How To Calculate BCWP

Working with a budget for a project can be a daunting task. Unless you are a seasoned veteran used to working under a budget with trusted suppliers who'll provide you with grade-A material at cost, you can be put in a bind when the managers come and audit your books.

The best way to keep track of your project status is to compute for BCWP or Budgeted Cost of Work Performed. Basically this measures how much has been budgeted for the amount of work done on a project. Often used in construction it can also be used in evaluating the progress of any project that works with a budget. A much less complicated name for BCWP is Earned Value. Look up either name online and you'll come across pretty much an identical set of computations but with different names for the plug in values.

You'll need a reliable calculator (or an abacus if you're a show off) to compute for the BCWP of the project you're completing. You'll also need whatever receipts you've accumulated since the project began (just make sure these receipts are project related.)

  • Determine BCWS. Add up the budget of the project inclusive of materials and labor to get the Budgeted Cost of Work Scheduled. An example would be if you were working on a building downtown that has a budget of $10000 for materials, plus 80 hours of labor at $20 per hour. Your formula should be something like BCWS = 10000 + (80 x 20). Doing the math should get you a value of BCWS = 11600.
  • Determine percent done. Next, you have to determine how much of the project has been completed. Basing this on the numbers given above, let's say that 50 hours was spent on the project but because of delays and other unforeseen circumstances only 20% of the building has been finished.
  • Determine BCWP. Using the numbers given in steps 1 and 2, multiply the BCWS by the % of work done. Your formula should be something like BCWP = BCWS x % WD. Plugging in the numbers from step 1 and step 2 should come out like BCWP = 11600 x 20. Doing the math should get you a value for BCWP = 2320.

Nothing to it, right? Determining the BCWP in three easy steps. Just be reminded that you should understand what to calculate for in each step and make sure that you have the appropriate documents like budget memos, receipts, expense vouchers and other such proofs that you spent money where you're supposed to spend it.

Be advised that this procedure is best used to effectively monitor the progress of your projects. Big projects with a lot of managers and foremen with varying amounts of authorization can make for a confusing paper trail when the managers, auditors and bean counters come calling on the project site. With a few simple steps and the right documentation, you can alleviate the managers and financiers that you're on top of the project and that they chose the right person to supervise their project and money.


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