## Reply: Earned Value vs. Actual Costs

 Name E-mail Your e-mail address will never be displayed on the site. Subject Message [quote="Rachu" post=2947]Hi James, Let me first take an example. Lets say a very small project has total BAC (budget at completion) value of USD1000 and duration estimate of 4 weeks. Following are some numbers after 2nd week of completion in the project, The project is 40% complete. The Actual Cost incurred on the project so far is USD 350. Now according to the duration estimate, the project should be 50% complete (2 weeks in 4 weeks duration), so the PLANNED VALUE is USD 500 (50% of total BAC of USD1000). But the project is only 40% complete so far, so the value we earned in the project, EARNED VALUE is USD400 (40% of the BAC). We also have the ACTUAL COST of USD350. So the EV is the value we earned in the project and AC is the cost to earn that value. If AC is lower than the EV that mean we are under budget (at that point, which is the case in this example). CPI (Cost Performance Index =EV/AC) gives that value. Think about if AC is USD450 in lieu of USD350, the same project becomes over budget. Not sure if my explanation is clear or not, experts please chime in with your valuable comments. Regards, R.[/quote]

## Topic History of : Earned Value vs. Actual Costs

Max. showing the last 6 posts - (Last post first)
2 years 2 months ago #20432

Anonymous

This helped out a lot thank you!
2 years 3 months ago #20067

Chetan

the way you clarified that the EV is the value earned in the project and cost we put to earn it is the actual cost... clarified it all.

thanks
2 years 3 months ago #19796

Anonymous

if earned value is greater than planned value cost so in this case , is there a concern ?
2 years 6 months ago #18828

Crystal

Thank you for this thread! I was struggling with the same thought process and take the exam this afternoon. This really cleared up the confusion!

Crystal
3 years 1 week ago #17462

Anonymous

Khurram, I have an exercise which states: a very small project has total BAC (budget at completion) value of USD100,000 and duration estimate of 5 weeks. After 2nd week of completion in the project, the project is 38% complete. According to the schedule, the project should be 48% completed. Draw the S-Curve and show PV, EV, and AC. I do not have cost incurred to date.
Thanks,
Luis
4 years 10 months ago #11215

a

This is great explanation. Much better than the textbook.

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