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**(explained with the example of building 10 houses each has a value of RUPEE 1000
**

expected to be completed in 10 weeks in proportion):

Planned Value (PV) — The budgeted value of the work completed so far at a

specific date

example: at end of week 4, altogether 4 houses should be completed, the PV is

RUPEE 4000

Earned Value (EV) — The actual value of the work completed so far at a

specific date (refer to the “Notes on Earned Value Measurement” section below)

example: by end of week 4, only 3 houses are completed, the EV is RUPEE 3000

Actual Cost (AC) — The total expenditure for the work so far at a specific date

example: by end of week 4, RUPEE 4000 was spend, the AC is RUPEE 4000

** Schedule Variance (SV) — difference between PV and EV, to tell whether the
**

project work is ahead of / on / behind schedule

SV = EV – PV

If the project is behind schedule the SV will be negative (i.e. achieved less

than what planned)

If the project is on schedule the SV = 0

If the project is ahead of schedule the SV will be positive (i.e. achieved

more than what planned)

example: by end of week 4, the SV = EV – PV = RUPEE3000 – RUPEE4000

= -RUPEE1000 (behind schedule)

Schedule Performance Index (SPI) — ratio between EV and PV, to reflect

whether the project work is ahead of / on / behind schedule in relative terms

SPI = EV/PV

If the project is behind schedule the SPI < 1 (i.e. achieved less than what

planned)

If the project is on schedule the SPI = 1

If the project is ahead of schedule the SPI > 1 (i.e. achieved more than what

planned)

example: by end of week 4, the SPI = EV/PV = RUPEE3000/RUPEE4000 =

0.75 (behind schedule)

to reflect whether the project work is under / on / over budget in relative terms CPI = EV/AC If the project is over budget the CPI < 1 (i. to tell whether the project work is under / on / over budget CV = EV – AC If the project is over budget the CV will be negative (i.e. labour with less skilled than expected) example: the EAC for the housing project = RUPEE10000 / 0. the CPI = EV/AC = RUPEE3000/RUPEE4000 = 0. the CV = EV – AC = RUPEE3000 – RUPEE4000 = -RUPEE1000 (over budget) Cost Performance Index (CPI) — ratio between EV and AC. EAC is a way to project/estimate the planned cost at project finish based on the currently available data The following formulas can be used to calculate EAC based on which information and conditions given in the question: EAC = BAC/CPI If we believe the project will continue to spend at the same rate up to now The delay is caused by reasons which is likely to continue (e.e. that is the total amount of money originally planned to spend on the project/work example: the BAC for the housing project = RUPEE1000 x 10 = RUPEE10000 Estimate at completion (EAC) — as the project goes on. achieved more than spent) example: by end of week 4. there may be variations into the actual final cost from the planned final cost. achieved less than spent) If the project is on budget the CPI = 1 If the project is under budget the CPI > 1 (i.g. Cost Variance (CV) — difference between PV and AC. achieved less than spent) If the project is on budget the CV = 0 If the project is under budget the CV will be positive (i.e.75 (over budget) Advanced EVM Formulas Budget at Completion (BAC) — also known as the project/work budget. achieved more than spent) example: by end of week 4.e.75 = RUPEE13333 .

i.g. VAC will be positive example: the VAC for the housing project = RUPEE10000 – RUPEE13333 (just take the 1st EAC as an example only) = -RUPEE3333 To Complete Performance Index (TCPI) — the efficiency needed to finish the project on budget. the difference between the new estimate at completion and original planned value VAC = BAC – EAC If we forecast the project will be over budget.e. it is the ratio between budgeted cost of work remaining and money remaining TCPI = (BAC-EV)/(BAC-AC) Use this equation if the project is required to finish within BAC example: the TCPI for the housing project at end of week 4 = (RUPEE10000 – RUPEE3000) / (RUPEE10000 – RUPEE4000) = 1.75*0. VAC will be negative If we forecast the project will be under budget. typhoon) which is not likely to happen again example: the EAC for the housing project = RUPEE4000 + (RUPEE10000 – $3000) = RUPEE11000 EAC = AC + [(BAC-EV)/(SPI*CPI)] If we believe that both current cost and current schedule performance will impact future cost performance The performance of the project will continue with sub-prime standards (over budget and behind schedule) This formula is less likely to be used for the PMP® Exam example: the EAC for the housing project = RUPEE4000 + [(RUPEE10000 – $3000)/(0. EAC = AC + (BAC-EV) If we believe that future expenditures will occur at the original forecasted amount (no more delays of the same kind in future) The delay might be caused by some unforeseen reasons (e.75)] = RUPEE16444 EAC = AC + New Estimate If we believe the original conditions and assumptions are wrong Will not be tested as there is nothing to calculate Variance at Completion (VAC) — the variance at completion.167 TCPI = (BAC-EV)/(EAC-AC) Use this equation if the project is required to finish within new EAC example: the TCPI for the housing project at end of week 4 with new EAC RUPEE13333 = (RUPEE10000 – RUPEE3000) / (RUPEE13333 – RUPEE4000) = 0.75 .

