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Budget Cost for Work Performed (BCWP)

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Mohammed Abo El Magd
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Dears, hallow,
The formula of calculating BCWP is always = P% * BAC ((Budget at completion)). Now, If there is no P% !!!

Do we have another formula to get BCWS ????????
Regards

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Rafael Davila
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Mike,

I never said Cost is the best basis for assessing progress. You might have a job progressing on time but not within budget (money budget, man-hours budget …), or progressing not on time but within budget (the most common). You have to consider both in your assessment of progress.

US Government came out with the idea of Earned Value just to find out it is flawed, and because they respond very slow took them decades to realize it. Their need is different from that of the Contractor because of budgeting reasons, for many government Contractors, especially defense contractors that a project or a program for developing new weapons needs more funds it means more business, it is good to them, bad for the Government and the tax payer.

When you are assessing progress on a given job you can progress through critical activities with a combination of non-critical activities that might or might not increase your probabilities of meeting a target date. Neither Earned Value not the new boy in town Earned Schedule tells you about how your potential capacity of success changed, probability theory can give you a better insight. The same applies for the meeting of budget which depends on a combination of time factors and other non-time related cost risks.

Traditional Job Costing preferably using intuitive metrics such as unit cost based on physical units along with probability theory is a better deal.

But don’t worry; most probably US Government will create 49 new Earned Schedule metrics alone with new acronyms only Tutankhamen will remember. Not only will add confusion to the confusion but will solve nothing relevant.

EV is kind of confusing that some users even call BCWP to earned man-hours as if money, morons. "Bah! Humbug!".

Might BCWP bless you.

Best regards,

Rafael

Mike Testro
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Hi Rafael

"All CPM schedules have a Critical Path that at any given time determines the project completion and activities outside the critical path do not." 

Really?

I would put in a caveat "All properly prepared CPM schedules ........."

I don't agree that cost is the best basis for assessing progress unless you have teased out only the time related costs.

Then you might as well do it properly and use resource hours.

Best regards

Mike Testro

Rafael Davila
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All CPM schedules have a Critical Path that at any given time determines the project completion and activities outside the critical path do not. But as a project is progressed activities durations vary and this might shift critical path activities. The deterministic approach to evaluate schedule performance fails to forecast this variability and in most cases, if not always, will be optimistic and we will know at the end, when it is already too late.

From my readings about EVM “Earned Value Method” and ES “Earned Schedule” I could not even see their recognition of Early and Late cumulative S Curves, as if there is no such thing as Early and Late S Curves. Although some claim ES is the answer, it is not; even if eventually Early and Late dates are included in the procedure.

One of the basic problems is to determine how to weight the relative values of critical activities versus non critical activities as well as for cost values as pointed out before by Deveaux. I believe there is no such thing as an exact answer but that the probabilistic method is the scientific way to deal with the issue.

There is a tendency to avoid probabilistic methods because they are based on assumptions about the probabilistic distributions for cost and performance (activity durations) as if the deterministic assumptions are flawless. A well thought probability distribution even when subjective is better than a well thought fixed deterministic assumption.

By comparing the cumulative distribution of success for cost (budget versus actual), as well as comparing the cumulative distribution of success for project end (budget versus actual) a better evaluation can be made.

Applying statistical values to a CPM schedule can be done easily with the help of the computer, the output is performed at a click of the mouse and for the surprise of many I believe easier to understand than the confusing terms of EVM. Anyone can understand what a 10% probability of finishing a job on time means.

Perhaps something good comes out of it. Maybe Contractors will be allowed to schedule for early completion in the hope to finish on time instead of being required to submit a baseline schedule that uses all contract time.

Anyone with a basic knowledge on statistical methods for scheduling knows that if a job scheduled for 100 days have a success probability of 50% to finish as scheduled, the same job scheduled for 80 days might have a success probability of 40% to finish on day 80 as scheduled but perhaps an 80% success probability of success to finish by day 100. This because of how activities in the deterministic schedule not in the critical path can become critical and drive further the job duration while activities with lower duration not in the critical path will have no impact.

