Common Cost Measurement Mistake

There is a common mistake made in traditional cost performance analysis (non-EVA) where the actual cost is compared to the planned cost. This is fundamentally wrong. Just look at our example. Following this flawed practice, the accountants might report that the cost performance is favorable (spent $2,400 against the plan of $2,500). However, only $2,000 of work has actually been accomplished. The ugly truth is that the item is both behind schedule and over budget. Without earned value, there is no valid performance analysis.

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Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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