Can you explain PV, AC and EV? OR Can you explain BCWS, ACWS and BCWP?

 Posted by articlesMaint on 9/30/2009 | Category: Project Management Interview questions | Views: 10890

PV (Planned Value):- PV is also termed as (BCWS) Budgeted cost of work scheduled. It answers “How much do we plan to spend till this date?”. It’s the total budgeted cost for the project.

AC (Actual Cost):- AC is also termed as ACWP (Actual cost of Work Scheduled). It answers “How much have we actually spent?”.

EV (Earned Value):- EV is also termed as BCWP (Budgeted Cost of Work Performed). It answers “How much work has actually been completed?”.

Figure: - PV, AC and EV

Many project managers traditionally use only Actual and Planned values. But it’s very much possible that you will not get proper results from the same. For instance consider the project shown in figure ‘Actual and Planned’. The project duration is 5 weeks. According to the planned value graph in Week1 we will spend 600$, in week3 we will spend 3800 $ and on the completion of project it is 6000$.

But we where getting computers at a discounted cost in Week1 itself so we bought the computer. According to plan we are supposed to spend in Week1 750 $ but in actual we have spent 3000$. By comparing with the actual plan value we have concluded that we over budget by 2250 $ in the first week. But that’s not the actual case; in reality we bought the computers on discounted rate. So the graph is showing something really wrong. This issue is solved by using EV (Earned Value).

Figure: - Actual and Planned

Earned Value measures progress and gives us forecasting, thus giving us an actual measure of the health of the project. For instance see the figure ‘Earned Value’. We have given two views one is the planned value and the other is the earned value. According to the planned value it’s a four week project with 25% (2500 $) work completed on Week1, 50 % (5000$) work completed on Week2 and so on. Now when the project starts executing on Week1 only 20% work is completed which means we have spent 2000$ and on week2 only 30 % work is completed. 2000$ and 3000$ shows the earned value for Week1 and Week2.

Figure: - Earned Value

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