Budgeted Cost of Work Scheduled (BCWS), also called the Planned Value (PV), is the sum of the budget for all work scheduled to be accomplished within a given time period. It also includes the cost of previous work completed and can address a specific period of performance or a date in time.
Definition: Budgeted Cost of Work Scheduled (BCWS) is the planned value of the work planned to be accomplished in a period of time.
BCWS = % Complete (Planned) x Project Budget
Contractor Reporting of BCWS
A contractor usually reports the Budgeted Cost or Work Performed (BCWP) on all work packages completed for a project. The BCWP is then compared to BCWS to determine if the project is behind or ahead of its projected trajectory. If the contractor has not completed all the scheduled work packages on time, then the BCWP will be less than the BCWS.
A contractor also reports the cumulative Actual Cost of Work Performed (ACWP) for the work packages that have been completed. The difference between the BCWP and the ACWP is the Cost Variance (CV). Suppose the actual costs at a time now (i.e., ACWP) are higher than the earned value at a time now (i.e., BCWP). In that case, we know that the contractor is currently overrunning cost and that the contractor’s Estimate at Completion (EAC) may be higher than the Budget at Completion (BAC).
Benefits of Budget Cost of Work Scheduled (BCWS) for any Project Team are:
- Provides a Baseline: Allows project personnel to compare actuals vs. planned
- Projects Future Costs: Highlights when projects will exceed costs.
- Identifies Issues: Highlights issues in cost vs. schedule for project personnel.
- Shows Cost as a Point in Time: Shows project personnel a snapshot of expected costs for any work performed.
Steps to Calculating Budget Cost of Work Scheduled (BCWS)
Step 1: Develop your Projects Total Budget
Your project’s total budget will be the total costs needed to complete the project, including labor, material, incidentals, and operations. Now you divide your project into many phases and assign a total budget for each phase. This breakdown of cost per phase is the foundation of BCWS.
Step 2: Track your BCWS
In this step, you track your BCWS by applying the BCWS equation below against a point in time.
BCWS = % Complete (Planned) x Project Budget
Step 3: Track your Budgeted Cost of Work Performed (BCWP)
The next step is to track the budgeted cost of work performed (BCWP) tracks versus where you are on the budget.
BCWP = % Complete (Actual) x Project Budget
Step 4: Determine the Cost Variance (CV)
In this step, you compare BCWS and BCWP to determine the Actual Cost of Work Performed (ACWP) and determine the Cost Variance (CV) in your project quality plan. This will project personnel if the project is over or under budget at any point.
Cost Variance = BCWP – ACWP
Step 5: Communicate with key stakeholders
The overall goal of any Earned Value is to inform project members and stakeholders of the progress of a project in terms of cost and schedule. BCWS informs project members on where the project stands versus the budget. It highlights problems so everyone on the team can address them and compensate for shortfalls.
Step 6: Review at project completion
In the final step, an assessment should be completed comparing the actual cost of each phase to the initial planned cost. This will help identify issues and also help in developing lessons learned for the next project planned. A few of the reasons for project overrun are:
- Not enough time allowed for initial planning
- Funding instability
- Requirements Creep
- Lack of detailed information in the beginning
- Missing budget items
- Inefficient resource planning
The Five Main EVM Variables:
- BCWS = Budgeted Cost of Work Scheduled
- BCWP = Budgeted Cost of Work Performed
- ACWP = Actual Cost of Work Performed
- BAC = Budget at Completion
- EAC = Estimate at Completion
What to Know When Calculating Budgeted Cost of Work Scheduled
When determining a project’s Budgeted Cost of Work Scheduled (BCWS), a manager should consider several important things. By considering these things, a manager can correctly calculate the BCWS, which tracks and controls project costs throughout the project’s lifecycle. Here are some important facts:
- Work Breakdown Structure (WBS): A well-defined Work Breakdown Structure should be in place for the job. The WBS breaks the project into smaller, more doable pieces of work. This makes it easier to estimate and keep track of costs. Each piece of work should have a planned cost that goes with it.
- Project Schedule: A Gantt chart or a similar tool shows the project schedule, which shows when each work package is supposed to start and stop. The manager should know the routine and how things are supposed to happen.
- Estimates of costs: Each work package should have an estimated estimate of how much it will cost. These estimates can be based on past facts, the opinions of experts, or other methods of guessing. It’s important to make sure that the estimates are as exact and realistic as possible.
- Assigning Resources: The manager should know exactly what resources (people, materials, tools, etc.) are needed for each work package and how much they will cost. This information is needed to figure out how much the planned costs will be.
- Cost Control Accounts: Cost control accounts should be set up for the project. Usually, these accounts are set up to match the work packages in the WBS. These accounts are used to track how much each work package is supposed to cost and how much it really costs.
- Time Phasing: The BCWS needs the planned costs to be spread out over time. According to the project plan, the manager should divide up the budgeted costs among the different time periods. This makes it possible to keep track of planned costs and compare them to actual prices over time.
- Earned Value Management (EVM): BCWS is one of the most important parts of EVM. EVM combines details on cost, schedule, and scope to understand how a project is doing fully. Cost control works best when you understand EVM terms like planned value (PV), earned value (EV), and actual cost (AC).
- Reporting and analysis: The manager should look at the BCWS data along with other cost-related metrics regularly and evaluate them. This study can help find possible changes in costs, changes from the planned schedule, and places that need to be fixed.
AcqLinks and References:
- Defense Acquisition Guidebook (DAG)
- DoD Earned Value Management Implementation Guide (EVMIG)
- DAU EVM Gold Card – 2020
- DOE EVMS Gold Card – Feb 2019