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Topics: Benefits Realization
Finding cost variance while paid in advance
Network:13



Finding cost variance while the money is paid in advance.

Case 1 : Actual cost (AC) : The actual amount of monies the project has spent to date regardless of the cost of tasks completed or tasks to be completed
Case 2 : Actual cost (AC) : Costs associated with the tasks which are completed or supposed to be completed
Money paid : 100000
Actual cost : 20000
Earned Value : 20000
Case 1 Actual Cost 100000 Money Paid in Advance
Earned Value 20000
Cost Variance -80000
Planned Value 20000
schedule Variance 0
Case 2 Actual Cost 20000 cost incurred to date
Earned Value 20000
Planned Value 20000
Cost Variance 0
Planned Variance 0
Planned Variance 0

Kindly advise which is right
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Network:1506



I would suggest it is neither of those two as actual costs needs to include the actual cost of any work package which has been completed. This might not be the same as the actual amount spent as you might not have received or paid certain invoices but those costs are also part of the AC calculation.

It is not Case 2 as we don't include those which were supposed to be completed when calculating actual costs.

Kiron
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1 reply by Ancin Alex
May 26, 2019 9:56 PM
Ancin Alex
...
Thank you for reply.
I came though this conflict due to the below definition from one of the course :
Actual cost (AC) :The actual amount of monies the project has spent to date.
Network:13



May 26, 2019 2:35 PM
Replying to Kiron Bondale
...
I would suggest it is neither of those two as actual costs needs to include the actual cost of any work package which has been completed. This might not be the same as the actual amount spent as you might not have received or paid certain invoices but those costs are also part of the AC calculation.

It is not Case 2 as we don't include those which were supposed to be completed when calculating actual costs.

Kiron
Thank you for reply.
I came though this conflict due to the below definition from one of the course :
Actual cost (AC) :The actual amount of monies the project has spent to date.
Network:15


All I know:) Sorry
Actual Cost is the total cost incurred for the actual work completed to date. In other words, it is the amount of money you have spent to date.

According to the PMBOK Guide, “Actual Cost (AC) is the total cost actually incurred in accomplishing work performed for an activity or WBS component.”

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