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Earned Value and Percentage of Completion: Two Ways to View Project Progress

Project teams and finance teams often describe progress in different ways. Two common approaches are Earned Value (EV) and Percentage of Completion (POC). They are related, but they serve different purposes and answer different questions.

Earned Value (EV) is a project management measure. It represents the budgeted value of the work actually completed at a specific point in time. In other words, EV shows how much value the project has “earned” based on completed scope, using the approved budget as the reference point. It is a core part of Earned Value Management because it helps assess both schedule and cost performance.

 

Percentage of Completion (POC) is usually a financial reporting and accounting concept. It expresses how much of the total contract or project has been completed, typically as a percentage. In many organizations, especially in construction, POC is used to support revenue recognition and financial reporting over the life of the project rather than waiting until the project is fully complete.

Although the two concepts may appear similar, they are not the same. EV is centered on performance against the project baseline, while POC is centered on financial progress and recognition of revenue or cost.

 

Aspect	Earned Value (EV)	Percentage of Completion (POC)
Primary purpose	Measures project performance	Measures financial progress for reporting/accounting
Main question answered	How much budgeted work has been accomplished?	What portion of the total project or contract is complete?
Expressed as	Monetary value based on budgeted work completed	Percentage
Reference point	Approved project budget / performance baseline	Total contract value, total expected cost, or total scope basis
Main users	Project managers, PMOs, controls teams	Finance, accounting, project controls, executives
Typical use	Cost and schedule performance analysis	Revenue recognition and financial reporting
Interpretation	Compares planned value, earned value, and actual cost	Compares completed portion to total expected project outcome
Common in construction financial reporting	Sometimes used for control and forecasting	Commonly used for construction project financial reporting

 

In practice, construction projects commonly use POC for financial reporting, because long-duration contracts often require revenue and margin to be recognized progressively as work is completed. At the same time, many construction organizations also use EV internally for project controls, forecasting, and performance measurement.

A simple EV example helps illustrate the concept. Assume a project has a budget of 1,000,000 for a foundation package. If the team has physically completed 40% of that scope, then the earned value is:

EV = 40% × 1,000,000 = 400,000

This means the project has earned 400,000 worth of planned budget for completed work. If the actual cost incurred to achieve that work is 500,000, the project is over budget for that portion of work, even though progress has been made.

A simple POC example uses a financial lens. Suppose a construction contract is expected to cost 8,000,000 in total, and the contractor has incurred 3,200,000 in eligible costs to date. If cost-to-cost measurement is the selected basis, then:

POC = 3,200,000 / 8,000,000 = 40%

If the total contract revenue is 10,000,000, then 40% completion may support recognition of 4,000,000 in revenue to date, subject to the organization’s accounting policy and applicable standards.

These two examples show the difference clearly. In both cases, the project may appear to be 40% complete, but EV translates that progress into budgeted project value, while POC translates progress into a financial reporting percentage.

For project professionals, the key takeaway is that EV and POC are complementary rather than competing methods. EV is more useful when the goal is to understand delivery performance, forecast outcomes, and manage schedule and cost efficiency. POC is more useful when the goal is to support financial reporting, contract accounting, and revenue recognition. In construction, organizations often rely on POC for external financial reporting and use EV for internal project management and control.

 

Project Management Institute. (2019). The standard for earned value management. Project Management Institute.

Kim, E., Wells, W. G., & Duffey, M. R. (2003). A model for effective implementation of earned value management methodology. International Journal of Project Management, 21(5), 375–382.

Prentice, J.-P. (2003). Earned value in the construction and facilities maintenance environments. AACE International Transactions, CS171.

True, L. (2003). Do you really know your construction costs? Journal of Construction Accounting & Taxation, 13, 5–10.