Earned Value Terminology
Earned value has its own vocabulary. One way to understand and remember its terms is to think of them in relation to the questions that often arise in project management and review. Earned value measurements are designed to answer such questions.
The Earned Value (EV) is the amount of work actually accomplished, stated in terms of the budget assigned to accomplish that specific scope of work. EV answers the questions, How much has been accomplished against plan? or How much work has been performed and verified? PMI's old term for EV was Budgeted Cost of Work Performed (BCWP).
The Planned Value (PV) refers to the costs that should have been incurred for the work that should have been completed to date. The PV answers the question, What is the planned cost? The PV must be established before the EV can be meaningful. (To use earned value correctly, the PV, and therefore the dollar amounts, must be allocated across the project's WBS, with dollar amounts associated with WBS elements.) PMI's old term for PV was Budgeted Cost of Work Scheduled (BCWS).
The Actual Cost (AC) is the total cost incurred for the work accomplished during a given period of time. AC answers the question, How much did it really cost to perform the work? The AC can be higher than the EV if there are more resources applied to a task than planned, or if a task takes longer than planned. PMI's old term for AC was Actual Cost of Work Performed (ACWP).
Senior management personnel are concerned with facts and how they are interpreted. It is important to make sure the work is actually completed. Project managers often make the mistake of saying, "I'm 90% complete." By focusing on PV, EV, and AC, you can avoid such pitfalls.