# Basic EVM Formulas

(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 .