How are PV, EV, and AC defined in Earned Value Management?

How are PV, EV, and AC defined in Earned Value Management?

• A. PV is the actual cost incurred for the work performed; EV is the authorized budget for the work scheduled; AC is the budget for the work completed.
• B. PV is the authorized budget for the work scheduled; EV is the budget for the work actually completed; AC is the actual cost incurred.
• C. PV is the budget for risks realized; EV is the earned value; AC is the cash on hand.
• D. PV is the planned value for the entire project; EV is the earned value; AC is the cumulative actual cost.

Answer: (B)

In Earned Value Management, you track three values at any reporting date to compare what was planned with what has been earned and what has actually cost you. Planned Value represents the authorized budget for the work scheduled to be completed by that date. Earned Value is the budgeted cost of the work actually completed, i.e., the value earned from the completed work. Actual Cost is the real money spent to complete the work to date. This setup lets you assess performance: schedule status comes from EV versus PV, and cost performance comes from EV versus AC. You can also compute indices like SPI (EV divided by PV) and CPI (EV divided by AC for a fuller picture). Other descriptions mislabel these terms—for example, treating PV as actual cost or as a risk budget—so they don’t align with how EVM measures progress against the plan.

In Earned Value Management, you track three values at any reporting date to compare what was planned with what has been earned and what has actually cost you. Planned Value represents the authorized budget for the work scheduled to be completed by that date. Earned Value is the budgeted cost of the work actually completed, i.e., the value earned from the completed work. Actual Cost is the real money spent to complete the work to date. This setup lets you assess performance: schedule status comes from EV versus PV, and cost performance comes from EV versus AC. You can also compute indices like SPI (EV divided by PV) and CPI (EV divided by AC for a fuller picture). Other descriptions mislabel these terms—for example, treating PV as actual cost or as a risk budget—so they don’t align with how EVM measures progress against the plan.