Stephen Devaux
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Mike, quite true.

The trouble with all methods of tracking project progress is that, almost invariably, we're not just dealing with making widgets. In some activities, we're designing fidgets. In others, we're hiring midgets, pointing digits, dating Bridgets, and testing gobbledegooks.  Even if each activity sometimes appears "cookie-cutter", they almost never are: if you're building a highway 100 miles long and you've completed 90 miles, what percent complete are you?  What if the last ten miles are through the Florida Everglades?

Earned value is a VERY blunt-instrument approach to weighting activity-driven milestones by some aspect of the activity. The most common is total costs, but labour costs and labour hours are also commonly used. (Even if using total costs, there is very good reason for also isolating just the labour hour component and using EV tracking on that metric, too.)

Of course, since you mention SPI, I will also point out that, while CPI tracking has value, SPI is usually not only distorted, but can actually, in the short term, reward the contractor for ignoring critical path activities and doing work out of sequence. For schedule tracking purposes, EV metrics:

  1. Ignore the critical path, often giving much more "value" to activities with lots of float, and
  2. Give EV credit for tasks performed ahead of schedule/out of sequence.

The distortion can be lessened by:

  • Placing BCWS values ONLY on the backward pass dates (the ALAP schedule, where there's no float).
  • Recognizing BCWP credit ONLY for work accomplished during the reporting period when it's scheduled.

The flaws in EVMS are sufficiently serious that the US DoD (which created and mandated the technique in the 1960s) has recognized the inadequacy of earned value tracking and is currently looking into completely overhauling the methodology for US defense contractors.

Under any circumstances, every worthwhile text on EV will emphasize that SPI tracking should always be complemented by progressing of the critical path.

Fraternally in project management,

Steve the Bajan

Mike White
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Hi Fellow Planners

To misquote one of your contributors " I thought I knew everything about the subject (EV) but now I've forgotten"

What if I don't have costs associated with the activities, I'm just a simple planner, not a cost engineer so how would I know what the costs are

If I want to know the SPI, surely this is nothing more than Earned(Achieved) vs Planned (900widgets/1000widgets = 0.9)

Thanks

MikeW

Anoon Iimos
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For me, BCWS; BAC (these are originally scheduled), while BCWP, which I supposed to be the same as the previous two, will only differs with BCWS in time (Scheduled vs. Actual, but using the same budget cost for the units), there will be no problem if your project is progressing exactly as planned.

The only difference is the ACWP (Actual Cost Work Performed). This makes the project miserable.
Darren Kosa
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Gordon,

Probably a typo (or I’m too much of a pedant) BAC is set and it wouldn’t need to be determined using EV calculation. It always equals the BCWS total.

Other than that, congratulations in succinctly defining BCWP using a single sentence, as opposed to my two waffling posts :o)

Hopefully we can now put this issue to bed.

Regards,

Darren
Gordon Blair
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Raviraj,

In a nutshell (although some would argue about which way round the CV calc should be).

This thread has been terrifying, I’ve never known such a simple, straightforward concept be made such a meal of.

As for the Summary roll up P%:

You get your Project BCWP and BAC from doing the Earned Value calcs on each of your underpinning activities, (working from %complete * whichever Budgeted Cost figure is your preference). These cumulative, whole Project figures can then be used to give a NOTIONAL P% for the whole Project.

I say notional, because using Pounds, shillings and pence as a definitive measure of progress can be misleading in the extreme.

