Question

What are costs? What are benefits? What tangible cost and benefits? What are in intangible cost and benefits? What direct and indirect cost?

What is earned value (EV)? Explain how earned value management can be used to control costs and measure project performance.

Answer 1

In the simplest terms, cost refers to the amount of money paid in order to receive a service or create a product. For example, the cost involved in setting up a building.
On the other hand, benefit is the amount of money or any other kind of a financial reimbursement that is received under given circumstances. For example, benefits received from a medical plan or an insurance policy.

A tangible cost or benefit are quantifiable which can be related to an asset or any material in production. For example, amount spent on rent & utilities is a tangible cost; and the financial pay & insurance costs are tangible benefits.
An intangible cost or benefit is un-quantifiable at an identifiable source. For example, losses in productivity & brand value are intangible costs; and friendly coworkers or job security imply intangible benefits.

Direct costs are generally the variable costs that are incurred in the production of a product, service or any other project. For example, labor wages & cost of materials.
Indirect costs are generally fixed during production. For example, depreciation of assets.

Earned value is a performance management technique to measure the actual work done & progress of the project against a specific planned project. Earned Value Management (EVM) uses a graph plotted between cost & time.
A line called the "planned value" is used to indicate the expected amount of cost & time that is supposed to be incurred in order to finish a project. For example, a task will take 1 week to completion.
Another line, called the "actual value" is plotted to indicate the actual real-time cost & time which is incurred during completion of the project. If the actual value exceeds the planned value, then it is not good.
Earned value is a concept which helps us in quantifying the amount of work done on the project. For example, 95% of the work according to the planned value has been completed at the end of Week 1.

This is how earned value management concept can be represented on a graph to show analysis of project duration, and thereby control costs & measure project performance.