Earned value is a powerful tracking and budgeting feature in Project. Despite the slew of intimidating acronyms that defines it (like AC, BCWP, TPI, EV, and the like), it isn’t especially complicated. Earned value helps you answer questions like, “Looking at the amount of work done so far in this project, how much money were we supposed to have spent?” Which then leads to other questions like, "Will we finish on time?" 

A simple example    You’re working on a gardening project for 10 homes in a cul-de-sac, and you expect to get the entire project of 10 homes done in 10 months. Further, you need to complete one home’s garden in each month. Let’s walk through some of the details on this project.

• $10,000 is your total budget for all 10 homes.

• $1,000 is budgeted for each home, which means you plan to spend $1,000 per month on the entire project. This includes money spent on plants, tools, and a gardener.

• You ask your account for a report after 2 months have passed. The accountant tells you $1,500 has been spent on the project so far. You think, “Great, I’m saving money.” 

• Then you realize your mistake. After 2 months’ time, 20 percent of the project should have been done, because 2 months is 20 percent of the 10 months that you had originally planned to spend on the project. But only one and a half gardens are actually done, not 2.

• So, after two months, you should have spent 20 percent X $10,000 (or $2,000) on the project to get it done on time, and two gardens should be complete—not $1,500 for one and half gardens. Now you realize you’re actually behind schedule. Yikes! Time to have a talk with the gardener.

Here’s the tricky thing (and great thing) about earned value. It marries time with money because it multiplies currency by scheduled time (or percent complete, in the jargon of professional project managers).

The lesson?    “Time is money,” as the old saying goes. Now, you can’t boast your prowess with earned value quite yet. You need to read on . . .