I’m currently trying to muster the enthusiam to write a paper expanding EVM to take cognisance of CPM, I’ll let you know when I’ve been bothered to finish it ;)
Raviraj Bhedase
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Trevor has explained it very correctly and in a more simplified form. Try to remeber these four simple formulas:

SV = BCWP - BCWS

SPI = BCWP / BCWS

CV = BCWP - ACWP

CPI = BCWP / ACWP
Trevor Rabey
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Mohammed, an example?
Suppose we planned to do do 2 Tasks yesterday.
We planned their duration etc, estimated that they will cost $1 each, and baselined the plan.
Today we find that we have done one of the Tasks but not the other. We may have started it or not, makes no difference, doesn’t count if not finished.
Further, we have found that the Task we finished actually cost $1.50.

BCWS = $1 + $1 = $2
BCWP = $1
SV = BCWP - BCWS = -$1
SPI = $1/$2 = 0.5

ACWP = $1.50
CV = BCWP - ACWP = $1 - $1.50 = -$0.5
CPI = $1/$1.50 = 0.67

No need for this "P%" which is not even defined or measurable, or useful.

Darren Kosa
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Mohammed

You’ve got your PMB am I correct? You’ve broken down that budget using a WBS? Each WBS element has a budget? That budget has been allocated to individual tasks? If the answer is yes to all of those questions, you should then have a budget that is spread over time that incorporates the full scope of work.

This is your starting point, as you have budget that is time-phased, you should then know how much you have budgeted for when you actually perform some work (as a tip it should always be a quantitative measure, % Complete is far too subjective).

If I’m performing work on a task that is 0/100 then I only claim the BCWP once that work is complete. If I’m performing work on a task that is 50/50 then I claim 50% when the task starts and 50% when it completes. This is the same for any of the discrete EV methods, you claim your planned value (BCWP) when you when you meet the criteria for you chosen EV method.

As a simple example, I have a 10d task that has a 10k budget and starts in January and finishes in February. I have used a 50/50 EV method so the budget is divided over two months and I also use a single milestone to indicate the start of the task and one for the finish of the task.

This means that my BCWS shows 5k in January and 5k in February.

In the January reporting period the task has started so I can claim the 5k milestone as BCWP, but when it comes to the February reporting period the task hasn’t finished so I don’t claim any BCWP for that task. However, the task is completed in March and so I claim another 5k milestone as BCWP in the March reporting period. Please note I am only claiming the predetermined value, but the EV report will still show a schedule variance. At no time do I have to use a formula to calculate BCWP, because I only claimed the planned value when the criteria for the EV method were met.

So when you ask is BCWP always = P% * BAC, I would say no it is how much work that has actually been done.

Regards,

Darren
Anoon Iimos
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Mohammed,

I believed Trevor had explained it. BCWP for me is a combination of Baseline and Current (Budget and Actual), Budget as known and Actual as you did performed (work performed).

If you are after the summary up to the project level, you need to work it out at the activity (task) level. Now we’ll go back to Budget vs. Actual at the activity level. Budget - Work Scheduled (Planned) vs. Work Performed (Actual). I think it is obvious that both are supposed to be known at a certain time or period. Or am I missing something?

cheers!
Mohammed Abo El Magd
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Trevor, you need to review the EV technique book issued by PMI , before deciding that this BCWP formulas is incorrect. On the other hand, I do not remember that you provided any equation to calculate the same.

Let me remind you of your definition, "Both BCWS and BCWP come straight from the Baseline, not from a formula"
You did not even explained, how could we get work performed from baseline??? Performed out from a plan, How is that????

Anyway, as you already decided that this formula is incorrect, I suppose that you will provide the correct one, aren’t you????
I will appreciate a digital example.
Trevor Rabey
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Mohammed, you can stick to your incorrect assumption that BCWP is calculated like this, in spite of the evidence and advice and anything you can look up, but it won’t help you and it will still be incorrect.

Nestor, BCWP is not calculated from BCWS. Both are known as at some date, then they are used together to calculate Schedule Performance Index SPI = BCWP/BCWS (> 1 is good).
What you are calling % Complete is SPI.
Nestor Principe
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Dear All,

According to what I usually do:

BCWS is the baseline/target value.
BCWP or EV = BCWS x % complete.

