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Earned Value Management

1) In earned value management, if the cost of material/ supplies changes over time, during the course of project, how will the Earned Value Management chart or graph indicate those variances?

2) Will it take into account the negotiated cost or the prevailing cost in the market?

If the rates are fluctuating use weighted averages.

If the objective is trend analysis (forecasting), for calculation of ETC, use the prevailing cost, so that you can manage the risk better.

These are the ones I would use as a project manager for managing the project.

If these reports are generated for other key stakeholders, then please ensure that everyone is on the same page.

These are my views. Trust this clarifies.

Hi,

The cost variance is calculated as the difference between Actual costs and the Earned Value and can be represented graphically where the time is plotted on the X-axis and Cost on the Y-axis. Usually the prevailing cost is considered instead of the negotiated cost.

You may like to read these insightful articles to learn more:

https://www.saviom.com/blog/crucial-benefits-of-earned-value-management/