What Is Earned Value in Manufacturing? EDGEBIC Definition
User Solutions TeamEarned value is the amount of planned work a job has actually completed, measured in the plan's own hours: a 50-hour job that is 60 percent done has an earned value of 30 hours. It is the anchor of Earned Value Management, the discipline that compares what a job has finished against what it should have finished (planned value) and against what it truly cost (actual hours), turning a routing and a stream of shop-floor actuals into a single, comparable picture of health.
This entry is part of the EDGEBIC by User Solutions glossary series; for the broader vocabulary of planning, see the manufacturing glossary.
How Earned Value Works
Earned Value Management rests on four quantities, all in hours.
- Budget at Completion (BAC) is the total hours planned for the job, summed from every scheduled step's window. It is the plan ceiling.
- Planned Value (PV) is the hours that were scheduled to be done by the reporting cut-off. Each step's window is clipped to the cut-off date and the pieces are added up.
- Earned Value (EV) is BAC times percent complete: how much of the plan's work is genuinely finished, in the same hours as the plan.
- Actual Cost (AC) is the hours actually logged against the job through daily breakdowns.
The power comes from the ratios. EV divided by PV is Schedule Performance Index, which says whether the job is ahead of or behind time. EV divided by AC is Cost Performance Index, which says whether it is under or over budget. Earned value is the number both indices share, so getting it right is what makes the rest trustworthy.
A Concrete Example
Job J-100, product Widget A, five steps, budgeted at 50 hours. The report is run partway through.
| Step | Planned hours | Actual hours |
|---|---|---|
| Cut | 8 | 10 |
| Drill | 12 | 11 |
| CNC | 24 | 30 |
| Deburr | 4 | 4 |
| Inspect | 2 | not started |
Budget at Completion = 8 + 12 + 24 + 4 + 2 = 50 hours. Actual hours logged = 10 + 11 + 30 + 4 = 55. Percent complete = actual divided by budget, capped: min(100, 55 divided by 50 times 100) = 100 percent. Earned value = 50 times 100 divided by 100 = 50 hours.
The job has earned its full 50-hour scope. That it took 55 hours to get there does not inflate earned value past the budget; instead it shows up as CPI = 50 divided by 55 = 0.91 (over budget) and an Estimate at Completion of 55 hours (a forecast 5-hour overrun). Earned value stays about scope; the cost indices carry the effort story.
How EDGEBIC Computes and Shows Earned Value
Earned value is the centerpiece of the Earned Value (EVM) report, the original proof-of-concept among EDGEBIC's eighteen report panes. The service loads every scheduled job, sums schedule durations for BAC, clips to the cut-off for PV, sums the logged actual hours for AC, then derives percent complete and earned value. A few details shape what you see:
- Percent complete is capped at 100. A job cannot earn more than its scope, so overruns move to CPI and Estimate at Completion, not to a percentage above 100.
- The grid sorts by SPI ascending, floating the most-behind jobs to the top, but every row carries its own EV, AC, EAC, and VAC so you can read time and cost together.
- Sub-assembly rollups do not double-count. The report excludes component-level breakdown rows so a parent step's hours are counted once, keeping earned value honest on multi-level jobs.
Each column is documented in place through Column Details, part of the self-explaining reports system that ships a written definition, formula, and worked examples for every grid. For the full pane inventory, see the EDGEBIC reports guide; to focus on delivery rather than budget, the reports that answer "are we on time" cover the late-job and on-time panes.
Read earned value alongside its two ratios, SPI and CPI, and a single job's schedule and cost position becomes readable at a glance. The cost half of that pair rests on actual cost, the hours truly logged against the job by the cut-off date.
Earned value is the amount of planned work a job has actually completed, expressed in the plan's own hours. If a job was budgeted at 50 hours and is 60 percent complete, its earned value is 30 hours. Earned Value Management compares earned value against planned value (what should be done by now) and actual cost (hours truly spent), producing the schedule and cost indices that show whether a job is ahead, behind, over, or under.
Planned value is the work scheduled to be done by the cut-off date; earned value is the work actually completed, in the same hours; actual cost is the hours genuinely logged. Planned value answers 'what did we intend by now?', earned value answers 'what did we finish?', and actual cost answers 'what did it take?'. Comparing earned value to planned value gives SPI; comparing it to actual cost gives CPI.
Earned value equals Budget at Completion times percent complete: BAC times (actual hours divided by BAC), capped at 100 percent. A 50-hour job that has logged 30 hours is 60 percent complete, so its earned value is 50 times 0.60 equals 30 hours. The cap matters: a job that has logged 55 hours against a 50-hour budget is 100 percent earned, not 110 percent, and the overspend shows in CPI instead.
Expert Q&A: Deep Dive
Q: How does EDGEBIC turn my routing and actuals into an earned value number?
A: It sums each schedule window's duration to get Budget at Completion, then divides logged actual hours by that budget to get percent complete, capped at 100. Earned value is BAC times that percentage. For a 50-hour job with 55 hours logged, percent complete caps at 100 and earned value is the full 50 hours, while actual cost stays 55 so CPI reads 0.91. The numbers come from your schedule durations and the DailyHourBreakdown actuals, recomputed fresh every time you open the report.
Q: Why is my earned value capped at the budget even though we clearly overran?
A: Because earned value measures work done, not effort spent. You cannot earn more than 100 percent of a job's scope, so a 50-hour job maxes out at 50 hours of earned value no matter how many actual hours it takes. The overrun is not hidden: it moves to CPI (earned value divided by actual cost, below 1.0) and to Estimate at Completion, which projects the final hour total above budget. Earned value stays honest about scope while CPI carries the cost story.
Frequently Asked Questions
Ready to Transform Your Production Scheduling?
User Solutions has been helping manufacturers optimize their production schedules for over 35 years. One-time license, 5-day implementation.
User Solutions Team
Manufacturing Software Experts
User Solutions has been developing production planning and scheduling software for manufacturers since 1991. Our team combines 35+ years of manufacturing software expertise with deep industry knowledge to help factories optimize their operations.
Share this article
Related Articles
The EDGEBIC Scheduling Glossary Index
A themed index to the EDGEBIC glossary: scheduling engine, capacity and calendars, materials and planning, shop floor, reporting, quoting, and data import terms, defined in plain language.
What Is the Critical Chain in Manufacturing Scheduling?
The critical chain is the longest dependent path through a plan once shared machine contention is counted, not just step precedence. Here is how it differs from the critical path.
What Does Finite Capacity Mean in EDGEBIC?
Finite capacity means the scheduler refuses to book more hours on a machine than that machine actually has. See exactly how EDGEBIC enforces it, day by day and shift by shift.