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Topics: Earned Value Management
AC vs EV calculation
Hello,

I just started a PM job (and PM in general) in the new company and as I was going over their reporting data, I realized that the way they get their AC and EV value doesn't make sense. Both values are linked and therefore the CPI value is useless.

What is the best practice to calculate the AC and EV values? I have access to the labor spent, the other direct cost and internal margins.

Thanks
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Nathalie -

EV should always trace back to the approved budgeted costs of work which has been completed. If you are working on a fixed price contract, then it is entirely possible that AC and EV will be the same (from the customer's perspective).

Kiron
The key question here is: do you need that? Just in case you need it, the PMI´s standards on the matter are really good to explain that and there are a lot of great explanations in the internet. In fact, there is not to much to add because the calculations are easy, the technique is easy and as other things the key success factor is the data you take and the method to work with it.
Kiron and Sergio both made good points.
Nathalie

They shouldn’t be linked. It is budgeted amount (EV) vs Actual Cost (AC) for the work actually completed.

EV you get it from your approved budget while AC you get it manually from your actual cost to the project incurred to complete this work.

RK
Thank you for your help!

I guess where I'm stuck is on quantifying the %complete, but I'll figure it out.

And for the actual cost, do you add the margins to the internal labor costs?
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1 reply by Rami Kaibni
Nov 13, 2020 8:52 AM
Rami Kaibni
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Yes, you add both. There are direct and indirect costs to each project. It’s not a margin but it’s defined rates vs. amount spent on the activities for each.
Nov 13, 2020 8:48 AM
Replying to Nathalie Roge
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Thank you for your help!

I guess where I'm stuck is on quantifying the %complete, but I'll figure it out.

And for the actual cost, do you add the margins to the internal labor costs?
Yes, you add both. There are direct and indirect costs to each project. It’s not a margin but it’s defined rates vs. amount spent on the activities for each.

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