Can someone explain what is Performance % complete and what it indicates.

Can we say P% = (BCWP / BAC) x 100.

Cheers..
Darren Kosa
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Hi Mohammed

Just thought I’d stick my two penneth in.

BCWS is your timephased baseline, otherwise known as your performance measurement baseline (PMB). It takes contains all the labour cost, cost of materials and expenses held in the control accounts and summarises them to show the projects planned value.

BCWP is claimed at the level at which it was planned i.e. work package or control account level using predetermined EV methods (discrete / LOE / apportioned). You should only claim the BCWP for a task according to the EV method chosen not as a % of the BAC.

If you haven’t planned to claim your BCWP in this way then I would suggest you don’t have a credible BCWS. If you don’t have a credible BCWS, then whatever problem you seem to be having with BCWP formulae is irrelevant because the performance data you’re reporting on is flawed from the outset.

Regards,

Darren
Mohammed Abo El Magd
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P% (Performance percent complete), known as you always know what number of unites been done against BAC.
Actual unites/BAC unites = P% or Time wise or your own judgment to the progress of an activity.

Eventually, it is easy to get P%, as it has multiple methods to be calculated, so it is the easiest term to get.
Simply, That is why I considered P% Known.
Trevor Rabey
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How? How is P% known, unless you divide one number by another number?
Mohammed Abo El Magd
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A problem was sent to primavera knowledge DB,,, " Performance % complete is not summarized on the project level ". They replied " The formula of calculating P% on the project level is P% = ( BCWP / BAC )* 100".

This was confusing. As usually the known are P% & BAC then we get BCWP. By this formula, it is supposed that the known are BCWP & BAC.

So, I asked, is there a new formula for BCWP, and that’s it.
Raviraj Bhedase
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I collected statements from primavera help file and thats it.

Whats does Primavera Support knowledge DB states regarding calculation of BCWP??

Mohammed Abo El Magd
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Raviraj ,
Many thanks, this was very good. All what I needed is just a confirmation that BCWP has no other way to be calculated which contradict with the statement of Primavera support knowledge DB.

Also you mentioned a good formula for planned value.

By the way, are you referring to Primavera help manual or another manual??

Thank you
Raviraj Bhedase
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Sorry, but I didn’t get ur question, so, I am writing @ each & every calculation regarding EV from the help manual.

Earned Value Cost

Earned Value Cost is the portion of the budgeted total cost of the activity that is actually completed as of the project data date.

Computed as Earned Value Cost = Budget at Completion * Performance % Complete.

The method for computing the performance percent complete depends on the earned-value technique selected for the activity’s WBS.

Budget At Completion

Budget At Completion is the budgeted total cost through activity completion.

Computed as Budget At Completion = Budgeted Labor Cost + Budgeted Nonlabor Cost + Material Cost + Budgeted Expense Cost. It is the same as the BL Total Cost.

Planned Value Cost

Planned Value Cost is the portion of the budgeted total cost of the activity that is scheduled to be completed as of the project data date, according to the baseline.

Computed as Planned Value Cost = Individual resource Budget At Completion * (Data Date of current project - Baseline Assignment Start Date) / (Baseline Assignment Finish Date - Baseline Assignment Start Date).

The Planned Value Cost of an activity is the sum of the Planned Value Cost of each individual resource assignment on the activity. If an activity has a resource or role assignment with manually-defined future period bucket values, Planned Value Cost is calculated using the manual assignment values.

If an activity has no resources, its

Planned Value Cost is calculated as the Budget At Completion * Schedule % Complete [(Data date - Baseline Start) / (Planned Finish - Baseline Start)].

The Schedule % Complete specifies how much of the activity’s original duration has been completed so far.

