Earned Value:

Earned value management is commonly used to measure project cost and schedule performance. It is important that Project Managers understand how to calculate and graph earned value, planned value, and actual cost.

Scenario:

The Enlightened Lamp Shade Company has to fill a large order of lamp shades in time for the parade of homes. They started 5 months ago and are in their final and 6^thmonth of production.

They have been keeping track of their schedule and cost performance each month. It is now time to calculate and graph the performance for month 5 using the following data:

• Project duration: 6 months
• Lamp shades to be produced: 6000
• Sell price of lamp shades: $50 each
• Number of shades produced in month 5: 900
• Actual cost to produce a lamp shade: $45

The earned value, planned value, and actual cost of the project over the last 4 months of the project are:

Month 1 Month 2 Month 3 Month 4 Month 5 Earned Value 40000 45000 50000 45000 Planned Value 50000 50000 50000 50000 Actual Cost 36000 42000 40000 45000