Earned value is an objective measurement of how much work has been accomplished on a project. It is a management technique that relates resource planning to schedules and to technical cost and schedule requirements. The major objectives of applying earned value to a contract is to encourage contractors to use effective internal cost and schedule management control systems, and to permit us, the customer to be able to rely on timely data produced by those systems for determining product-oriented contract status. Using the earned value process, the management team can readily compare how much work has actually been completed against the amount of work planned to be accomplished. Planned value compared with earned value measures the dollar value of work planned versus the equivalent dollar volume of work accomplished.
Any difference is called a schedule variance.
In contrast to what was planned, this graph shows the work accomplished in red. The difference between the planned work in blue and the work accomplished in red is the Schedule Variance. The graph shows a behind schedule condition. Any difference is called a cost variance. A negative variance means more money was spent for the work accomplished than was planned.