EARNED VALUE ALERT!

Are You Doing It Right, Wrong, or At All?

COMMENTARY

By Dr. Kenneth Smith, PMP

Honolulu, Hawaii
& Manila, The Philippines

For the past few years I have only been preaching — rather than practicing – the project management tools & techniques I learned in the U.S. Defense Department, and subsequently honed throughout my USAID Foreign Service and international consulting careers. But following a recent discussion on Earned Value Methodology, I decided to go back to basics and revisit EVM the modern way — by ‘googling.’  In doing so, I was literally shocked by what I encountered.

Searching on-line for ‘Earned Value,’ the first seven sites from my query revealed the following:

1. https://sitemate.com/resources/articles/finance/earned-value-formula/

The earned value formula is a relatively straight forward one. You take the actual percentage of work which has been completed on the project, phase of work or specific task, and you multiply that number by the budget at completion.

% of work completed x BAC (budget at completion)

The output of this formula is our earned value or budgeted cost of work performed (BCWP).

 2. www.projectengineer.net/the-earned-value-formulas 

Also known as Budgeted Cost of Work Performed (BCWP), Earned Value is the amount of the task that is actually completed.  It is also calculated from the project budget.

EV = Percent Complete (actual) x Task Budget

For example, if the actual percent complete is 25% and the task budget is $10,000,

EV = 25% x $10,000 = $2,500

3. www.planacademy.com/7-earned-value-management…

Earned Value is calculated as the Budget At Completion multiplied by the Percent of Work Completed.         EV = BAC x % Complete

4. www.indeed.com/…/earned-value-formula 

Earned value = (% completed) x (project budget)

Earned value of a project is a metric for tracking and evaluating a project’s value and progress.

5. tensix.com/the-8-earned-value-management…

Formula: EV = BAC x % complete Output: You’ll get a monetary amount as the earned value, in the currency of your project budget.

6. study.com/academy/lesson/how-to-calculate-earned …

The formula for earned value (EV) is the percent % of completed work times the Planned Value (PV).

7. www.aresprism.com/blog/how-to-calculate-earned…

Earned Value (EV): % complete x BAC. That is percent complete from progress measurement multiplied by the budget at completion.

“Why was I shocked?” You ask. Because 1) the definitions were imprecise, and 2) the formula differed from what I learned years ago — and teach!

More…

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How to cite this article: Smith, K. F. (2023).  EARNED VALUE ALERT! Are You Doing It Right, Wrong, or At All? commentary, PM World Journal, Vol. XII, Issue III, March. Available online at https://pmworldjournal.com/wp-content/uploads/2023/03/pmwj127-Mar2023-Smith-earned-value-alert-commentary.pdf

About the Author

Dr. Kenneth Smith

Honolulu, Hawaii
& Manila, The Philippines

 Initially a US Civil Service Management Intern, then a management analyst & systems specialist with the US Defense Department, Ken subsequently had a career as a senior foreign service officer — management & evaluation specialist, project manager, and in-house facilitator/trainer — with the US Agency for International Development (USAID).  Ken assisted host country governments in many countries to plan, monitor and evaluate projects in various technical sectors; working ‘hands-on’ with their officers as well as other USAID personnel, contractors and NGOs.  Intermittently, he was also a team leader &/or team member to conduct project, program & and country-level portfolio analyses and evaluations.

Concurrently, Ken had an active dual career as Air Force ready-reservist in Asia (Japan, Korea, Vietnam, Thailand, Indonesia, Philippines) as well as the Washington D.C. area; was Chairman of a Congressional Services Academy Advisory Board (SAAB); and had additional duties as an Air Force Academy Liaison Officer.  He retired as a ‘bird’ colonel.

After retirement from USAID, Ken was a project management consultant for ADB, the World Bank, UNDP and USAID.

He earned his DPA (Doctor of Public Administration) from the George Mason University (GMU) in Virginia, his MS from Massachusetts Institute of Technology (MIT Systems Analysis Fellow, Center for Advanced Engineering Study), and BA & MA degrees in Government & International Relations from the University of Connecticut (UCONN).  A long-time member of the Project Management Institute (PMI) and IPMA-USA, Ken is a Certified Project Management Professional (PMP®) and a member of the PMI®-Honolulu and Philippines Chapters.

Ken’s book — Project Management PRAXIS (available from Amazon) — includes many innovative project management tools & techniques; and describes a “Toolkit” of related templates available directly from him at kenfsmith@aol.com on proof of purchase of PRAXIS.

To view other works by Ken Smith, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/dr-kenneth-smith/