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Blog > Project Controls Tips & Tutorials > 7 Earned Value Management Formulas To Know For Project Control

7 Earned Value Management Formulas To

Know For Project Controls
OCTOBER 24, 2015 BY MICHAEL LEPAGE — 16 COMMENTS

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As a project controls professional, one of

the most important things to understand
is that there are a huge number of
di erent formulas that can make your life
signi cantly easier on a daily basis —
provided that you know when, where and
how to utilize them properly. Have you
ever spent countless hours of your
precious time trying to gure out if the
value of the project you’re working on is equal to the amount of money you’re
actually spending to complete it? With earned value management and the
following terms and formulas, you’ll never have to wonder again — you’ll know
beyond the shadow of a doubt.

Earned Value Management Formulas

Earned Value (EV)
Earned Value is a term that refers to the cost of the work that has been completed
expressed as the value of the performance budget assigned to that work. It’s not
just the cost of the completing some work, it representing the value that has been
earned by completing the work. This is commonly also referred to in the
construction industry as the “budgeted cost of work performed,” or BCWP. Earned
Value is calculated as the Budget At Completion multiplied by the Percent of Work
Completed.

EV = BAC x % Complete

Planned Value (PV)

This term refers to the approved budget for work that is scheduled to be
completed by a certain date in the future. Whereas Earned Value takes a look at
how much you spent to get work done by a certain time, Planned Value is
proactive in that it looks at how much you SHOULD HAVE spent at to get to
a speci ed date. Planned Value is also referred to as Budgeted Cost of Work
Scheduled or BCWS.

To nd the Planned Value at any point in the project, simply add up all your
planned costs up to that point. Often, your planned costs are referenced from the
project’s baseline.

Actual Cost (AC)

As its name suggests, Actual Cost is a term used to describe the amount of money
that you actually spent to get a certain task done by a certain time. Many
construction professionals also call this the “Actual Cost of Work Performed,” or
ACWP or just AC.

Like Planned Value, Actual Cost is a cummulative value that continues to grow as
the project progresses.

Budget at Completion
Budget at Completion, also called BAC, is the total amount of money that you’re
expecting to spend to nish a particular task or for the entire project. You arrive at
this number by taking all of the estimates that you’ve already conducted and
assumptions that you’ve made about things like schedule and work required and
adding them together.

Schedule Variance (SV)

Schedule Variance is a number that tracks how long you thought a task would take
during planning versus how long it actually took and how that relates to the
money you’re spending. To nd this number, begin with the Earned Value of your
task and subtract from it the Planned Value. The number you’re left with is the
amount of money that delays have cost you and your team so far.

SV = EV – PV

Cost Variance (CV)

Cost Variance allows you to see the discrepancy between the amount of value that
you earned on a task and the actual cost that ask required to perform. To arrive at
this number, take the Earned Value and subtract it from the Actual Cost.

CV = EV – AC

Schedule Performance Index (SPI)

Schedule Performance Index allows you to take a closer look at overall schedule
e ciency on a project. It answers the question “am I using my time wisely?” SPI
provides an instantaneous check on schedule at any point in the project. To
calculate SPI, take the Earned Value of your task or project and divide it by the
Planned Value.

SPI = EV / PV

Cost Performance Index (CPI)

Cost Performance Index lets you look at not just how much money you’re
spending to complete a project, but how well that money is being utilized. CPI
provides an instantaneous check on cost performance at any point in the project.
To nd this number, take the Earned Value of your task or project and divide it by
the Actual Cost.

CPI = EV / AC

Estimate at Completion (EAC)

Estimate at Completion is a handy number to know because it allows you to
estimate the total cost of a task as of today, taking into account the work that
you’ve already done. Take the approved budget that you have for the entire task
and subtract from it the cost variance for all of the work that you’ve done to date.
The number you’re left with is your EAC.

EAC = BAC / CPI

 
Estimate to Complete (ETC)
The Estimate to Complete is the number that describes exactly what it will take to
nish a particular task, accounting for all of the work that you’ve done up to this
point. To nd this number, take the Estimate at Completion and subtract from it
the Actual Costs to Date.

ETC = EAC – AC

Get to know these core Earned Value Management formulas and keep them
handy. Chances are you’ll need them soon.

