Why is Earned Value Important on Projects?
Earned Value provides us with the value of the work actually accomplished on a project. It is calculated by taking the percentage completed multiplied by the budget at completion. Earned value is used in cost management on projects and answers how much work complete do we to-date. Earned value is the measure of project work performed expressed in terms of budget authorized to perform that project work.
EV = % complete * BAC
First, determine the how complete the project is then refer back to the total budget (Budget at Completion) to determine the value earned. For example, if you are half way completed your project that has a budget of $100,000 you have earned value of $50,000. In other words, we have completed $50,000 of the project work up to to now.
Earned value is essentially the value of all project work completed up to the present point in time.