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Feb
09

How to Calculate Earned Value (EV) for the PMP Exam

 

Hopefully you’ve been following our series on PMP calculations.

 

So you will know that one of the areas that people often struggle with when studying for the PMP is the calculations involved with the Cost Management knowledge area.

 

This post is about Earned Value. Otherwise known as EV.

Tip – EV is also known as Budgeted Cost of Work Performed (BCWP).

 

So what is Earned Value? EV is the estimated value of the work completed by your project as of today.

 

So if the project stopped today, the EV would show the value that it has produced.

 

Understanding Earned Value is vital as it’s used in many of the other calculations that you will need to know to master the PMP exam.

 

It’s used to calculate:

  • Cost Variance (CV)
  • Schedule Variance (SV)
  • Cost Performance Index (CPI)
  • Schedule Performance Index (SPI)
  • To Complete Performance Index (TCPI)

 

How is EV calculated? Here’s the formula.

 

Earned Value (EV) = Percent Complete * Budget At Completion

 

Let’s see an example.

 

Rohit is the project manager on a project to build a new cricket stadium in Mumbai, India.After six months of work, the project is 27% complete. The estimated total cost of the project is expected to be $50,000.000.

 

What is the EV?

 

Answer: $13,500,000

 

How did we calculate this?

 

The Percent Complete = 27%.

 

From our previous blog post, we know that the BAC is the estimated total cost of the project. So in this case, BAC = $50,000,000.

 

With these figures we can calculate the EV.

 

EV = 27% * $50,000,000 = $13,500,000

 

That was easy, right?

 

Next in the PMP calculation series is Cost Variance (CV).

 

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Permanent link to this article: http://testeagle.com/blog/2012/02/how-to-calculate-earned-value-ev-for-the-pmp-exam/

7 comments

4 pings

  1. Abdulnaser Malka says:

    I need to join your team .
    it is a great one ..

    Thanks

    1. Nathan says:

      You can join the mailing list for the blog series.

      We’ll email you when we put out another post about a PMP calculation.

      You can sign up here – http://eepurl.com/iOwIn

  2. ahmed khan says:

    Good work, and I’d love to join the team.

    Thanks,
    Ahmed

  3. Kittie Mulloy says:

    Thanks – your calculation on earned value (EV) was terrific.

    1. Nathan says:

      Thanks Katie – I’d glad it was helpful!

  4. Salvador Benitez JR says:

    Thank you for the great example. I do have a question regarding the percentage. Is the % complete based on time, cost, or revenue?

    1. Nathan says:

      It is based on the budget at completion – which is an estimate of what the project will cost at its completion

  1. How to Calculate Cost Variance (CV) for the PMP Exam | TestEagle Blog says:

    [...] « How to Calculate Earned Value (EV) for the PMP Exam [...]

  2. How to Calculate Estimate At Completion (EAC) for the PMP Exam | TestEagle Blog says:

    [...] You can read our previous blog post about how to calculate Actual Cost, Budget At Completion and Earned Value.     [...]

  3. How to Calculate Schedule Variance (SV) for the PMP Exam | TestEagle.com says:

    [...] can read our previous blog posts to find out how to calculate Earned Value and Planned [...]

  4. How to Calculate Schedule Performance Index (SPI) for the PMP Exam | TestEagle.com says:

    [...]   You can read our previous blog posts to find out how to calculate Earned Value and Planned Value.     Tip – Earned Value is also known as Budgeted Cost of Work [...]

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