Earned Value Management (EVM) is comprised of several formulas that provide an analysis of a project and its current state regarding budget and schedule. EVM provides a way to measure the project in a quantifiable way using project metrics. It may not always be ideal and it may sometimes be a hassle, but EVM helps paint a picture of the current direction a project is going in and whether it is on track to meet the planned goals.
Download a copy of the below table: EVM Cheat Sheet
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Earned Value Management |
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| EVM TERMS | DEFINITION |
| Budget At Completion (BAC) | The project’s budget |
| Planned Value (PV) | The value of the work that should have been completed at any given point for the total project to remain on budget and schedule
PV = (Planned Percentage Completed) X BAC |
| Earned Value (EV) | The estimated value of the work completed at any given point
EV = (Actual Percentage Completed) X BAC |
| Actual Cost (AC) | The actual cost spent at any given point |
| Cost Variance (CV) | The difference between the Earned Value (EV) and the Actual Cost (AC) that shows how much ahead or behind in the budget the project is at any given point
· A negative CV is the amount the project is over budget · A positive CV is the amount the project is under budget
CV = EV – AC |
| Cost Performance Index (CPI) | An indicator into the speed or rate of spending compared to the value being generated (Is the project budget on track)
· CPI less than 1 shows the project is spending too fast and is over budget · CPI equal to 1 shows the project budget is on track · CPI greater than 1 shows the project is under budget
CPI = EV/AC |
| Schedule Variance (SV) | The difference between the planned work completed versus the amount of work that was completed
· A negative SV is an estimate of how much the project is behind schedule · A positive SV is an estimate of how much the project is ahead of schedule
SV = EV – PV |
| Schedule Performance Index (SPI) | The indicator into the speed or rate of the work getting completed compared to the work that was expected to be completed
· SPI less than 1 shows the project as being behind schedule · SPI equal to 1 shows the project as being on track · SPI greater than 1 shows that the project is ahead of schedule
SPI = EV/PV |
| Estimate At Completion (EAC) | Based on the current spending rate, EAC is an estimate of how much it will actually cost to complete the whole project
EAC = BAC/CPI |
| Estimate To Completion (ETC) | Based on the current spending rate, ETC is an estimate of how much it will actually cost from a specified point forward to complete the project; it is simply the EAC minus the current actual costs
ETC = EAC – AC |
| Variance At Completion (VAC) | The difference between the planned budget (BAC) and the new forecast budget (EAC)
VAC = BAC – EAC |
| To-Complete Performance Index (TCPI) | An estimate of how hard it would be to meet the project’s objectives
TCPI (BAC – EV)/(BAC – AC) |
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Categories: Project Management
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