Project Management

Glossary of Terms for Earned Value

Actual Cost (AC): Total costs actually incurred and recorded in accomplishing work performed during a given time period.

Actual Cost of Work Performed (ACWP): See Actual Cost (AC).

Apportioned Effort (AE): Effort applied to project work that is not readily divisible into discrete efforts for that work, but which is related in direct proportion to measurable discrete work efforts.

Contrast with Discrete Effort.

Budget at Completion (BAC): The sum of all the budgets established for the work to be performed on the project. The total planned value for the project.

Budgeted Cost of Work Performed (BCWP): See Earned Value (EV).

Budgeted Cost of Work Scheduled (BCWS): See Planned Value (PV).

Control Account: A management control point where scope, budget (resource plans), actual cost, and schedule are integrated and compared to earned value for performance measurement. Control accounts are placed at selected management points (specific components at selected levels) of the work breakdown structure.

Cost Performance Index (CPI): A measure of cost efficiency on a project. It is the ratio of earned value (EV) to actual costs (AC). CPI _ EV divided by AC. A value equal to or greater than one indicates a favorable condition and a value less than one indicates an unfavorable condition.

Cost Variance (CV): A measure of cost performance on a project. It is the algebraic difference between earned value (EV) and actual cost (AC). CV _EV minus AC. A positive value indicates a favorable condition and a negative value indicates an unfavorable condition.

Discrete Effort: Work effort that is separate, distinct, and related to the completion of specific end products or services, and that can be directly planned and measured.

Earned Value (EV): The value of work performed expressed in terms of the budget assigned to that work. It is also referred to as the Budgeted Cost of Work Performed (BCWP).

Earned Value Technique (EVT): This is a technique or method for measuring the performance of work, and used to establish the performance measurement baseline (PMB).

Estimate at Completion (EAC):  The expected total cost of completing project work. EAC is equal to the actual cost (AC) plus the estimate to complete (ETC) for all of the remaining work. The EAC may be calculated based on performance to date or estimated by the project team based

on other factors.  

Estimate to Complete (ETC): The estimated cost of completing the remaining work.

Level of Effort (LOE): Support-type activity (e.g., seller or customer liaison, project cost accounting, project management), which does not produce definitive end products.

Management by Exception:  A management technique that emphasizes attention to performance behavior that falls outside of some predetermined range of normal or expected outcomes. This technique is characterized by containment and conservatism.

Organizational Breakdown Structure (OBS): A hierarchically organized depiction of the project organization arranged so as to relate the work to the performing organizational units. (Sometimes OBS is written as Organization Breakdown Structure with the same definition.)

Performance Measurement Baseline (PMB): An approved, integrated scope-schedule-cost plan for the project work against which project execution is compared to measure and manage performance.

Physical Work Progress: The amount of work physically completed on the project or task. This may be different from the amount of effort or money expended on the project or task. Predetermined techniques of claiming physical work progress that were selected during project planning are

used to credit Earned Value when work is partially complete at the time of progress reporting.

Planned Value (PV). The authorized budget assigned to the scheduled work to be accomplished. This is also referred to as the budgeted cost of work scheduled (BCWS).

Responsibility Assignment Matrix (RAM): A structure that relates the project organizational breakdown structure to the work breakdown structure to help ensure that each component of the project’s scope of work is assigned to a responsible person/team.

Schedule Performance Index (SPI):  A measure of schedule efficiency on a project. It is the ratio of earned value (EV) to planned value (PV). The SPI _ EV divided by PV. An SPI equal to or greater than one indicates a favorable condition and a value of less than one indicates an unfavorable condition.

Schedule Variance (SV): This is a measure of schedule performance on a project. It is the algebraic difference between the earned value (EV) and the planned value (PV). SV _ EV minus PV.

S-Curve:  Graphic display of cumulative costs, labor hours, percentage of work, or other quantities, plotted against time. Used to depict Planned Value, Earned Value, and Actual Cost of project work.

Time-Phase Budget: A project budget that identifies how much money or labor is to be expended on each task for each time period (e.g., month) in the project schedule (see Planned Value).

To-Complete Performance Index (TCPI): The calculated projection of cost performance that must be achieved on remaining work to meet a specified goal, such as the BAC or the management EAC. For example: To-Complete Performance Index _ (remaining work) / (budget remaining)

_ (BAC _ EV) / (BAC _ AC). The difference between the total budget assigned to a project (BAC) and the total cost estimate at completion (EAC). Variance at Completion _ Budget: at Completion _ Estimate at Completion. It represents the amount of expected overrun or under-run.

Variance Threshold: A predetermined range of normal outcomes that is determined during the planning process and sets the boundaries within which the team practices management by exception.

 


[i] Guide to the Project Management Body of Knowledge (PMBOK@ Guide) Third Edition @2004 Project Management Institute, Four Campus Boulevard, Newtown Square, PA 19073-3299 USA

September 18, 2008 Posted by | earned value, PMBOK | , , , , , , , | Leave a comment

   

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