SKIL90004 Chap.4 Budgets, Resources and Earned Value
Budgets, Resources and Earned Value
Earned value separates the budgeted value of planned work, the budgeted value of completed work and actual cost at one status date. This chapter calculates SV, CV, SPI and CPI with the source formula directions, then turns each number into a schedule or cost interpretation. Resource loading adds feasibility by exposing capacity peaks that a logical network can otherwise hide.
A defensible status reading preserves one cut-off date, progress rule and authorised baseline before comparing the measures. The calculation identifies a performance condition, not its cause, so the manager must connect ratios with schedule logic, resource demand, quality evidence and approved changes.
Recovery options then need a named trade-off, approval route and later check that distinguishes genuine improvement from moved or redefined work.
What this chapter covers
- 01
Budget baselines
- 02
Planned value
- 03
Earned value
- 04
Actual cost
- 05
Schedule variance and index
- 06
Cost variance and index
- 07
Resource loading
- 08
Resource levelling
Worked example · free
Calculate schedule and cost performance
- 1SV = 96,000 - 120,000 = -$24,000.
- 1CV = 96,000 - 108,000 = -$12,000.
- 1SPI = 96,000 / 120,000 = 0.80.
- 1CPI = 96,000 / 108,000 = 0.89 after rounding.
Key terms
- Planned value
- Planned value is the authorised budgeted value of work scheduled by the status date.
- Earned value
- Earned value is the authorised budgeted value of work actually completed by the status date.
- Actual cost
- Actual cost is the expenditure incurred for completed work by the status date.
- Schedule variance
- Schedule variance equals EV minus PV and describes earned progress against plan in value terms.
- Cost variance
- Cost variance equals EV minus AC and describes budgeted accomplishment against actual spend.
- Resource loading
- Resource loading places planned demand against time to reveal peaks and overload.
Budgets, Resources and Earned Value FAQ
What does a negative schedule variance mean?
SV equals EV minus PV. A negative result means the project has earned less budgeted value than planned by the status date, so progress is behind in earned-value terms.
Why is actual cost not progress?
Actual cost records expenditure. Earned value records the budgeted value of completed work. Spending money on equipment or labour does not itself prove that the defined work has been accomplished.
How does resource levelling affect a schedule?
Levelling moves work, changes assignments or revisits sequence to resolve impossible demand. Moving non-critical work within float may preserve the finish, while other moves can change the critical path or budget.
Exam move
Memorise formula direction by meaning rather than symbols. Recalculate every result from printed inputs, label variances with currency and indices as ratios, then add one precise interpretation. Mix performance questions with resource histograms so you learn that a technically valid network can still be infeasible when skills or equipment are overloaded. Create a four-column practice sheet with PV, EV, AC and interpretation.
For each row, calculate SV as EV minus PV and CV as EV minus AC before calculating SPI and CPI. Keep all inputs on the same status date and baseline. Write variances with currency units and indices without units. Round ratios only at the end and keep the unrounded division visible for checking. Use cases that produce all four combinations: behind and over, behind and under, ahead and over, ahead and under.
This prevents a memorised sentence from replacing interpretation. After each result, identify what the measures do not establish. Earned-value status does not by itself prove the cause, forecast the exact calendar finish or guarantee quality. Add a short diagnostic note using schedule, resource, risk or quality evidence.
Review the progress measurement rule as well, because EV is only credible when completed work is recognised consistently against observable outputs. Add a resource histogram to a separate scheduling case. Mark the capacity line, identify the overloaded period and name the tasks creating demand.
Try levelling a non-critical activity within float, then recheck successor dates, remaining margin and demand in the destination period. Compare that option with assigning another qualified person and explain why nominal headcount may not equal usable capability. Connect any approved resource change to the budget baseline.
Under timed conditions, write formula, substitution, result, direction and project implication in that order. A negative SV means less value earned than planned; a negative CV means actual cost exceeds the budgeted value of completed work. Finish with an evidence request and bounded response rather than claiming that the ratios reveal the cause automatically. Finally, perform a consistency audit across two reporting dates.
Confirm that progress rules remain unchanged, approved changes are reconciled and later values use the same units. Explain whether the trend improves because work performance changed or because the baseline changed. This prevents a favourable ratio from being praised when difficult work was simply moved or redefined.
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