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Earned Value

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Usman BakundiMember for 23 years 3 months
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Could someone help me out with the radical difference between "Earned value and "Actual work performed"? The divide appears very thin to me.

It became confusing to me when I read an article titled "Inegrated Project Management with performance measurement"( Apparently from Steve Wake APM specific Interest group on EV).Three performance curves were presented suggesting that actual cost of work performed (ACWP) is much, much higher than the earned value.

How is that possible and if possible which one practically represents actual performance ?

Bakundi
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3 replies

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  1. 0
    Steven Oliver ·
    #1
    Earned Value is simply the proportion of the budget allocated to a task that can be claimed due to the progress made on the task i.e. % Complete * Budget.

    Actual cost of work performed (ACWP) represents the costs associated with carrying out the work.

    As such the two figures are independent of each other and aid as a means of comparing the actual cost to the value obtained from the work undertaken. i.e if your actual costs to undertake a task amount to £ 1, 000, but the value obtained from your progress is only £ 800 (the amount your client is going to pay you), who is liable for the difference ?. A very simple example, you can derive all manner of statistics, but I prefer to focus on the core issue.

    For an excellent paper on the subject by Paul Harris, visit www.eh.com.au
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  2. 0
    Usman Bakundi ·
    #2
    Dear Steve,

    Thanks for your response and indeed your reference and clarity.

    You have also raised the question that who pays the difference between Earned value and the ACWP. Dont leave that question hanging, it requires a "soft landing"

    Thank again.

    Bakundi
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  3. 0
    Steven Oliver ·
    #3
    The best definition I ever heard was that effectively thats your bonus/pay rise blown.
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