PMP Exam Preparation EVM formulae

Earned Value Management (EVM)

EVM integrates project scope, cost and schedule measures Helps in assess and measure project performance and progress EVM uses three key measures for each work package
Planned Value (PV): is authorized budget Earned Value (EV): Budgeted value of work performed/completed (<PV) Actual Cost (AC): Actual cost incurred

Variances
Schedule variance, SV = EV PV Cost variance, CV = EV AC Performance Index Schedule Performance Index, SPI = EV/PV Cost Performance Index, CPI = EV/AC

Earned Value Management (EVM) Formulae

Note that EV comes first in all formulae

Variances
SV = EV PV CV = EV AC

If it is a variance, the formula is EV minus some thing

If it is an index, the formula is EV divided by some thing If the formula is related to cost use AC

Performance Index
SPI = EV/PV CPI = EV/AC

If the formula is related to schedule use PV

Interpretations

Negative variances are bad Indices less than one is bad

EVM & Forecasting

At beginning of project
Estimate at completion (EAC) = Budget at Completion (BAC)

EAC = AC + Bottom-up ETC EAC forecast for ETC work performed at the budgeted rate
EAC = AC + (BAC EV)

EAC forecast for ETC work performed at the present CPI

EAC = BAC/CPI

EAC forecast for ETC work considering both SPI and CPI factors
EAC = AC + [(BAC AC) /(CPI * SPI)]

To-Complete Performance Index (TCPI)

Is projection of CPI that must be achieved on remaining work to meet the specified goal such as BAC TCPI = budget remaining/funds remaining = (BAC EV)/(BAC AC)

EVM Exercise
You have a project to build a new fence. The fence is four sided, 10 meter long each side. Each side to take 1 week, and budgeted for Rs 1000 per side. At the end of Day-3, 25 meters of fencing is done and spent Rs 2800. Calculate below EVM measures

PV EV AC

CPI SPI EAC

BAC CV

ETC VAC

THANK YOU