Filed Under: Project Controls Tips & Tutorials, Project Management

About Michael Lepage

Michael is an avid project controls blogger and is the Chief Learning
O cer here at Plan Academy. Michael has taught 1000s professionals how to
use project controls software like Primavera P6 over the past 10 years through
his online courses and tutorials. Michael is a member of AACE, the Guild of
Project Controls and holds his PMP certi cation from PMI.
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Comments

Islam Katta says:

October 25, 2015 at 2:57 pm
Hi Michael
hope this message nds you in best health.
Many thanks for your email. Coincendently i had my superiors visited me last
week from Italy (Astaldi). The Earned Value topic was the main in our discussion.
I’m now in Turkey in their larger health campus project,Etlik as the PCS Manager.
I emphasize I do appreciate it.
Best regards
IMK

Reply

Michael Lepage says:

October 26, 2015 at 10:08 am
IMK, best of luck on your project. Thanks for reading!

Reply

Azad Pasha says:

October 28, 2015 at 4:06 am
Hello Michael,
Great !
This will be a complete set with those items :
BCWS : Budgeted cost of work scheduled
BCWP: Budgeted cost of work performed
ACWP : Actual cost work performed

Maybe an S-curve graph of a project in execution phase will be appropriate to

show all those terms.
have you thought of the learning curve ? and its e ect on the EVM ? I would like
to contribute with an article about it from my own experience .

Keep up the good job !

Azad

Reply

Murali Cheekala says:

October 29, 2015 at 1:17 am
Based on my experience, the success of implementing EVM in a project
depends on the accurate calculation of the % of Physical work complete.

In a complex mega project, having multitude of activities, a comprehensive

Progress Measurement System (PMS) has to be developed to calculate the actual
% of work complete. The PMS can be based on man-hours or cost weightage
basis.

With out an accurate progress measurement system, EVM will be of limited use
for Project Controls personnel.

Reply

Colum O'Donovan says:

October 29, 2015 at 11:03 pm
Great note Michael, it’s very appropriate at the moment

Reply
 Esther Joy says:
November 13, 2015 at 7:18 am
Thanks for giving such a nice article . The information you shared will
help me to get a good knowledge.

Reply

Michael Lepage says:

November 13, 2015 at 1:59 pm
Glad you liked it!

Reply

Praveen Malik says:

January 14, 2016 at 9:02 am
Hi Michael,

Good presentation of formulas. For your readers here is a comprehensive list of

all EVM formulas

BR
Praveen Malik

Reply

Praveen Malik says:

January 14, 2016 at 9:05 am
Hi Michael,
Good presentation of formulas. For your readers here is comprehensive list of all
EVM formulas – http://www.pmbypm.com/earned-value-management-formulas/

BR
Praveen Malik

Reply

Mustafa says:
December 03, 2016 at 2:41 pm
Michael
thanks.

For calculating EAC, article says as EAC= BAC-CV, but the formula below the
article says as EAC=BAC/CPI. the both formulas giving di erent values.
please advise.

regards
Mustafa
Project Manager
Cecon Contracting, Dubai

Reply

Michael Lepage says:

December 06, 2016 at 4:37 pm
Mustafa, I’m not sure where you see EAC = BAC – CV, but the
formual EAC = BAC / CPI is correct.

Reply

Ferdinand Ancheta says:

 December 14, 2016 at 11:56 pm
I want to add these formula:
TEAC – Time Estimate At Completion (Duration / SPI)
ECD – Estimated Completion Date (Start Date + TEAC)

ECD will now then your realistic nish date using if your earned value is accurate.

Thanks,
Ferds

Reply

Ferdinand Ancheta says:

December 14, 2016 at 11:58 pm
oppsss…it should read as ECD will now then your realistic nish
date…if your earned value is accurate.

Reply

Manish Dhungana says:

December 02, 2017 at 6:23 pm
Install and test software for 100 servers over 10 days at $200 per server.
Current situation: 5 days of work, 30 servers completed, $7800 total cost. Please
calculate CPI, SPI, EAC, ECD.

Reply

Ruwan Hewavitharana says:

April 08, 2018 at 7:27 am
The article is very important to me because of I am pursuing CCP. I want
to do a presentation of cost control for my company and I would like to get one
 of power point presentations on the same.

Reply

Michael Lepage says:

April 08, 2018 at 9:09 pm
Hi Ruwan,
Thanks for the feedback.
Here’s a link to this article in PDF
format.https://www.planacademy.com/wp-
content/uploads/2018/04/planacademy.com-7-Earned-Value-
Management-Formulas-To-Know-For-Project-Controls.pdf
Enjoy!
Michael

Reply

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