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Cost Variance (CV) in Project Management

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How to calculate and interpret CV as it is used in earned value analysis in project management. From Project Management Fundamentals, a new type of textbook designed to be: granular, easy to use with a "flipped" classroom approach, and designed for electronic distribution on iPads, kindle readers, and PCs/Mac. Find out more at http://pmf.education/

Published in: Engineering
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Cost Variance (CV) in Project Management

  1. 1. Earned Value Analysis
  2. 2. Earned Value Analysis • Cost Variance • CV = EV - AC • Negative is bad • Positive is good
  3. 3. Creating a Time-Phased BudgetTask Activity Budget (PV) Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Design prototype board $468 $78 $390 Order Sensors $156 $156 BreadBoard Sensors and connections $546 $234 $312 Outline programming requirements $390 $78 $312 Draft Preliminary Program $1,092 $78 $390 $390 $234 Load program and test $156 $156 Setup "Real" Twitter Account $39 $39 Develop Final Test Criteria $78 $78 Test $780 $78 $390 $312 Put into Case $39 $39 Complete Perm Install $156 $78 $78 Write up Details and Post $234 $234 Week Total $234 $1,326 $1,014 $702 $546 $312 Cumulative $234 $1,560 $2,574 $3,276 $3,822 $4,134 $0.00 $1,250.00 $2,500.00 $3,750.00 $5,000.00 Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Planned Value at this time in the project = $2574 Today
  4. 4. Actual Costs (AC) AC = $3,000
  5. 5. Percent of work complete 50% Earned Value Project Total PV = $4,134 EV= Total PV for Project or Activity X % Complete Today = End of Week Three
  6. 6. Percent of work complete 50% Earned Value EV= 4,134 X 50% = $2,067 Project Total PV = $4,134
  7. 7. $0.00 $1,250.00 $2,500.00 $3,750.00 $5,000.00 0 Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 PV AC EV
  8. 8. $0.00 $1,250.00 $2,500.00 $3,750.00 $5,000.00 0 Week 1 Week 2 Week 3 PV AC EV CV=EV-AC CV=$2,067-$3000 CV= -$933
  9. 9. Indexes to Monitor Progress

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