Scheduled Cost?

In the beginning … the promoters of earned value management used FLAs (Four Letter Acronyms) for the 3 basic measures:

• BCWS = Budgeted Cost of Work Scheduled
• ACWP = Actual Cost of Work Performed
• BCWP = Budgeted Cost of Work Performed

But four letters seemed excessive in the world of TLAs (three letter acronyms), especially when two of them (CW) were the same in all cases. So ’round about 2000, some promoters of earned value management began to advocate for two letters:

• PV = Planned Value (instead of BCWS)
• AC = Actual Cost (instead of ACWP)
• EV = Earned Value (instead of BCWP)

As you can see, it seemed that the promoters wanted to emphasis “value” because … value is GOOD!

Unfortunately, these two measures represent “value” mostly from the perspective of the project team, and most especially if the project team is composed of contractors:

• Planned value = the contractor’s plans for getting value by getting paid
• Earned value = the contractor’s actual value from earned payments

But if you are the customer/ client/ user/ owner/ sponsor of the project, your value usually comes after the project is over. There is no business value to you in either planned value or earned value.

But no one really wants to go back to the bad old days of FLAs, so what should we do? In an IJPM article in 2005, Denis F. Cioffi suggested the following:

• SC = Scheduled Cost (instead of BCWS)
• AC = Actual Cost (instead of ACWP)
• EC = Earned Cost (instead of BCWP)

I like it. Makes sense. More accurate. More descriptive. Everyone should start using this nomenclature. Now.

Thank you. That is all.