Earned Value (EV) is a project management term that measures the value of the work that has been done up to a certain point in time. The earned value (EV) is a key part of the earned value management (EVM) method, which is a way to measure how a project is going in terms of cost and time.
To figure out EV, use this formula:
EV = Percentage Done x Budgeted Cost
where % Complete is the amount of work that has been done up to a certain point in time and Total Budgeted Cost is the total cost that was planned for the project.
For example, let’s say a job is supposed to cost a total of $100,000 and is only 30% done after 5 weeks. The project’s EV would be:
EV = 30% x $100,000 = $30,000
This would mean that the work that had been done up until that point was worth $30,000.
EV can be used by the project manager as a standard to measure how the project is going and how well it is doing. If the real cost of the project is more than the EV, the project is over budget. If the actual cost is less than the EV, the project is under budget. The EV can also be used to figure out other project management measures, such as the Cost Performance Index (CPI) and the Schedule Performance Index (SPI), which measure how well costs and schedules are managed.
Usage
It is used in project schedule and cost management
