Using EVM would purchase orders be actual costs or estimates to complete?



  • I am getting my head wrapped around EVM. How should one account for items like purchase orders? In my experience until invoiced POs are treated by accountants like it doesn't exist until you get an invoice or take delivery (an accrual).

    So for example I have a $1MM PO and only have $250,000 invoiced. The obvious answer seems your AC = EV = 25% ($250,000). I think this is really just part of the PM manually estimating the ETC. I just want to understand if this is generally treated differently using EVM.

    So I guess my question would be: Is the general practice to have un-invoiced amounts of a purchase order be part of your ETC?



  • Accounting for costs and EV are not the same thing. For EV I would not recognize the costs as AC (ACWP) until the material is used. The definition of used could differ but it is just definitely separated from the accounting, invoicing, and AP. The reason is is that EV measures cost performance and that is not the same as funds management.


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