What is the difference between earned value and actual cost?

Earned value is the budgeted worth of the work you have completed; actual cost is the money you spent to complete it. They answer two different questions. Earned value asks, in budget terms, how much of the job is done. Actual cost asks how much cash that took. On our example project, five point four million of work is complete (earned value) but it cost six point three million to get there (actual cost). The nine-hundred-thousand gap between them is the cost variance, and it is only visible because the two numbers are kept separate rather than collapsed into one spend figure.

What do BCWS, BCWP, and ACWP mean?

They are the older government-contracting names for the same three numbers. BCWS, the budgeted cost of work scheduled, is planned value. BCWP, the budgeted cost of work performed, is earned value. ACWP, the actual cost of work performed, is actual cost. The newer PV, EV, and AC labels mean exactly the same things and are now more common in construction, but you will still see BCWS, BCWP, and ACWP in federal specifications, older project-controls software, and some owner reporting templates, so it is worth being fluent in both sets.

How do you calculate earned value?

Earned value is percent complete multiplied by the budget at completion for the work in question. If a work package is budgeted at one million dollars and is forty percent complete, its earned value is four hundred thousand dollars. The whole method stands or falls on that percent-complete figure, which is why disciplined teams fix an objective rule for it before the work starts, such as units installed over total units, or a weighted-milestone schedule, rather than collecting a subjective estimate at the end of each month.

Construction Glossary · Earned Value

Planned, Earned &Actual Cost

Three numbers, read at the same moment, are the whole foundation of earned value. Confuse any two of them and every index built on top goes wrong.

Definition

Planned value (PV), earned value (EV), and actual cost (AC) are the three measurements earned value management is built on. Planned value is the budgeted cost of work scheduled by now, earned value is the budgeted worth of work actually done, and actual cost is what that work has cost.

Read at one moment

All three numbers are taken at the same cut-off, called the data date. On our $12.0M project at month 8, the plan called for half the budget to be earned, so planned value is $6.0M. Only 45% of the work is actually finished, so earned value is $5.4M. And the accounting system shows $6.3M spent, which is actual cost.

Two gaps fall straight out of the chart. Planned value sitting above earned value is the schedule gap, the schedule variance of −$0.6M. Actual cost rising above earned value is the cost gap, the cost variance of −$0.9M. Both are negative here, which is the shape of a job that is behind and over.

The same three numbers, two naming systems

Older federal and software documentation uses the BCWS, BCWP, and ACWP labels. They map exactly onto the modern PV, EV, and AC. Each simply answers one plain question.

Modern name	Legacy name	The question it answers
Planned Value (PV)	BCWS — Budgeted Cost of Work Scheduled	How much work should be done by now?
Earned Value (EV)	BCWP — Budgeted Cost of Work Performed	How much work is actually done?
Actual Cost (AC)	ACWP — Actual Cost of Work Performed	What did that work cost?

Earned value is the number to get right

Planned value comes straight from the baseline. Actual cost comes straight from accounting. Only earned value depends on judgment, because it is percent complete multiplied by the work's budget.

EV = percent complete × budget at completion
45% × $12.0M = $5.4M

Inflate percent complete and earned value inflates with it, which flatters both the cost and schedule indices and hides trouble. The discipline is to fix an objective percent-complete rule per work type before the work begins. See the percentage-of-completion guide for the methods.

How POD sources the three numbers

POD takes planned value from the frozen budget baseline, earned value from the progress and line-level confirmations in your pay applications, and actual cost from the costs booked against the project. Because all three are held against one versioned baseline, the variances and indices are computed, not transcribed, and they recompute every period from the same source.

The full EVM guide

Frequently asked questions

From three numbers to a verdict

Once PV, EV, and AC are honest, the cost and schedule indices follow in two divisions. POD keeps all three tied to one baseline so the verdict is computed, not estimated.

What Is EVM? Back to the Glossary