3.3.2 Earned Value Terminology
Department of Defense Instruction DODI 7000.2 defined a series of terms that have become synonymous with the earned value method of performance estimation. Those terms become standard terms, are widely used, and are likely to remain in use for the foreseeable future. Some of the most common terms are described below:
Actual Cost of Work Performed (ACWP) (Actual cost) – This is the total of all expenditure on the project, or part of the project, up to the reporting date; it is the sum of what has actually been spent irrespective of what has been planned or achieved (Fleming & Koppelman (2002)).
Budgeted Cost for Work Performed (BCWP) (Earned value) – This is the cost of all the progress achieved on the project, or part of the project, up to the reporting date and expressed in terms of the planned value originally set out in the initial estimate; it is also called the ‘Earned Value’ as it represents what has been earned, not simply what has been spent (Anbari(2003))
Budgeted Cost for Work Scheduled (BCWS) (Planned value) – This is the sum of all the planned costs in the project, or any given part of the project, up to the reporting date (Kim & Ballard (2002)).
Cost Variance (CV) – This is the numerical difference between the earned value and the actual cost at the reporting point (CV=BCWP -ACWP )9
Earned Value Management System (EVMS) criteria.10 It defines the attributes that management control systems must possess for earned value to be used effectively. Currently, there exist 32 EVMS criteria which are systemized into five categories that are attached to major project management activities: (1) organization, (2) planning and budgeting, (3) accounting, (4) analysis, and (5) revisions. Each criterion addresses a major principle necessary for effective management of large, flexibly priced defense projects.
Schedule Variance (SV) – This is the numerical difference between the earned value and the BCWS ) (Branch (2004)) BCWP planned expenditure at the reporting point ( SV
ork breakdown structure (WBS) – PMBOK® Guide, pp.209, defines the WBS as “a deliverable-oriented grouping of project elements that organizes and defines the total work scope of the project. Each descending level represents an increasingly detailed definition of the project work”. Tausworthe (1980) defines the WBS as an enumeration of all work activities in hierarchic refinement of detail, which organizes work to be done into short manageable tasks with quantifiable inputs, outputs, schedules, and assigned responsibilities. Some of the characteristics and benefits of the WBS are reviewed, and ways in which these can be developed and applied in software implementation projects are discussed. Although the material is oriented principally toward new-software production tasks, many of the concepts are applicable to continuing maintenance and operations tasks.