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To measure cost performance, planned value (BCWS) and earned value (BCWP) must be in the same currency units as actual costs. In large implementations, the planned value curve is commonly called a Performance Measurement Baseline (PMB) and may be arranged in control accounts, summary-level planning packages, planning packages and work packages.
BCWP is a term in Earned value management approach to Project management. BCWP is contrasted to Budgeted Cost of Work Scheduled (BCWS) also called Planned Value (PV). BCWS is the sum of the budget items for all work packages, planning packages, and overhead which was scheduled for the period, rather than the cost of the work actually performed.
Cost is the planned cost estimate-to-complete (Cost ETC) of the project. This can usually be derived from earned value management planning by using the complement of the planned value (PV) (i.e., budgeted cost of work performed, or BCWS), which estimates what the sunk cost will be at key reporting points during the project. By subtracting the ...
In the absence of funding constraints, the best value for money projects are those with the highest net present value (NPV). Where there is a budget constraint, the ratio of NPV to the expenditure falling within the constraint should be used. In practice, the ratio of present value (PV) of future net benefits to expenditure is expressed as a BCR.
Any value lower than one would indicate that the project's present value is less than the initial investment. As the value of the profitability index increases, so does the financial attractiveness of the proposed project. The PI is similar to the Return on Investment (ROI), except that the net profit is discounted.
Instead, the word "value" in earned value refers simply to a "numerical value" (a quantity). In EVM, we use the word "value" in the sense that it helps us compute a percent complete. Planned Value (PV) and hence Earned Value (EV) are a numerical portion of the total scope of the project -- which is a concrete measure, not an abstract notion.
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The second part of the definition concerns the knowledge that the value of a cash flow is time-related, given the term "present value". Future cash flows must be corrected or discounted to today. Managing by value necessitates maximizing future cash flows. Managing by value obliges companies to search for new free cash flows. It's no longer ...