Definition: What is Planned Value?
Definition of Planned Value

What is Planned Value?

The Earned Value Management System (or EMVS) is the process, procedures, tools, and templates an organisation has established to do Earned Value Management (EVM).

EVM is a method where analysis techniques can be used by Project Managers to identify deviations from the project plan and mitigate issues through early intervention.

The three dimensions of the Earned Value Management System (or EMVS) are:

Planned value is a scientific way of establishing an accurate baseline (accuracy depending of course on all supporting data being accurate) that can show your stakeholders what the value will be at any point in time if the project is running on time.

How to calculate planned value

The formula for calculating Planned Value is:

PV = % of project completed (planned) x Budget at completion (BAC - Budget at Completion which is the total budget of the project).

If you are lucky enough to have a linear project where time and cost are the same every day to completion, Planned Value will be very simple. However most projects have different tasks or iterations with different effort, which may cause the effort to fluctuate. In this case the Project Manager will need a way to calculate the % complete of a project at any given time.

In order to determine the % complete, the Project Manager must have the project plan or Work Breakdown Structure (WBS) set up to provide this data. As described in the Work Breakdown Structure article, the overall project is broken down to allow for activities to have a % of the total work assigned. As the Project Manager tracks the progress of work to task completion, the data should ‘roll-up’ to provide an overall completion %.

It is highly recommended that project management software be used for this to be automated or else the Project Manager will have a considerable amount of manual effort to maintain every task and calculate at a whole of project level.