Hope this is clear....
Mike Testro
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Hi All

I am leaving this thread

Best regards

Mike Testro
Mohammed Abo El Magd
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I did not get what you mean by “BCWS and BCWP come straight from the Baseline, not from a formula" , how is that ???!!! In another wards, let me know how you get it ?!

EV technique is all about mathematical formulas. Some parts of its terms are given in Baseline and other comes from current. BCWS, all terms comes from baseline. BCWP, one term comes from baseline and other from current. ACWP, that is all from current.

Regarding your second paragraph, for these limitations, that is why there are two techniques for EV, work wise & time wise. And regarding missing tasks in baseline or deleted, this is not the problem of EV, yet, there are turn around to get EV for these tasks.
Trevor Rabey
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Both BCWS and BCWP come straight from the Baseline, not from a formula.
The only difference between them, on any given Status Date, is that:
BCWS is the budget cost of the Tasks we planned to do (up to this Status Date)
BCWP is the budget cost of the Tasks we actually did do (up to this Status Date).

Now, EV has a few problems and limitations.
It is possible that BCWS = BCWP even if the Tasks we did were not the Tasks we planned to do (up to this Status Date). EV does not directly measure or give a good performance score for doing what really matters, which is having a good complete plan in the beginning and sticking to it.
Also, any Task that was not in the Baseline will not have a BCWS or a BCWP, but may have a ACWP.
Also, a Task that was in the Baseline but later deleted will have a BCWS but no BCWP or ACWP.
Mohammed Abo El Magd
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Anoon, this definition is for BCWS, Budget Cost for work scheduled.
Ans it’s formula is BCWS = BAC * S%
Anoon Iimos
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in addition to Trevor, "so there is a Baseline Cost for each Task" at a certain time or period.
Trevor Rabey
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BCWP is "Budgeted Cost of Work Performed"
Can also (perhaps, for clarity) be called "Budgeted Cost of Tasks Performed".
You planned the project and Baselined it.
BCWP comes straight from the Baseline.

You did some Tasks.
They each had an estimated cost and were Baselined, so there is a Baseline Cost for each Task.
Mohammed Abo El Magd
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Dears,
Let me repeat again my question since I did not get any reply yet.
Primavera support service stated that " P% = (BCWP / BAC)*100" and that “this is the applicable formula to calculate Performance % Complete on project level"

According to this formula and without using abacus, we suppose to know BCWP & BAC to get P% !!!! . For BAC, we have no problem with it. But BCWP, how could we calculate it without knowing P%???

Could anybody help ?

Regards
Mike Testro
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Hi Mohamed

At least I know that I know nothing about this subject and don’t mind saying so.

Some contibutors to other threads think they know everything about everything and spout off accordingly.

Best regards

Mike Testro
Samer Zawaydeh
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Dear Mike,

The is simple, check out the explanation at wikipedia

http://en.wikipedia.org/wiki/Earned_value_management

Best,

Samer
Mohammed Abo El Magd
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Oh, I am now confused!!!
Mike, are you saying that you do not know about EV technique??!!! You do not know BCWP, BCWS, etc...?!!

THE WHOLE THRAED IS ABOUT EV!!!!
Mike Testro
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Hi Trevor

I guess it was but it was so long ago I have forgotten everything I ever thought I knew on the subject.

Best regards

Mike Testro
Trevor Rabey
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Isn’t this thread about BCWP?
Mike Testro
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Hi Trevor

Regarding the 2nd part of your text:

"What about the EV?
Chop it up into 10 x 1 day tasks if you like, link FS etc.
At the end of what is (supposed to be) day 6, you expect 6000 bricks laid. Maybe you find 3000 or maybe 8000 bricks laid."

You can do progress on consumable resources on however many a day should be laid.
If it is underestimated the activity will be longer - over estimated then shorter.

"What is BCWP, BCWS, ACWP, CPI, SPI etc for each case?"

I have no idea what these mean - I am not a planner.