earned value of 3 house built is RUPEE3000 Percentage Complete — directly transform the percentage of the amount of work completed into EV example: building 10 houses each has a value of RUPEE1000 expected to be completed in 10 weeks in proportion. 50% EV upon completion . 100% EV upon completion 20/80 rule: 20% EV at the activity begins. 80% EV upon completion. 50/50 rule: 50% EV at the activity begins. Physical Measurement — directly transform the physical measurement of the amount of work completed into EV example: building 10 houses each has a value of RUPEE1000 expected to be completed in 10 weeks in proportion. earned value of 30% complete is RUPEE3000 Weighted Milestone — a EV is assigned to the 100% completion of each milestone of the work packages with prior agreement with stakeholders Fixed Formula — a specific percentage of the overall PV is assigned to the start of a work package and the remaining assigned upon completion. these must be agreed upon in the project management plan 0/100 rule: 0% EV at the activity begins.

.

CPI and SPI).e.Name (Abbreviation) Formula Interpretation Schedule Performance SPI = EV/PV < 1 behind schedule = 1 on schedule Index (SPI) EV = Earned Value > 1 ahead of schedule PV = Planned Value < 1 Over budget = 1 On budget > 1 Under budget Cost Performance CPI = EV/AC sometimes the term Index (CPI) EV = Earned Value ‘cumulative CPI’ would AC = Actual Cost be shown. Completion (EAC) if AC = Actual Cost BAC. this formula performance continues EV = Earned Value is not likely to be used CPI = Cost Performance Index SPI = Schedule Performance Index . EV. i. the original BAC = Budget at completion CPI remains the same estimation is not CPI = Cost performance index accurate EAC = AC + [(BAC - Estimate at EV)/(CPI*SPI)] use when the question gives all the values (AC. which actually is the CPI up to that moment Schedule Variance SV = EV – PV < 0 Behind schedule = 0 On schedule (SV) EV = Earned Value > 0 Ahead of schedule PV = Planned Value Cost Variance (CV) CV = EV – AC < 0 Over budget = 0 On budget EV = Earned Value > 0 Within budget AC = Actual Cost if the original estimate Estimate at EAC = AC + New ETC is based on wrong Completion (EAC) if AC = Actual Cost data/assumptions or original is flawed New ETC = New Estimate to Completion circumstances have changed Estimate at EAC = AC + BAC – EV the variance is caused by a one-time event and Completion (EAC) if AC = Actual Cost is not likely to happen BAC remains the same BAC = Budget at completion again EV = Earned Value if the CPI would remain Estimate at Completion (EAC) if EAC = BAC/CPI the same till end of project. substandard BAC = Budget at completion otherwise.

Name (Abbreviation) Formula Interpretation TCPI = (BAC – EV)/ (BAC – AC) BAC = Budget at completion EV = Earned value AC = Actual Cost To-Complete < 1 Under budget Performance Index TCPI = Remaining = 1 On budget (TCPI) > 1 Over budget Work /Remaining Funds BAC = Budget at completion EV = Earned value CPI = Cost performance index Estimate to ETC = EAC -AC Completion EAC = Estimate at Completion AC = Actual Cost Variance at VAC = BAC – EAC < 0 Over budget = 0 On budget Completion BAC = Budget at completion > 0 Under budget EAC = Estimate at Completion .

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