Metrics Calculation

Earned Value (EV)

Earned Value is an approach where you monitor the project plan, actual work and work-completed value to see if a project is on track. Earned Value indicates how much of the budget and time should have been spent, with regards to the amount of work done to date. It answers the “What did we get for the money we spent?” question.

When properly applied, EVM (Earned Value Management) provides an early warning of performance problems. Additionally, EVM promises to improve the definition of project scope, prevent scope creep, communicate objective progress to stakeholders, and keep the project team focused on achieving progress.

EVM can play a crucial role in answering management questions that are critical to the success of every project, such as:

• Are we ahead of or behind schedule?
• How efficiently are we using our time?
• When is the project likely to be completed?
• Are we under or over our budget?
• What is the remaining work likely to cost?
• What is the entire project likely to cost?
• How much will we be under or over budget?

The project manager can use the EVM methodology to help identify:

• Where problems are occurring
• Whether the problems are critical or not
• What it will take to get the project back on track

EV Management Terms

Term	Description	Interpretation
PV (BCWS)	Planned Value (Budgeted Cost of Work Schedule)	What is the estimated value of the work planned to be done?
EV (BCWP)	Earned Value (Budgeted Cost of Work Performed)	What is the estimated value of the work actually accomplished?
AC (ACWP)	Actual Cost (Actual Cost of Work Performed)	What is the actual cost incurred?
BAC	Budget at Completion	How much did you BUDGET for the TOTAL JOB?
EAC	Estimate at Completion	What do we currently expect the TOTAL project to cost?
ETC	Estimate to Complete	From this point on, how much MORE do we expect it to cost to finish the job?
VAC	Variance at Completion	How much over or under budget do we expect to be?

Earned Value Management Formulas & Interpretation

Name	Formula	Interpretation
Earned Value (EV)	Total Estimated Cost * % Complete	Amount of budget earned so far based on physical work accomplished, without reference to actual costs
Cost Variance (CV)	EV – AC	NEGATIVE is over budget POSITIVE is under budget
Schedule Variance (SV)	EV – PV	NEGATIVE is behind schedule POSITIVE is ahead of schedule
Cost Performance Index (CPI)	EV / AC	I am getting _____ cents out of every $1
Schedule Performance Index (SPI)	EV / PV	I am progressing at ___% of the rate originally planned
Estimate At Completion (EAC) Note: There are many ways to calculate EAC	BAC / CPI	As of now how much do we expect the total project to cost $_____. Used if no variances from the BAC have occurred
	AC + ETC	Actual plus a new estimate for remaining work. Used when original estimate was fundamentally flawed
	AC + BAC – EV	Actual to date plus remaining budget. Used when current variances are atypical
	AC + (BAC – EV) / CPI	Actual to date plus remaining budget modified by performance. When current variances are typical
Estimate To Complete (ETC)	EAC – AC	How much more will the project cost?
Variance At Completion (VAC)	BAC – EAC	How much over budget will we be at the end of the project?