Earned Value (EV)

Earned Value (EV) is the measure of work performed in a project, expressed in terms of the budget authorized for that work. It is a key component of Earned Value Management (EVM) and is used to track project performance and progress.

Key Aspects of Earned Value

• Represents Completed Work Value – Expresses progress in monetary terms.
• Used in Performance Measurement – Compared against Planned Value (PV) and Actual Cost (AC).
• Helps Forecast Future Performance – Forms the basis for cost and schedule variance analysis.
• Supports Decision-Making – Provides insight into whether the project is ahead, on track, or behind.

Earned Value Formula

EV = \text{% of Work Completed} \times \text{Budget at Completion (BAC)}

Where:

• EV = Earned Value
• BAC = Total authorized budget for the project
• % of Work Completed = Verified project progress in percentage

Example Calculation

A project has a Budget at Completion (BAC) of $500,000, and the team has completed 40% of the total work.

$$EV=40\%\times 500,000=200,000$$

Thus, the Earned Value (EV) is $200,000, meaning that work worth $200,000 of the total budgeted cost has been completed.

Mermaid Diagram: Earned Value Analysis

graph LR;
    A["Project Start"] -->|Planned Value (PV)| B["Work Scheduled"]
    B -->|Earned Value (EV)| C["Work Completed"]
    C -->|Actual Cost (AC)| D["Cost Incurred"]
    D --> E["Project Performance Assessment"]

Example Scenarios

Software Development

A development team working on a $1 million project has completed 50% of the work.
Earned Value = $500,000, indicating half the authorized budgeted work is done.

Construction Project

A building project with a BAC of $2 million has completed 30% of planned tasks.
Earned Value = $600,000, helping managers assess progress against planned cost.

Marketing Campaign

A marketing team with a $100,000 budget has executed 25% of planned strategies.
Earned Value = $25,000, used to track campaign efficiency.

Why Earned Value Matters

• Provides Objective Project Performance Metrics – Eliminates reliance on subjective status updates.
• Identifies Cost & Schedule Variances – Helps track project health.
• Improves Forecasting Accuracy – Supports Estimate at Completion (EAC) analysis.
• Supports Proactive Decision-Making – Enables early intervention for cost overruns.

See also: [[Actual Cost (AC), Budget at Completion (BAC), Estimate at Completion (EAC), Estimate to Complete (ETC), Planned Value (PV).