Understanding Earned Value Fields

In the first article of this series, I discussed the importance of Earned Value Management, or EVM, which evaluates the performance of your project in terms of its schedule, cost, and work. Earned value lets you effectively compare baseline and actual values. In this article, we will discuss earned value fields in Microsoft Project and the meaning of each field.

Earned Value Fields in MS Project

In Microsoft Project, there are eight main fields (three basic and five advanced) for earned value analysis. These fields are the major keys for project managers to understand the project status from cost, time, and work perspectives. We will discuss each these fields below.

Basic Earned Value Fields

ACWP (Actual Cost of Work Performed): The actual cost of work performed fields show costs incurred for work already done on a task. Up to the project status date or today’s date, when a task is first created, the ACWP field contains 0.00. As progress (percentage of completion or actual work) is reported on the task, Microsoft Office Project calculates the actual cost of work performed (ACWP). This is the cost of actual work plus any fixed costs for the task to date.

The best use for this field is to compare actual to budgeted assignment costs. Usually, we use Actual Cost (AC) as a common term in progress meetings to simplify the ACWP.

BCWS (Budgeted Cost of work Scheduled): These fields contain the cumulative time-phased baseline costs up to the status date or today’s date. The time-phased versions of these fields show values distributed over time. To calculate BCWS for a task, Microsoft Office Project adds the time-phased baseline costs of the task up to the status date.

The best use for this field is to review how much of the budget should have been spent on a task to date, according to the task’s baseline cost. Usually, we use Planned Value (PV) as a common term in progress meetings to simplify BCWS.

BCWP (Budgeted Cost of Work Performed): These fields contain the cumulative value of the tasks, resources, or assignments’ percent complete multiplied by the time-phased baseline costs. BCWP is calculated up to the status date or today’s date. As soon as a baseline is saved and progress is reported for the task (as actual work, actual duration, or percentage of work complete), Microsoft Office Project calculates BCWP.

The best use for this field is to review how much of the budget should have been spent on a task up to the status date or today’s date, in view of the amount of work done so far and the time-phased baseline cost for the task. Usually, we use Earned Value (EV) as a common term in progress meetings to simplify the BCWP.

These are three basic fields/concepts for earned value, and they are the input for the advanced earned value concepts that we use for earned value analysis and will cover next.

Advanced Earned Value Fields

SV (Schedule Variance):This field shows the difference in cost terms between the current progress and the baseline plan of a task, all assigned tasks of a resource, or for an assignment up to the status date or today’s date.

SV is the difference between the budgeted cost of work performed (BCWP) and the budgeted cost of work scheduled (BCWS). Microsoft Office Project calculates the SV as follows:

SV = BCWP – BCWS

The best use for this field is to determine whether the task is behind or ahead of its baseline schedule in cost terms.

CV (Cost Variance): This field shows the difference between how much it should have cost and how much it has actually cost to achieve the current level of completion up to the status date or today’s date.

CV is the difference between the task’s BCWP (budgeted cost of work performed) and ACWP (actual cost of work performed). Microsoft Office Project calculates the CV for a task as follows:

CV = BCWP – ACWP

The best use for this field is to determine whether the task is under, over, or exactly within your budget for a task.

BAC (Budget at Completion): This field shows the total planned cost for a task, a resource for all assigned tasks, or for work to be performed by a resource on a task. Budget at completion (BAC) is also referred to as Baseline Cost.

There are many ways to calculate BAC, such as expert judgment, parametric estimating, or analogous estimating, but in general MS Project calculates the BAC using the following formula:

BAC= (Work * Standard Rate) + (Overtime Work * Overtime Rate) + Resource Per Use Cost + Task Fixed Cost

CPI (Cost Performance Index): This field shows the ratio of budgeted (or baseline) costs of work performed to actual costs of work performed up to the project status date or today’s date. CPI is the ratio of BCWP (budgeted cost of work performed) to ACWP (actual cost of work performed):

CPI = BCWP / ACWP

The best use for CPI is to see the ratio of budgeted to actual costs. This value indicates whether you are over or under budget as of the status date.

CPI >1 = under budget, CPI<1 = Over Budget

SPI (Schedule Performance Index): This field shows the ratio of the budgeted cost of work performed to the budgeted cost of work scheduled (BCWP/BCWS). SPI is often used to estimate the project completion date. The time-phased version of this field shows values distributed over time.

SPI = BCWP / BCWS

SPI >1 = ahead of schedule

SPI<1 = behind schedule

These are the eight major keys for earned value, I know it’s a lot of information, but, as we said before, to track your project progress and forecast the future, you need to use the earned value analysis.

In my next article, I’ll present a case study which will illustrate the implementation of these concepts in a real-life scenario. Comments or questions are welcome below.