A crucial project performance indicator, earned value (EV) measures the worth of work done at a specific moment in relation to the budget as intended. Assessed project progress and efficiency using Earned Value Management (EVM), it is part of:
Key Formula:
EV=Percentage of Work Completed×Total Project BudgetEV = \text{Percentage of Work Completed} \times \text{Total Project Budget}
Related Metrics:
- Planned Value (PV): Budgeted cost of scheduled work.
- Actual Cost (AC): Actual spending at a given time.
- Schedule & Cost Performance Indexes (SPI, CPI): Compare EV with planned progress and cost.
Example in Practice:
A project with a $100,000 budget is planned to be 50% complete but is actually only 40% complete.
- EV = $100,000 × 40% = $40,000
- If the actual cost (AC) so far is $50,000, the CPI = EV/AC = 0.8, indicating overspending.
Why It’s Important:
By offering a clear assessment of project performance, EV lets managers spot early cost overruns and schedule violations.
