The Two Faces of Eve

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189 In class, when I introduce PMI®’s five process groups from the PMBOK® Guide, I usually pause when I get to Monitoring and Controlling.  I point out that every M&C process needs at least two inputs: something planned and something actual.  In fact, each M&C process receives an input from a Planning process as well as one from an Executing process – because the M&C process compares actual executed results to the plan.  “And, class, what do we call the difference between planned and actual?”

Though a student once responded, “My checkbook,” the collective response is usually “variance,” though not quite in unison!  When covering Schedule Variance and Cost Variance during the discussion of Earned Value, I usually hit a potentially confusing point.  Since SV=EV-PV and CV=EV-AC, we review that a Variance is the difference between planned and actual.

So, in CV, the “actual entity” is AC (Actual Cost).  So, EV (Earned Value) is the “planned entity.”  However, in SV, since PV (Planned Value) is the “planned entity,” then it remains that EV is now the “actual entity.”  So, sometimes EV is planned and other times it is actual?

I am reminded of the 1957 movie The Three Faces of Eve.  It is the true account of a woman with multiple personalities and how they appeared on the stand in a court case.  But when it comes to Earned Value Management, the true story is more aptly named The Two Faces of EV!  EV has a dual personality – sometimes actual and sometimes planned.  Can you see the two faces in the illustration at the left?

This is better understood when using previous abbreviations for Earned Value Management components:

  • EV (Earned Value)    =>   BCWP (Budgeted Cost of Work Performed)
  • AC (Actual Cost)        =>  ACWP (Actual Cost of Work Performed)
  • PV (Planned Value)    =>  BCWS (Budgeted Cost of Work Scheduled)

When determining Cost Variance, consider CV=BCWP-ACWP, or the Budgeted Cost (EV) minus the Actual Cost (AC) of the Work Performed.  In this case, we can see that the BC side of BCWP (EV) is the planned personality of EV.

When determining Schedule Variance, consider SV=BCWP-BCWS, or the Work Performed (EV) minus the Work Scheduled (PV) in terms of the Budgeted Cost.  Here we see that the WP side of BCWP (EV) is the actual personality of EV.

Hence – The Two Faces of EV!  As you prepare for the PMP® Exam, always remember that EV is the first parameter in the formulas for CV and SV.  And also remember that these variances are always the difference between planned and actual – no matter which personality EV is taking on at the moment!