Earned Value Management
The building blocks of earned value management system are:
- PV – Planned value (BCWS – budgeted cost of work scheduled)
- EV – Earned value (BCWP – budgeted cost of work performed)
- AC – Actual cost (ACWP – actual cost of work performed)
- SV (schedule variance) = EV-PV
- SPI (schedule performance index) = EV/PV
- CV (cost variance) = EV-AC
- CPI (cost performance index) = EV/AC
- SV% (schedule variance %) = ((EV-PV)/PV)*100
- BAC (budget at completion) = sum of planned values of all work packages of the project
- EAC (estimate at completion) = AC+(BAC-EV)/CPI
- EAC = BAC / CPI
- ETC = EAC - AC
- VAC = BAC - EAC
- To complete performance index:
- TCPI = (BAC – EV) / (BAC – AC) Once the EAC is approved by the project sponsor, the newly forecasted EAC replaces BAC in the TCPI formula denominator and TCPI becomes: TCPI = (BAC - EV) ÷ (EAC - AC).
- 50/50 rule – A task is considered 50% complete when it begins and gets credit for the last 50%, only when it is completed.
- 20/80 rule – A task is considered 20% complete when it begins and gets credit for the last 80% only when it is completed.
- 0/100 rule – A task does not get credit for partial completion, only for full completion.
- FV = PV (1 + i)^n - i = interest rate, n = number of compunding periods
