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difference between earned value and actual costs. (CV = EV – AC)”

Actual Costs

Actual Cost (AC), also called actual expenditures, is the cost incurred for executing work on a project. This figure tells you what you have spent and, as with Planned Value, can be looked at in terms of cumulative and current. Cumulative AC is the sum of the actual cost for activities performed to date. Current AC is the actual costs of activities performed during a given period. This period could represent days, weeks, months, etc. AC is also called Actual Cost of Work Performed (ACWP).

Earned Value

To report the accomplishments of the project, you must apply Earned Value (EV) to the figures and calculations in the project. EV is the quantification of the “worth” of the work done to date. In other words, EV tells you, in physical terms, what the project has accomplished. As with PV and AC, EV can be presented in a Cumulative and Current fashion. Cumulative EV is the sum of the budget for the activities accomplished to date. Current EV is the sum of the budget for the activities accomplished in a given period. Earned Value is also called Budgeted Cost of Work Performed (BCWP).

Planned Value (PV) is determined by the cost and schedule baseline. Actual Cost (AC) is determined by the actual cost incurred on the project. Earned Value (EV) tells you, in physical terms, what the project accomplished.

Variance Analysis

PMI’s PMBOK® Guide defines a variance as “a quantifiable deviation, departure, or divergence away from a known baseline or expected value” (PMI, 2004, p. 379). As the project planning components become known, the scope and quality, schedule, and cost estimate. The project manager will review with the project’s sponsor or client to seek approval. When approval is granted the project has established a planning baseline or time-phased cost plan. Also, the project manager will be provided with financial information from accounting that will expressed the actual cost incurred on the project s work is performed, then the project manager will seek information from the team that will state the budgeted cost of work performed on the project, or earned value. After those three values are established, a variance analysis can be performed. There are two basic expressions of variance, schedule variance and cost variance.