How are earned value and planned value calculated? Why are these numbers important?
Earned Value = Work Total Cost x Percent Complete Work
Planned Value = Work Total Cost x Percent Complete Duration through yesterday
A simple example can be made for a planned four-hour task with a cost budget of $400, a duration of four days, a scheduled start date of three days ago and 50% of the work has been completed within one hour:
Total Work = 4 hours at $400
Percent Complete Work = 50%
Earned value cost = 2 hours at $200
Actual hours cost = 1 hour at $100
Planned Value = 3 hours at $300 (75% complete duration as three of the four planned days have passed)
The example above is representative of a situation in which efficiency was optimized for accelerated earned value ($100 actual cost vs. 2 hours of completed work). At the same time, the task is behind schedule because 75% of the scheduled duration has passed as of yesterday and only 50% of the work is complete.
Similar analysis for schedule status based on % complete is covered in the Forward Progress FAQ.