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Old 12-07-2010, 07:58 AM
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Earned Value

Hi

Please can someone share the easy to understand document or other material on Earned Value.

Thanks

Atif
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Old 12-07-2010, 02:14 PM
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The Business Dictionary defines it as:

Quote :
Alternative term for "budgeted cost of work performed"
Continuing on, "budgeted cost of work performed (BCWP)" is further defined as:

Quote :
"In construction industry, total of the budgeted costs of the activities (that make up a job or project) completed to-date, or on any given date. Also called "achieved cost" or "earned value." See also "actual cost of work performed."
From http://www.businessdictionary.com
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Old 12-10-2010, 03:08 AM
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Earned Value

Hi NW Craig

Many thanks for your reply. Can you please also help me with some examples as how to calculate the Earned Value of a specific project.

Thanks once again.
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Old 12-10-2010, 03:48 AM
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It's not too hard. Before work is performed, you'll estimate the cost for an activity. To keep things easy, let's assume that some work will take 100 hours to complete and the estimated cost for the task (called the "Planned Value") is $10,000.

After 50 hours of work (i.e., 50% of the work) have been performed, then the Earned Value would be 50% of the budgeted cost or $5,000. Just take the percentage of completion and multiply that by the Planned Value.

At the end of the work, the Earned Value will, of course, be 100% of the Planned Value.

The next thing to consider would be the Actual Value which is what the work actually cost to perform.

The Earned Value and Actual Value are both used to create the Cost Variance. Which, obviously, is the difference between what you thought the work would cost and what it actually did.

The formula to calculate the Cost Variance might seem a bit counter-intuitive at first, but you subtract the Actual Value from the Earned Value. This means that if you went over your budget, you'll end up with a negative number while coming in under budget results in a positive value.

Hope that helps!
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