152- EVM Formula Tips

Memorization Techniques for EVM Formulas

Basic Definitions

  • BAC (Budget at Completion): Total budget of the project. No formula is associated with BAC.
  • AC (Actual Cost): The actual amount of money spent on costs for a given period. AC also does not have a formula.

Planned Value (PV) and Earned Value (EV)

  • Both PV and EV are multiplied against the BAC.
  • PV (Planned Value): Represents the budgeted cost of work scheduled to be completed by a certain point in time.
    • Formula: PV=(Planned%×BAC)PV = (Planned \% \times BAC)
  • EV (Earned Value): Represents the value of the work actually completed.
    • Formula: EV=(Actual%×BAC)EV = (Actual \% \times BAC)

Cost and Schedule Variances and Indices

  • Key Observation: CV, CPI, SV, and SPI all start with EV.
  • Variance vs. Index: Anytime there's a "V", it indicates a variance, implying subtraction. Anytime there's an "I", it indicates an index, implying division.
Cost Variance (CV) and Cost Performance Index (CPI)
  • CV and CPI both deal with costs (Actual Cost - AC).
  • CV (Cost Variance): The difference between the earned value and the actual costs.
    • Formula: CV=EV−ACCV = EV - AC
  • CPI (Cost Performance Index): A measure of the value of work completed compared to the actual cost.
    • Formula: CPI=EVACCPI = {EV \over AC}
Schedule Variance (SV) and Schedule Performance Index (SPI)
  • SV and SPI both relate to the project schedule (Planned Value - PV).
  • SV (Schedule Variance): The difference between the earned value and the planned value.
    • Formula: SV=EV−PVSV = EV - PV
  • SPI (Schedule Performance Index): A measure of the work completed compared to what was planned.
    • Formula: SPI=EVPVSPI = {EV \over PV}

Forecasting

Estimate at Completion (EAC)
  • EAC is a forecast of the total cost of the project upon completion.
  • Formula: EAC=BACCPIEAC = {BAC \over CPI}
    • Take the total budget and divide it by the project's spending rate (CPI) to forecast the final cost.
Estimate to Complete (ETC)
  • ETC represents how much more money is needed to finish the project.
  • Formula: ETC=EAC−ACETC = EAC - AC
    • Subtract how much you've already spent (AC) from the latest estimate (EAC) to determine how much more funding is required.
Variance at Completion (VAC)
  • VAC shows how much money will be left over (or how much more will be needed) at the end of the project.
  • Formula: VAC=BAC−EACVAC = BAC - EAC
    • Subtract the new forecasted budget (EAC) from the original budget (BAC) to see the expected surplus or deficit.

To-Complete Performance Index (TCPI)

  • TCPI indicates the required cost performance to meet the project's objectives.
  • Formula: TCPI=BAC−EVBAC−ACTCPI = {BAC - EV \over BAC - AC}
    • TCPI is similar to the CPI formula, but it factors in the total budget. It can be thought of as a "total CPI," where both EV and AC are subtracted from the budget (BAC).

Tips for Memorization

  • Write down all 12 formulas multiple times to commit them to memory.
  • Use the provided PDF with all the formulas for reference until they're memorized.