What does Budgeted Cost of Work Performed mean in Project Management?

Budgeted Cost of Work Performed
BCWP, or Budgeted Cost of Work Performed, is a way to measure the progress of a project by putting a monetary value on the completed work. It helps you understand if the project is on track with the planned budget. By comparing BCWP with the actual cost, you can see if the project is under or over budget.
Simply put, BCWP measures the value of the work completed up to a specific point in time. It helps project managers and stakeholders understand how the project is progressing financially and whether the work completed aligns with the planned budget. This measurement is crucial for effective project management. It allows for early detection of cost overruns and helps make informed decisions about project adjustments.
Meaning and definition of Budgeted Cost of Work Performed

How to calculate BCWP

The BCWP formula is:
BCWP = Budgeted Cost Work Scheduled (BCWS) × Percent Complete (%)

In this formula, BCWS represents the estimated cost of the work planned for a specific period, and Percent Complete (%) shows how much work is completed. By multiplying these two values, you get the Budgeted Cost of Work Performed (BCWP), which tells you the value of the work done so far in monetary terms.

How to use BCWP

Comparing BCWP with ACWP, the actual cost incurred for the work performed provides a clear picture of the project's financial health. If BCWP is greater than ACWP, the project is under budget. On the other hand, if BCWP is less than ACWP, the project is over budget, as the work completed has cost more than planned.
line graph showing budgeted cost of work scheduled, budgeted cost of work performed and actual cost of work performed.
In summary, BCWP is a valuable tool for project managers to monitor a project's financial progress and make informed decisions to keep the project on track and within budget. By comparing BCWP with ACWP, managers can identify cost overruns and take necessary corrective actions to ensure successful project completion.
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