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Planned Value (PV)

5 minutes 5 Questions

Planned Value (PV) is a fundamental concept in Earned Value Management (EVM) that represents the authorized budget assigned to scheduled work to be accomplished at a given point in time. It reflects the planned amount of work that should have been completed according to the project schedule and cost estimates. PV is calculated before the project execution begins and is used as a baseline to measure project performance and progress. By comparing PV with other EVM metrics like Earned Value (EV) and Actual Cost (AC), project managers can assess whether the project is on track concerning scope, schedule, and budget. PV is critical in project planning as it establishes the time-phased budget for the project tasks and deliverables. It is the cumulative cost of the work scheduled to be performed up to a specific point in the project timeline. In essence, it answers the question: "How much work should have been completed by now, according to the plan?" Calculating PV involves distributing the total project budget over the project's timeline based on the scheduled work. This involves creating a detailed project schedule and allocating costs to each task or work package. The cumulative PV is then plotted over time, forming the Performance Measurement Baseline (PMB), which serves as a reference for measuring actual project performance. Understanding PV is crucial for project managers because it provides the basis for variance analysis. Comparing PV with EV allows for the calculation of Schedule Variance (SV), indicating whether the project is ahead or behind schedule in terms of value earned. Similarly, comparing PV with AC can provide insights into cost performance when used in conjunction with other EVM metrics. In summary, Planned Value is an essential component of EVM that helps project managers plan, monitor, and control project performance. It sets the stage for effective performance measurement by providing a planned baseline against which actual progress and costs can be compared, enabling informed decision-making and proactive management of project scope, schedule, and budget.

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PMI-SP - Earned Value Management (EVM) Example Questions

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Question 1

When calculating Planned Value (PV) in a milestone-based project, what is the recommended approach?

Correct Answer: Sum up the budgeted costs assigned to each milestone planned for completion

In milestone-based projects, Planned Value (PV) calculation should be based on the budgeted costs assigned to planned milestones, which represents the authorized budget for scheduled work. The correct answer focuses on summing up the budgeted costs assigned to each milestone that is planned for completion. This aligns with PMI's recommended approach for milestone-based projects, as it considers both the planned schedule and authorized budget components. The other options are incorrect because: - Using actual costs with SPI mixes different earned value metrics inappropriately - Averaging milestone budgets by dividing by total milestones distorts the true planned value - Adjusting the cumulative cost baseline based on completion percentages confuses PV with Earned Value (EV) metrics

Question 2

In a project with multiple phases, how should the Planned Value (PV) be calculated for overlapping activities?

Correct Answer: Sum the budgeted costs of work scheduled in each phase based on resource allocation

When calculating Planned Value (PV) for overlapping activities, the correct approach is to sum the budgeted costs of work scheduled based on resource allocation. This method is aligned with PMI's standards because: 1. It considers the actual scheduling of work packages 2. It accounts for specific resource assignments during overlapping periods 3. It maintains the integrity of the performance measurement baseline 4. It reflects the true time-phased budget distribution The other options are incorrect because: - Dividing costs equally across time periods does not reflect the actual planned work distribution - Using weighted distribution based on complexity fails to consider actual scheduled work and resource requirements - Using percentage of concurrent activities oversimplifies the calculation and may not reflect actual planned work The correct method ensures accurate performance measurement by considering both the timing of activities and their associated budgeted costs as scheduled in the project baseline.

Question 3

Under what condition would Planned Value (PV) equal Budget at Completion (BAC)?

Correct Answer: At the scheduled completion date of the project

At the scheduled completion date of the project, Planned Value (PV) will equal Budget at Completion (BAC). This is a fundamental principle in Earned Value Management. Planned Value represents the authorized budget assigned to scheduled work, and BAC represents the total budget for the project. At the scheduled end date of the project, all work should be planned to be complete, making PV equal to BAC. The other options are incorrect because: - Being ahead of schedule and under budget would mean PV would be less than BAC - When deliverables are 100% complete, we're measuring actual completion, which relates to Earned Value (EV), not PV - During the final phase with minimal work remaining, we're still measuring actual progress, not planned value

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