## What Is the Earned Value of a Project?

An Earned Value analysis evaluates the project progress in relation to the planned goal at a specific point in time.

Many people think that Earned Value (EV) is a very complicated concept because it is often described with formulas rather than words. Now let's take a closer look at the calculation.

## How to Calculate the Earned Value

The easiest way to calculate the EV is to multiply the planned value (PV) by the percentage of project completion - at a specific date. And this is the way, most project management tools do calculate the value achieved.

Here is the calculation formula for completeness:

**EV = PV x %**

*EV: Earned value*

*PV: Planned value (on a specific date)*

*%: Percentage of completion*

## How the Earned Value Chart Works

Now let's focus on the EV diagram for a simple, practical explanation. There are three lines in the graph: Planned Value (PV), Earned Value (EV) and Actual Value (AV).

- Planned value (PV) shows the cumulative value of the planned work over a certain period (cost or effort)
- Earned value (EV) shows the cumulative value of the planned work that has already been completed over time (cost or effort).
- Actual Value (AV) shows the accumulated value of the actual costs incurred or costs at a given time.

If the earned value obtained is equal to or higher than the planned value, you are on schedule (or even better - shown in green); if the score is less than the planned value, you are behind schedule (not so good - shown in red).

Not that complicated and a very good tool to visualize the progress of your project over time, isn’t it?