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higher the better Payback Period: The lower the better Rough Order Magnitude (ROM): Estimated value +50 or -50 % Time PERT - Expected Activity Duration (EAD): P + 4M + O / 6 Standard Deviation of an activity: P – O / 6 Valuesa 1 sigma: 68.26%

Internal Rate of Return (IRR): The higher the better Life Cycle Cost: The lower the better

**Range of Activity Duration: EAD +/- SD Variance of an activity: (P – O / 6)
**

2

2 sigma: 95.46%

3 sigma: 99.73%

6 sigma: 99.99%

Control Limit: 3 sigma from mean

Probability Expected Monetary Value (EMV): Probability % x Impact in currency Communication Communication Channel: n (n – 1) / 2 Budget at completion (BAC): is simply the total budgeted cost of the project. Actual cost (AC): is the expenditures spent thus far or at a specific point in time on the project. In example, actual cost at the end of month three is $95,000 Planned value (PV): is how much work was expected to be completed. PV = Planned % Complete x BAC In example, PV = 80% x $110,000 = $88,000 Earned value (EV): is how much work has actually been completed. EV = Actual % Complete x BAC In example, EV = 75% x $110,000 = $82,500

500). SPI = EV / PV Schedule performance index (SPI): shows how close actual work is being completed compared to the schedule. use SPIs. negative cost variance shows us that our sample project is running over budget.500 . use CPI. CPI = EV / AC Cost performance index (CPI): shows how much work is being completed on the project for every unit of cost spent.94 hours Are you over budget? Cost Performance Index (CPI): If you want to know whether you’re over or under budget.500 . CV= $82.500 / $88.000 = 0.500).$88.$95. The key to using this is that when you’re ahead of schedule. For every hour we originally estimated. SPI < 1 : The project work is going slower than expected SPI > 1 : The project work is being completed faster than originally expected In example. Is your project behind or ahead of schedule? Schedule Performance Index (SPI): If you want to know whether you’re ahead of or behind schedule. you’ve earned more value than planned! So EV will be bigger than PV.000 = (-$5. CPI < 1 : The project work is costing more than expected CPI > 1 : The project work is being completed at a lesser cost than original expected .938 . Schedule variance (SV): shows how well the actual work performed compares to the planned schedule SV = EV – PV SV = $82.000 = (-$12. negative schedule variance shows that the amount of work actually completed is running behind what was scheduled to be completed. our project team is actually completing only 0. SPI = EV / PV = $82.Cost variance (CV): shows how the actual cost of the project is comparing to the value of work completed CV = EV – AC In example.

500 / $95. For every $1 in cost. CPI = $82.In example.87 in work output.000 = 0.868 . our sample project is earning only $0. CPI = EV / AC . .

000 Estimate at completion (EAC): formula forecasts the total cost of the project based on current project performance.000 = $31.EAC VAC –ve : Indicates a budget overrun VAC –ve : Indicates that the project is expected to come in under budget.Estimate at completion (EAC): formula forecasts the total cost of the project based on current project performance. Based on current performance. EAC = BAC / CPI In example: EAC = $110.11 = (-$16. this tells us that when our project is completed.000 to get it finished Variance at completion (VAC): predicts what the difference between the budgeted project cost and actual project cost will be at the conclusion of the project.000 . VAC = BAC .11).95.728.11 . EAC = BAC / CPI Estimate to complete (ETC): formula forecasts how much more money will be required to finish the project ETC = EC . In example: VAR = $110.728.11.868 = $126. .728. our project will run about $17.000 / 0.$126.AC In example: ETC = $126.728.000 over budget. Based on current performance.11. our project is going to take just under $32. its total cost will be just under $127.728.

