to this point in time
there are various methods for determining "Earned Value", the one(s) selected should be defined in the Quality plan.
- 0/100 Rule: an activity is either complete, or not complete. You've earned 100% of the value or 0% of the value.
- 50/50 Rule: the project earns 50% of the value when the activity starts and 100% when it's complete.
- Proportional rule: the value earned is based on the activity status, so if an activity is 25% done then you earn 25% of it's value.
