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Earned Value Management

© 2011 DaySpring Limited. All Rights Reserved.

DO NOT COPY OR REPRODUCE.
www.dayspringlimited.com
+
Acronym Name Formula
BAC = total budgeted cost of the
BAC Budget at Completion
project
PV Planned Value PV = Planned % complete x BAC
AC = actual cost of the project up
AC Actual Cost
to the measurement period
EV Earned Value EV = Actual % complete x BAC
CV Cost Variance CV = EV - AC
SV Schedule Variance SV = EV - PV
CPI Cost Performance Index CPI = EV / AC
SPI Schedule Performance Index SPI = EV / PV
EAC Estimate at Completion EAC = BAC / CPI
ETC Estimate to Complete ETC = EAC - AC
VAC Variance at Completion VAC = BAC - EAC
To-Complete Performance Index
TCPI TCPI = (BAC - EV) / (BAC - AC)
(BAC based)
To-Complete Performance Index
TCPI TCPI = (BAC - EV) / (EAC - AC)
(EAC based)

© 2012 DaySpring Limited

+
You are the project manager for the construction of 20 miles of
sidewalk. According to your plan, the cost of construction will be
$15,000 per mile and will take 8 weeks to complete.

2 weeks into the project, you have spent $55,000 and completed 4 miles
of sidewalk, and you want to report performance and determine how
much time and cost remain.

Budgeted at Completion (BAC)

BAC = $15000 * 20 = $300,000

© 2012 DaySpring Limited

+ You are the project manager for the construction of 20 miles of sidewalk. According to your plan, the
cost of construction will be $15,000 per mile and will take 8 weeks to complete. 2 weeks into the
project, you have spent $55,000 and completed 4 miles of sidewalk, and you want to report
performance and determine how much time and cost remain.

Budgeted at Completion (BAC)

BAC = $15000 * 20 = $300,000

Planned Value (PV)

PV = Planned % Complete × BAC

Planned % Complete = 2/8 = 25%

So, PV = $300,000 * 25%

= $300,000 × .25
= $75,000

© 2012 DaySpring Limited

+ You are the project manager for the construction of 20 miles of sidewalk. According to your plan, the
cost of construction will be $15,000 per mile and will take 8 weeks to complete. 2 weeks into the
project, you have spent $55,000 and completed 4 miles of sidewalk, and you want to report
performance and determine how much time and cost remain.

Earned Value (EV)

EV = Actual % Complete × BAC

Actual % Complete = 4/20 = 20% (we have completed 4 miles of the 20 mile
project)

So, EV = $300,000 * 20%

= $300,000 × .20
= $60,000
Cost Variance (CV)
CV = EV – AC
CV = $60,000 - $55,000
= $5,000
Remember

A positive CV is good, it indicates that we are doing better on costs than we have planned. Conversely
a negative CV indicates costs overrun.
© 2012 DaySpring Limited
+ You are the project manager for the construction of 20 miles of sidewalk. According to your plan, the
cost of construction will be $15,000 per mile and will take 8 weeks to complete. 2 weeks into the
project, you have spent $55,000 and completed 4 miles of sidewalk, and you want to report
performance and determine how much time and cost remain.

Schedule Variance (SV)

SV = EV – PV
SV = $60,000 - $75,000
= - $15,000

Remember

A positive SV is good, it indicates that the project is ahead of schedule. Conversely a negative SV
indicates we are not performing well as we had planned in terms of schedule That is project is behind
the planned schedule.

© 2012 DaySpring Limited

+ You are the project manager for the construction of 20 miles of sidewalk. According to your plan, the
cost of construction will be $15,000 per mile and will take 8 weeks to complete. 2 weeks into the
project, you have spent $55,000 and completed 4 miles of sidewalk, and you want to report
performance and determine how much time and cost remain.

Cost Performance Index (CPI)

CPI = EV ÷ AC
CPI = $60,000 ÷ $55,000
CPI = 1.09

Remember

• CPI of 1 indicates that the project is exactly on track in respect of budget.

• CPI > 1 is good
• CPI < 1 bad, undesirable and exceeded the budget
+ You are the project manager for the construction of 20 miles of sidewalk. According to your plan, the
cost of construction will be $15,000 per mile and will take 8 weeks to complete. 2 weeks into the
project, you have spent $55,000 and completed 4 miles of sidewalk, and you want to report
performance and determine how much time and cost remain.

Schedule Performance Index (CPI)

SPI = EV ÷ PV
SPI = $60,000 ÷ $75,000
SPI = 0.8

Remember

• SPI of 1 indicates that the project is exactly on planned schedule.

• SPI > 1 is good
• SPI < 1 bad, undesirable and exceeded the schedule

Greater = better
+ You are the project manager for the construction of 20 miles of sidewalk. According to your plan, the
cost of construction will be $15,000 per mile and will take 8 weeks to complete. 2 weeks into the
project, you have spent $55,000 and completed 4 miles of sidewalk, and you want to report
performance and determine how much time and cost remain.

Estimate At Completion (EAC)

EAC = BAC ÷ CPI
EAC = $300,000 ÷ 1.09
EAC = $275,229.36

Estimate To Completion (ETC)

ETC = EAC - AC
ETC = $275,229.36 - $55,000
EAC = $220,229.36

Variance At Completion (VAC)

VAC = BAC - EAC
VAC = $300,000 - $275,229.36
VAC = $24,770.64

* A positive variance indicates that we are doing better than projected.

© 2012 DaySpring Limited
+ You are the project manager for the construction of 20 miles of sidewalk. According to your plan, the
cost of construction will be $15,000 per mile and will take 8 weeks to complete. 2 weeks into the
project, you have spent $55,000 and completed 4 miles of sidewalk, and you want to report
performance and determine how much time and cost remain.

To Complete Performance Index (TCPI ) [cost]

TCPI = (BAC – EV) ÷ Remaining funds
TCPI = (BAC - EV) ÷ (BAC - AC)
TCPI = ($300,000 - $60,000) ÷ ($300,000 – $55,000)
TCPI = 0.98

To Complete Performance Index (TCPI )

TCPI = (BAC - EV) ÷ (EAC - AC)
TCPI = ($300,000 - $60,000) ÷ ($275,229.36 – $55,000)
TCPI = 1.089

© 2012 DaySpring Limited

+ You have evaluated your project and have developed the following earned value management table
from your analysis:

Tasks EV PV AC CV CPI SV SPI

A $10000 $10000 $11000
B $12000 $11000 $13000
C $9000 $8000 $8500
Total $31000 $29000 $32500
Determine the project status by calculating CV, CPI,SV, and SPI for each task
and for the project overall.

© 2012 DaySpring Limited

+ You have evaluated your project and have developed the following earned value management table
from your analysis:

Tasks EV PV AC CV CPI SV SPI

A $10000 $10000 $11000 -1000 0.91 0 1.00
B $12000 $11000 $13000 -1000 0.92 1000 1.09
C $9000 $8000 $8500 500 1.06 1000 1.13
Total $31000 $29000 $32500 -1500 .95 2000 1.07
What is the analysis of how the project is doing from the above indicators?

© 2012 DaySpring Limited