- Imagine a trench that is 1,000 feet long (task)on a project with a $10,000 budget.
- When it is 400 feet complete, it is 40% done. Therefore, the “Earned Budget” is $4,000.
- Looking at the daily costs in the field so far, if you have spent $3,500 you are ahead on your production at this stage.
- If you had spent $4,500, you would be behind on your production.
Your actual costs don’t have to be perfect while you wait for them to get to the accounting system and back to you. This is about general directionality and it is better to have immediate feedback so you can take corrective action rather than wait for days or a week plus for more exact information.