Planned Value

Definition

Planned value (PV) is a metric used in project management to represent the value of the work that is planned to be completed by a specific point in time, according to the project schedule. This concept is crucial for measuring progress and performance, allowing project managers to assess whether the project is on track, ahead, or behind schedule. PV helps in determining how much of the project's budget should have been spent at a given time based on the planned progress.

5 Must Know Facts For Your Next Test

1. Planned value is calculated by taking the total budget for the project and multiplying it by the percentage of the project that was planned to be completed by a certain date.
2. PV is often used alongside earned value and actual cost to provide a comprehensive view of project performance through earned value management (EVM).
3. Tracking planned value regularly can help identify trends in project performance early, allowing for timely corrective actions if necessary.
4. The concept of planned value applies not just to large projects but can also be used in smaller projects to ensure alignment with budgets and schedules.
5. Understanding planned value is essential for effective communication with stakeholders about project status and financial health.

Review Questions

• How does planned value contribute to effective project management?
  • Planned value plays a critical role in effective project management by providing a baseline against which actual progress can be measured. It allows project managers to compare what was scheduled to be completed with what has actually been achieved at a given point in time. By regularly tracking planned value, managers can quickly identify any discrepancies and address issues before they escalate, ensuring that the project stays on track both in terms of timeline and budget.
• What is the relationship between planned value and earned value in project management?
  • Planned value and earned value are closely related concepts in project management that work together to assess overall project performance. Planned value represents the expected completion of work by a specific date based on the schedule, while earned value reflects the actual work completed at that date. By comparing these two metrics, project managers can calculate key performance indicators like schedule variance and cost variance, which help evaluate whether the project is on schedule or over/under budget.
• Evaluate how planned value impacts stakeholder communication regarding project status.
  • Planned value significantly impacts stakeholder communication by providing a clear framework for reporting on project status. When presenting updates, project managers can show how much work was supposed to be completed compared to what has actually been done, using planned value as a benchmark. This clarity helps stakeholders understand if the project is on track or facing delays, facilitating informed decision-making and fostering trust. If discrepancies arise, discussing them in relation to planned value allows for transparent conversations about potential adjustments needed to keep the project aligned with its goals.

Related terms

Earned Value: Earned value (EV) measures the value of work actually completed at a specific point in time, providing a snapshot of project performance.

Actual Cost: Actual cost (AC) represents the total costs incurred for work performed up to a specific point in time, allowing for comparison against planned and earned value.

Schedule Variance: Schedule variance (SV) is the difference between earned value and planned value, indicating whether a project is ahead or behind its planned schedule.