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Budgeted Cost for Work Scheduled (BCWS)

APMT 012

DAU GLOSSARY DEFINITION

The sum of the budgets for all work (work packages, planning packages, etc.), scheduled (including in-process work packages), plus the amount of Level of Effort (LOE) and apportioned effort scheduled within a given time period. Also called the Performance Measurement Baseline (PMB).

General Information

The budgeted cost for work scheduled, or BCWS, is the dollarized value of all work scheduled to be accomplished in a given period of time. This most important variable symbolizes the planning function required by Earned Value Management (EVM). BCWS is determined early in the contract and establishes the baseline against which performance is measured. This baseline is also referred to as the Performance Measurement Baseline (PMB).

 

The Defense Acquisition University (DAU) identifies five independent Earned Value Management (EVM) variables: BCWS, BCWP, ACWP, BAC, and EAC. All earned value metrics are derived from these five variables. The chart in Figure 1 can be used to visually represent BCWS and its relationship with the other independent variables and two key EVM metrics derived from these variables.

 

Under EVM industry standard EIA-748, companies are expected to plan and organize their work efforts into small work packages, typically 30 to 60 days in duration. These work packages are related to each other by an Integrated Master Schedule (IMS).

 

For each work package, the contractor determines a budgeted cost for completing that work and sets a date for starting and completing the work package. This is called the Budgeted Cost for Work Scheduled (BCWS)

 

When arrayed over the period of performance for the contract, the budgeted work packages combine to form a time-phased Performance Measurement Baseline (PMB) curve. As shown in Figure 1, at the end of the contract the PMB terminates at the Budget at Completion (BAC). At any point in time during the period of performance of the contract, this curve represents the cumulative total of the Budgeted Cost for Work Scheduled (BCWScum) for the contract. A contractor will not budget the entire amount of the contract cost, or the Total Allocated Budget (TAB), but will reserve some budget as Management Reserve (MR) for tasks that may need to be added later (i.e. realized risks/unknowns within the currently authorized specific scope of work in the contract). In other words, MR is not part of the PMB until it is used, and thereby, applied to the PMB.

 

The principle of earned value is that at any time during the performance of the contract, the status date, the actual performance of the contractor can be compared to the Performance Measurement Baseline (PMB), and conclusions drawn about the contractor’s performance with respect to cost and schedule.

 

The contractor reports the budgeted cost for all work packages completed for the contract as of the status date. This is the cumulative Budgeted Cost for Work Performed (BCWPcum), or earned value. If the contractor has not completed all the scheduled work packages to time now, then the BCWPcum will be less than the BCWScum, representing a “monetized” indication that the contractor has completed less work than planned, known as Schedule Variance (SV). It is important to understand that we cannot infer from EVM data alone the actual time that the contractor is behind schedule. We would have to use other analysis tools (e.g. network techniques such as Critical Path Method (CPM) in conjunction with the Integrated Master Schedule (IMS) to forecast when the contractor will be complete.

 

In addition to reporting the BCWPcum, the contractor also reports the cumulative Actual Cost of Work Performed (ACWPcum) for the work packages that have been completed. The difference between the BCWPcum and the ACWPcum is the Cost Variance (CV). If the actual costs as of the status date (i.e., ACWPcum) are higher than the earned value (i.e., BCWPcum), that the contractor is currently over running cost and that the contractor’s Estimate at Completion (EAC) will likely be higher than the BAC.