Important terms to understand for the Earned Value Management chapter

Actual cost (AC): it is the actual cost incurred for the completed work of the project up to the time of calculation. In another word, it is the money that has been spent for the completed work of the project as of today.

It can be written as ACWP which means the actual cost of the work performed. you won't see this term used by the PMP Exam.

Example of the Actual cost: Tim is project manager for new school construction project. The project has a total budget of $4,000,000. The Planned Value is $1,750,000. As of today, forty percent of the budget has been spent and thirty percent of the is complete. What is the actual cost (AC)?

Answer: Keep it simple. The Actual Cost is the money spent as of today. The project has a budget of $4,000,000, 40 percent of it has been spent. the actual cost is 40% x $4,000,000.

AC = $1,600,000.

Planned Value (PV): it is simply the estimated value of the work planned to be done as of today. e.g. if your project is to install 100 desktop computer for software company in 4 days. You supposed to get 25 PCs installed per day. By the end of the 3rd day, the planned value for the PCs installed is 75 PC.

Example :George is the project manager of Highway construction project. It is scheduled to reach 50% completion milestone today. The total length of the highway is 50 miles and it is estimated to complete each 10 miles with $11,000,000. During a status meetings sam announced that he has already completed 30 miles long of the railroad for $40,000,000. what is the planned value (PV)?

Answer: Planned value is the estimated value of work planned to be accomplished. As of today, the project is planned to be 50 percent complete. PV = 50% x 50 miles of highway x ($11,000,000 per 10 miles) = $27,500,000.

Budget At Completion: it is simply the value you estimated for how much the project costs. it is part of the original cost plan where you estimate how much the whole project will cost. BAC is may be less, more, or equal to the Estimate at completion (EAC) since the last will be the final cost of the project when it is finished.

Example: Tech startup Company assigned you to manage a software development project. The software is expected to cost $300,000 for the developers, $50,000 for the hosting servers, and $5,000 for testing. what is the budget at complete for that proejct?

Answer: BAC is the estimated value of what the project will cost.

BAC = $300,000 + $50,000 + $5,000, or $355,000.

Earned Value (EV): it is the estimated value of the work actually completed by the project as of today. e.g. if you have a project of constructing a 30 miles of railroad in 30 days with a rate of 1 mile per day and you will be compensated $500,000 for each mile. by the end of day 20, you only finished 16 miles of the railroad. The Earned value for your project is (the value of the work completed) 16 days multiplied by $500,000 for each day, which equal to $8,000,000.

Actual cost (AC): it is the actual cost incurred for the completed work of the project up to the time of calculation. In another word, it is the money that has been spent for the completed work of the project as of today.

It can be written as ACWP which means the actual cost of the work performed. you won't see this term used by the PMP Exam.

Example of the Actual cost: Tim is project manager for new school construction project. The project has a total budget of $4,000,000. The Planned Value is $1,750,000. As of today, forty percent of the budget has been spent and thirty percent of the is complete. What is the actual cost (AC)?

Answer: Keep it simple. The Actual Cost is the money spent as of today. The project has a budget of $4,000,000, 40 percent of it has been spent. the actual cost is 40% x $4,000,000.

AC = $1,600,000.

Planned Value (PV): it is simply the estimated value of the work planned to be done as of today. e.g. if your project is to install 100 desktop computer for software company in 4 days. You supposed to get 25 PCs installed per day. By the end of the 3rd day, the planned value for the PCs installed is 75 PC.

Example :George is the project manager of Highway construction project. It is scheduled to reach 50% completion milestone today. The total length of the highway is 50 miles and it is estimated to complete each 10 miles with $11,000,000. During a status meetings sam announced that he has already completed 30 miles long of the railroad for $40,000,000. what is the planned value (PV)?

Answer: Planned value is the estimated value of work planned to be accomplished. As of today, the project is planned to be 50 percent complete. PV = 50% x 50 miles of highway x ($11,000,000 per 10 miles) = $27,500,000.

Budget At Completion: it is simply the value you estimated for how much the project costs. it is part of the original cost plan where you estimate how much the whole project will cost. BAC is may be less, more, or equal to the Estimate at completion (EAC) since the last will be the final cost of the project when it is finished.

Example: Tech startup Company assigned you to manage a software development project. The software is expected to cost $300,000 for the developers, $50,000 for the hosting servers, and $5,000 for testing. what is the budget at complete for that proejct?

Answer: BAC is the estimated value of what the project will cost.

BAC = $300,000 + $50,000 + $5,000, or $355,000.

Earned Value (EV): it is the estimated value of the work actually completed by the project as of today. e.g. if you have a project of constructing a 30 miles of railroad in 30 days with a rate of 1 mile per day and you will be compensated $500,000 for each mile. by the end of day 20, you only finished 16 miles of the railroad. The Earned value for your project is (the value of the work completed) 16 days multiplied by $500,000 for each day, which equal to $8,000,000.