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Benifits of using Earned value reporting

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Earned value is the measurement of work performed expressed in terms of the budget authorized for the works. To impose improve productivity; you need to know how you are doing so you can confirm that you are improving.

Published in: Leadership & Management
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Benifits of using Earned value reporting

  1. 1. Why Earned Value Reporting What is Earned Value? , Why Earned Value? , (PMBOK- Fifth Edition) – page 538 says that earned value is the measurement of work performed expressed in terms of the budget authorized for the works. To impose improve productivity; you need to know how you are doing so you can confirm that you are improving. Most contractor cost reporting systems report the quantity completed and how much has been spent. These reports are very sufficient for tracking individual cost accounts. The only problem with quantity reporting is that it is difficult to summarize the results from many cost accounts and look at parts of the project or trends over many accounts. To be able to summarize, the recommended approach is to convert the quantity to the "Earned Value" of the quantity completed. Earned Value can be reported in labor hours, labor cost ($) or total cost ($). The Earned Value of a quantity is the "value" assigned to it in the cost estimate.
  2. 2. Earned Value = quantity completed x Estimated Unit rate an alternate calculation of Earned Value is based on the % complete Earned Value = Total Estimated Cost x % complete When all quantities are converted to the same "value" then they can easily be summarized and reported. On the chart above, there are three values plotted Planned (PV or BCWS) = the estimated value based on the cost estimate and the schedule Earned (EV or BCWP) = the quantity completed to date converted to Earned Value Actual (AC or ACWP) = the actual cost spent to date. Comparing Earned and Planned is a measure of schedule progress (ahead/behind schedule) Earned < Planned = behind schedule Comparing Earned and Actual Values is a measure of cost performance (over/under budget) Also, the ratio of Actual and Earned Values is a reliable productivity index Actual/Earned > 1.0 Low productivity (spent more than earned) Actual/Earned = 1.0 Actual productivity = estimate Actual/Earned < 1.0 High productivity (earned more than spent)

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