EVM - Basic Elements

EVM consists of the following three basic elements:

• Planned Value
• Actual Cost
• Earned Value

All the three elements are captured on a regular basis as of a reporting date.

Planned Value

Planned value (PV) is also referred to as Budgeted Cost of Work Scheduled (BCWS). PV or BCWS is the total cost of the work scheduled/planned as of a reporting date.

It is calculated as:

```PV or BCWS = Hourly Rate × Total Hours Planned or Scheduled
```

NOTE: Hourly Rate is the rate at which effort will be valued.

Actual Cost

Actual cost (AC) is also referred to as Actual Cost of Work Performed (ACWP). AC or ACWP is the total cost taken to complete the work as of a reporting date.

It is calculated as:

```AC or ACWP = Hourly Rate × Total Hours Spent
```

Earned Value

Earned value (EV) is also referred to as Budgeted Cost of Work Performed (BCWP). EV or BCWP is the total cost of the work completed/performed as of a reporting date.

It is calculated as:

```EV or BCWP = Baselined Cost × % Complete Actual
```

All these three elements can be derived from Work Breakdown Structure by associating the costs to each of the tasks. For a big project, it will be a tedious task to calculate these elements manually. Scheduling software tools like Microsoft Project is used to calculate these three elements.

NOTE: % Completed Planned and % Completed Actual are defined below.

% Completed Planned

The percentage of work which was planned to be completed by the Reporting Date. It is calculated using the following formula:

```% Completed Planned = PV / BAC
```

% Completed Actual

The percentage of work which was actually completed by the Reporting Date. It is calculated using the following formula:

```% Completed Actual = AC / EAC
```