EVM earned value management is the core of planning ,scheduling and reporting it is essential for planning engineers and recommended for other engineers to understand the EVM tools and techniques in the Control Costs process,When you use EVM formulas, you’re measuring and analyzing how far off your project is from your plan.Take a look at the 9 formulas to understand how to evaluate a project based on earned value management go through the definitions and formulas one by one it is very easy and most of project are using EVM to report the progress of the project and evaluate the work performance.
Earned value management – EVM:
1- BAC- Budget at Completion:
Formula Budget at Completion (BAC): No formula – it’s the project budget
What it says: How much money you will spend on the project
Why you use it: To tell the sponsor the total amount of value that he’s getting for the project
2- PV- Planned Value:
Formula: Planned Value (PV) = budget at Completion (BAC) x Planned % Complete
What it says: What your schedule says you should have spent
Why you use it: To figure out what value your plan says you should have delivered so far
3- EV-Earned Value:
Formula: Earned Value (EV) = budget at Completion (BAC) x Actual% Complete
What it says: How much of the project’s value you’ve really earned
Why you use it: EV lets you translate how much work the team s finished into a dollar value
4- AC-Actual Cost:
Formula: Actual Cost (AC) = No formula What you’ve actually spent on the project
What it says: How much you’ve actually spent so far
Why you use it: The amount of money you spend doesn’t always match the value you get
5- SPl- Schedule Performance Index:
Formula: Schedule Performance Index (SPl) =Earned Value (EV) / Planned Value (PV)
What it says: Whether you’re behind or ahead of schedule
Why you use it: To figure out whether you’ve delivered the value your schedule said you would
6- SV- Schedule Variance:
Formula: Schedule Variance (SV) =Earned Value (EV) – Planned Value (PV)
What it says: How much ahead or behind schedule you are
Why you use it: This puts a dollar value on exactly how far ahead or behind schedule you are
7- CPI- Cost Performance Index:
Formula: Cost Performance Index (CPI) =Earned Value (EV) / Actual Cost (AC)
What it says: Whether you’re within your budget or not.
Why you use it: Your sponsor is always most interested in the bottom line!
8- TCPI- To Complete Performance Index:
Formula: To Complete Performance Index (TCPI) =(Budget at Completion (BAC) – Earned Value (EV) ) / (Budget at Completion (BAC) -Actual Cost (AC) )
What it says: How well your project must perform to stay on budget.
Why you use it: This will let you forecast whether or not you can stick to your budget.
9- CV- Cost Variance:
Formula: Cost Variance (CV) = Earned Value (EV) -Actual Cost (AC)
What it says: How much above or below your budget you are
Why you use it: Your sponsor needs to know how much it costs to get him the value you deliver.
Note: If the Schedule Performance Index SPI is below 1, then your project is behind schedule. But if you see a Cost Performance Index CPI under 1, your project is over budget
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