Cost Planned Work: The Project Cost Baseline in EVM

Cost Planned Work: The Project Cost Baseline in EVM

PMBOK v8 Definition

Cost Planned Work is defined as "the sum of all budgets established for the work to be performed." It represents "the value of total planned work: the project cost baseline." In Earned Value Management (EVM), this is formally known as Planned Value (PV). PV is "the authorized budget assigned to scheduled work" for an activity or work breakdown structure (WBS) component, excluding management reserve. The total PV for the entire project is also called Budget at Completion (BAC).

Why It Matters for the Exam

Cost Planned Work (PV) appears in nearly every EVM question on the PMI exam. It is the foundation for calculating Schedule Variance (SV = EV − PV) and is frequently tested in questions about cost baselines, performance measurement baselines (PMB), and project health assessments. Expect 2-4 questions directly referencing PV in the Cost Management and Schedule Management sections.

Key Points to Remember (for the exam)

  • Exact Definition: PV = authorized budget for work scheduled to be completed by a specific point in time (the data date)
  • Primary Formula: PV is the denominator in Schedule Variance: SV = EV − PV
  • Key Distinction: PV is NOT actual cost (AC) — PV is planned, AC is what was actually spent
  • Total Project PV: The sum of all PV across the project equals BAC (Budget at Completion)
  • Exclusion: PV does NOT include management reserve — only the performance measurement baseline
  • Time-Phased: PV is allocated by phase over the project life; it defines physical work that SHOULD have been accomplished
  • Common Confusion: PV is often confused with EV (Earned Value). PV = work planned; EV = work actually completed (valued at planned rates)

Typical PMI Exam Example

You are managing a software development project with a BAC of $500,000. At the data date (month 6), you planned to complete 40% of the work. What is the Planned Value (PV)?

Answer: PV = 40% × $500,000 = $200,000. This is the authorized budget for the work scheduled to be completed by month 6.

PMI Exam Traps

  • Trap: Confusing PV with EV (Earned Value)

    • Reality: PV = work you PLANNED to complete; EV = work you ACTUALLY completed (valued at planned budget rates)

  • Trap: Thinking PV includes management reserve

    • Reality: PV is the authorized budget WITHOUT management reserve. Management reserve is separate from the performance measurement baseline

  • Trap: Using actual costs to calculate PV

    • Reality: PV is based ONLY on planned budget and schedule — actual costs are irrelevant to PV calculation

  • Trap: Confusing PV with the project budget total

    • Reality: PV at a given point in time is only the budget for work scheduled up to that date, not the total project budget (BAC)

Important PMI Connections

Related ConceptRelationship TypeExam Attention Point
Earned Value (EV)Direct comparisonEV − PV = Schedule Variance (SV); positive = ahead of schedule
Actual Cost (AC)Performance comparisonEV − AC = Cost Variance (CV); positive = under planned cost
Budget at Completion (BAC)Total of all PVBAC = sum of all PV across the entire project
Performance Measurement Baseline (PMB)PV is the PMBThe total PV is sometimes referred to as the PMB

Quick Review Questions

  1. At month 3 of a 12-month project with BAC = $1,200,000, you planned to complete 25% of the work. What is the PV at month 3?

  2. If SV = EV − PV and the result is negative (-$50,000), what does this indicate about project performance?

  3. Does PV include management reserve? Why or why not?

  4. What is the relationship between total PV across all project phases and BAC?

  5. At the data date, PV = $100,000 and EV = $90,000. Is the project ahead of, on, or behind schedule?

PMBOK v8 Reference

Section 5 – Tools and Techniques (Earned Value Management) Section 4.4 – Data Representation and Analysis (EVM calculations)