000 . If you’re performing within budgeted cost. Q’s: What will the total cost of the project be at completion? EAC How much more money will it take to finish the project? ETC How much over or under budget will the total project cost be? VAR How much work was expected to be finished at this point in time? PV How much work has actually been completed at this point in time? EV How much more or less has the completed work cost compared to what was planned? CV How much more or less work has been accomplished compared to what was planned? SV How much is the work being completed costing compared to what was planned? CPI How does the work being completed compare to what was planned in the schedule? SPI What level of performance must future project work meet in order to meet the budget? TCPI based on BAC What level of performance must future project meet in order to meet the project’s cost based on past performance? TCPI based on EAC .11 = 0.000 . it’ll be based on your BAC.500 / $15.$95. The formula for TCPI to meet the BAC is: TCPI = (BAC – EV) / (BAC – AC) In example: TCPI = ($110.728.$95. 2.500) / ($110. If you’re running over budget. a higher number means it’s time to take a stricter cost management approach. When the number is lower than one. There are two different formulas for TCPI.000) = $27.500) / ($126. you know you’re well within your budget and you can relax a bit.11 .To-complete performance index (TCPI): tells us what performance must be achieved to meet either the budget at completion or estimate at completion.$82. When you’re looking at the TCPI for a project. the more you’re going to have to rein in spending on your project and cut costs. A project that’s behind schedule or over budget will have lower numbers.000 = 1.867 You can tell if your project is ahead of schedule or under budget by looking for larger numbers.$82. you’ll have to estimate a new EAC and base your TCPI on that.500 / $31.000) = $27.83 The formula for TCPI to meet the EAC is: TCPI = (BAC – EV) / (EAC – AC) In example: TCPI = ($110.728. 1.000 . One is for when you’re trying to get your project within your original budget. The higher the number. Two is for when you are trying to get your project done within the Estimate at Completion you’ve determined from Earned Value Calculations. Have you ever wondered halfway through a project just how much you’d have to cut costs in order to get it in within your budget? This number represents a target that your CPI would have to hit in order to hit your forecasted completion cost.

500 . SPI = EV / PV o Schedule variance (SV): How much ahead or behind schedule you are. it’s the opposite. Remember “lower = loser”? Well. you’ll have to estimate a new EAC and base your TCPI on that. CPIC = EVC / ACC Forecast what your project will look like when it’s done: o Estimate at completion (EAC) formula forecasts the total cost of the project based on current project performance. use CPI.000= $88. There is no formula for actual cost. If you’re running over your budget. EV = Actual % Complete x BAC. You want it lower to give you more room to spend money! .000.868. Formula for TCPI to meet the BAC is: TCPI = (BAC-EV) / (BAC-AC) Formula for TCPI to meet the EAC is: TCPI = (BAC – EV) / (EAC – AC) A high TCPI means a tight budget: When you’re looking at the TCPI for a project. CPI=EV/AC.AC% Core formulas: Budget at completion (BAC): is total budgeted cost of the project. ETC = EAC – AC o Variance at completion (VAC) predicts what the diff betwn the budgeted proj cost and actual project cost will be at the conclusion of the proj.BAC • Project cost at end of month three: $95. 500) o Cumulative cost performance index (CPIC) provides a more accurate overall performance index for the proj based on earlier CPI measurements. 82.000 -. -. If you’re performing within your budgeted cost. use SPIs.000 = 0. A higher number means that your budget is too tight. PV = Planned % Complete x BAC. When the number is lower than one.000 Planned Value (PV): This is how much of your budget you planned on using so far.500 Is your project behind or ahead of schedule? o Schedule performance index (SPI):If you want to know whether you’re ahead of or behind schedule. 82. 500) Are you over budget? o Cost performance index (CPI): if you want to know whether you’re over or under budget..AC • Estimated work complete at end of month three: 80% -. you know you’re well within your budget and you can relax a bit. o Cost variance (CV): How much above or below your budget you are. EV = 75% x $110.SV = EV – PV.000 = ($12. with TCPI.88.000 = ($5. PV = 80% x $110.500 .000 Earned Value (EV): This figure tells you how much your project actually earned so far. 82.500 / 95. in above example it is $110.PV% • Actual work complete at end month three: 75% -.000 Actual Cost (AC): is the expenditures spent thus far or at a specific point in time on the project.000 = $82. VAC = BAC – EAC o To-complete performance index (TCPI) tells you how well your project will need to perform to stay on budget. EAC = BAC / CPI o Estimate to complete (ETC) formula forecasts how much more money will be required to finish the project. AC = $95. CV = EV – AC. it’ll be based on your BAC.Case study of the Earned Value formulas: • 4-month project: Total budget $110. a higher number means it’s time to take a stricter cost management approach.95.

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