Earned value, also referred to as budgeted cost of work performed, represents the total cost of work completed at a certain date. Along with the actual cost of work performed, earned value helps project managers evaluate project performance in relation to costs and scheduling.
How to Calculate Earned Value
The formula to calculate earned value is the project budget multiplied by the percentage of work completed up until the date in question. For example, consider a project with a budget of $30,000 and 200 work hours. After the employees have completed 100 work hours, the earned value is $30,000 multiplied by 0.5, or $15,000. Managers can then compare earned value to actual costs to identify cost variances and re-evaluate budget needs.
Based in San Diego, Calif., Madison Garcia is a writer specializing in business topics. Garcia received her Master of Science in accountancy from San Diego State University.