What is the budgeted cost of work scheduled?
The Budgeted Work of Work Scheduled (BCWS) is the sum of budgets for all planned work to be completed over a specified period of time. It also covers the cost of completed previous work and can discuss a specific performance period or a date in time.
The budgeted cost of scheduled work is also known as the planned value (PV), which in principle is exactly the same, being the ‘Planned’ value of the project at different phases of the project.
How to calculate the BCWS in Project Management
The BCWS or PV can be calculated using a simple formula. It divides the project scope into stages, which will be used to track progress. All begins with the creation of a budget.
1. Create your project budget
Your project budget will encompass the total costs needed for completion. It includes the costs of labor and material procurement, as well as operating costs. Creating your BCWS works best when costs are broken down into phases and individual costs are assigned to each phase.
This process can become complex when you break out budgets into multiple phases. Not all phases will have equal costs. And often phases will overlap. While simple projects can be tracked in spreadsheets, more complex projects will benefit from project management software(Ms Office, Primavera P6, etc.) to break down each phase and provide the tracking you need for more efficient scope management.
Because no work has yet begun, your BCWS will be the same as your budget once this first step is completed. You will need to update your BCWS as your project progresses.
2. Track your BCWS
You’ll want to keep track of your BCWS as your project progresses. It provides a quick overview of where you are in comparison to your budget at any given time.
3. Track your budgeted cost of work performed
BCWS is just one of the metrics you should monitor as part of your ongoing project risk management analysis. The budgeted cost of work performed (BCWP) measures how far your project has progressed compared to where you expected it to be as part of your project cycle management plan.
4. Compare budgeted project costs to the actual cost of work performed
It’s time to compare both of these metrics to the actual cost of work performed (ACWP) in your project quality plan in the next step. This will tell you whether you’re on track or off track at any given time (the cost variance or CV).
5. Communicate with key stakeholders
Keeping key stakeholders informed about the project’s progress versus budget is an important part of your project communication plan. The process will reveal issues so that everyone is better informed and project planning can be adjusted to account for any shortfalls.
Budgeted Cost of Work Scheduled (BCWS) Formula
The calculation of BCWS is not difficult, following are the BCWS Formula:
Using of Budgeted Cost of Work Scheduled (BCWS) in Project Management
The Project Manager cares about this number, but the real strength of earned value analysis(EVA) is in comparing this number to our actual performance.
To use the budgeted cost of work scheduled(BCWS), we need to compare this number to our earned value or budgeted cost of work performed.
Budgeted Cost of Work Scheduled (BCWS) Example
Project XYZ has a budget of $50,000. It starts on 01 June (Project Start Date) and finishes on 01 December (Project Finish Date). Total Project Duration is 183 days (about 6 months). Suppose that today is 01 September, i.e. halfway point of the project when the project should be 50 % complete according to our plan. Then at this point, what is the BCWS (Budgeted Cost of Work Scheduled)?
BCWS = 50% from $50,000 = $25,000
So BCWS shows how much of the budget should have been spent up to a certain date.
A construction project with a budget of $1,000,000 with a duration of 2 years.
The Project Manager, after exactly 1 year and asks for a report about our current budgeted cost of work scheduled(BCWS), and how that relates to our actual performance.
To find our BCWS, we know that the project should be 50% complete.
We also know that our budget at completion is constant, and is $1,000,000.
We can multiply these numbers together to find our budgeted cost of work scheduled.
BCWS = % project complete (planned) x Budget at completion (BAC) = 50% x $1,000,000 = $500,000
Then, let’s imagine that we already have actually completed 45% of the project at the one-year. This means that our budgeted cost of work performed(BCWP) is less than what we had planned to the tune of:
BCWP = % of project complete (actual) x BAC = 45% x $1,000,000 = $450,000
As we can see, our BCWP equates to $450,000 in work, while we had planned to generate $500,000 in work. This shows that we are currently behind schedule and gives is a schedule variance of $50,000.