Before I start my posts on Earned Value Management (EVM), I would like my readers to go through some common EVM definitions that you would read in my upcoming posts. This would help you grasp the topics faster and it would also be a revision to your EVM concepts 🙂
* Budget At Completion (BAC)
This is always the Total cost from the Baseline, calculated using the Baseline Budgeted Values or Baseline At Completion values depending upon the ‘Earned Value Calculation’ setting (Admin, Admin Preferences, Earned Value).
If the ‘Earned Value Calculation’ is set to ‘Budgeted Values with Planned dates’ or ‘Budgeted Values with Current Dates’:
BAC = BL Budgeted Labor Cost + BL Budgeted Non-Labor Cost + BL Budgeted Material Cost + BL Budgeted Expense Cost.
If the ‘Earned Value Calculation’ is set to ‘At Completion Values with Current Dates’:
BAC = BL At Completion Labor Cost + BL At Completion Non-Labor Cost + BL At Completion Material Cost + BL At Completion Expense Cost.
* Actual Cost (ACWP)
Actual Cost (ACWP) is the actual total cost incurred on the activity as of the project data date. ACWP is the same as the Actual Total Cost.
ACWP = Actual Labor Cost + Actual Non-Labor Cost + Actual Material Cost + Actual Expense Cost
* Cost Variance (CV)
Cost Variance is the difference between the Earned Value and the actual cost of that activity.
CV = EV – Actual Cost
* Earned Value Cost (BCWP or EV)
Earned Value Cost (EV) is the portion of the budgeted total cost of the activity that is actually completed as of the project data date. Also known as the Budgeted Cost of Work Performed for the activity. The method for computing the performance percent complete depends on the Earned Value technique selected for the activity’s WBS.
EV = BAC * Performance % Complete
* Planned Value Cost (BCWS or PV)
Planned Value Cost (PV) is the portion of the budgeted total cost of the activity that is scheduled to be completed as of the project data date according to the baseline dates. Also known as the Budgeted Cost of Work Scheduled for the activity. The Schedule % Complete specifies how much of the activity’s original duration has been completed so far based on the baseline dates.
PV = BAC * Schedule % Complete
* Cost Performance Index (CPI)
A CPI greater than 1 means that Earned Value is greater than the actual amount spent. A CPI of less than 1 means that the Earned Value is less the. n the actual amount spent.
CPI = EV / Actual Cost
* Schedule Performance Index (SPI)
An SPI greater than 1 means that Earned Value is greater than the Planned Value. An SPI of less than 1 means that the Earned Value is less then the Planned Value.
SPI = EV / PV
* Estimate to Complete (ETC)
Estimate to complete is the estimated cost left to complete on the activity. The calculation can be customized at the WBS level (On the ‘Earned Value’ tab in the WBS view).
It can be computed as either:
ETC = Remaining Total Cost for the activity
ETC = PF * (BAC – EV)
Where ‘PF’ is a multiplier to weight the ETC calculation. This can be either ‘1’, ‘1/CPI’ or ‘1/(SPI * CPI)’ or user defined amount.
* Estimate At Completion (EAC)
EAC is the estimated cost at completion for the activity.
EAC = Actual Cost + ETC.