Best regards

Mike Testro

Trevor Rabey
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I’m not talking about the task breakdown to a level of detail where only FS links are needed. I already agree with you on that. Real planners don’t need them thar fancy links. When the CPM was done with the first software ever used for anything, they only had FS links and they did CPM just fine. There are lots of things in the various software that might be useful in some specific exceptional cases, but otherwise should be avoided. Some people say, "well the software has it so why can’t I use it?"... ummm, because it’s a bad idea?

What about the EV?
Chop it up into 10 x 1 day tasks if you like, link FS etc.
At the end of what is (supposed to be) day 6, you expect 6000 bricks laid. Maybe you find 3000 or maybe 8000 bricks laid.
What further information is needed to update?
How is that information used to update and re-plan for each case?
What is BCWP, BCWS, ACWP, CPI, SPI etc for each case?


Mike Testro
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Hi Tevor

So we have 10000 bricks in one long low garden wall - just 1 lift and no scaffold.

I would still break it up to sections between expansion joints and FS link between sections.

Best regards

Mike Testro
Trevor Rabey
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Sure, but what about my example. 10000 bricks, no 1st and 2nd, no scaffolding, just bricks.
Or choose a similar example say 5000 bricks, 5 days etc, but same story.
Mike Testro
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Hi Trevor

Now you are really pushing my buttons.

There is a rolling thread going on now where I am promoting FS links with bottom up tasks.

My precept is that:

1. Use one task for One Trade in One Location.
2. If a task is more than 10 days it is too long.

So your activity of 10,000 bricks would be set up to replicate the build sequence.

1. Brickwork to 1st Lift
2. Adapt scaffold
3. Brickwork to 2nd lift
4. Adapt scaffold
etc etc

You would then be estimating % complete on a lot of small tasks rather than one big one - so 10% either way will adjust itself.

I won’t go into resource modelling at this stage as it needs a thread of its own.

Meanwhile go and have a look at the Ban These Abominations - in Training section.

Best Regards

Mike Testro
Trevor Rabey
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I always get a bit edgy about the use of "percentages" because people never say what it is a percentage of, and it can possibly be a percentage of various things, and no one ever says what numerator and denominator they used to calculate it, and sometimes they haven’t used any calculation at all and it is just a made-up guessed number.

When we say "10% of it", what exactly is "it"?

One Task might be to lay 10000 Bricks, 10 Days, bricks $1.20 each, 1 bricklayer for 80 Hours at $100/Hour, total cost $20000.
Say at the end of Day 1 everything has gone according to plan and there is 1 Day of Actual duration, 1000 bricks laod, 8 Hours of Work, ie 10% of Bricks, 10% of Duration, 10% of Work and 10% of Cost.

I don’t want to hear a report of % of anything.
I want:

Actual Start, Actual Duration, Actual Finish, Remaining Duration
Actual Work, Remaining Work
Actual Cost, Remaining Cost
Actual Bricks, Remaining Bricks

..and I will do the arithmetic myself.

BCWS is "Budgeted Cost of Work Scheduled" but makes more sense as (and is really intended to be interpreted as) "Budgeted Cost of Tasks Scheduled". Otherwise the cost of the bricks is not included.

So BCWS = BCTS = $2000.

But what if there are 2000 Bricks laid?
Since only 1000 bricks are "scheduled" BCWS(max) = BCTS = $2000.
Mike Testro
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Hi Mohamed

Surely if your budget cost is say $20,000

And you have done 10% of it.

Then your BCWP is $2,000

Check it on your abacus.

Best regards

Mike Testro.
Mohammed Abo El Magd
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Let me rephrase the question, Primavera support service mentioned that " Performance % complete on the summery bar is calculated using this formula P%= (BCWP/BAC)*100" means that BCWP & BAC are should be known.
So, again what is the formula of calculating BCWP?
Anoon Iimos
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What’s the question? it all comes down to math, you got your budget and you got your actual, all you got to do is count.