Earned value analysis in project management (EVA) is a technique for measuring project performance against project scope, schedule, and cost baselines.
It is based primarly on earned value management (EVM) and forcasting and it is one of the most difficult parts of the PMP® certification exam to master.
Here you will find an all-in-one project management graphic that summarizes:
- the main parameters and formula to calculate the performance measurement and forecasting metrics of a project
- how they are used and interpreted
- their parent-to-child relationships
Earned Value Analysis in Project Management
1) Earned Value Analysis in Project Management
Monitoring and measuring the project’s cost, schedule, and work performed against the project management plan at any given point in time, forecasting the project’s completion date and final cost, and analyzing variances in the schedule and budget as the project proceeds.
2) Earned Value Management
2.1) KEY PARAMETERS
BUDGET AT COMPLETION (BAC)
- No formula
- Total budget for the project
EARNED VALUE (EV)
- EV = BAC x Actual % complete
- Value of work completed by a given point in time compared to authorized budgeted amount assigned to work component.
ACTUAL COST (AV)
- No formula
- Actual cost of completing the work component by a given point in time.
PLANNED VALUE (PV)
- PV = BAC x Planned % complete
- Approved budget assigned to schedule activity or WBS component to be completed by a given point in time.
2.2) PERFORMANCE MEASUREMENT METRICS
- Formula start with EV
- Results: below 1.0 = behind shedule/over budget; exactly 1.0 = on schedule/budget; above 1.0 = ahead of schedule/under budget
COST VARIANCE (CV)
- CV = EV – AC
- Variance measuring actual performance to date (or during the period) against what’s been spent.
SCHEDULE VARIANCE (SV)
- SV = EV – PV
- Variance measuring how much behind or ahead of schedule at given point in time.
COST PERFORMANCE INDEX (CPI)
- CPI = EV / AC
- Measure of whether project is within budget or not at given point in time.
SCHEDULE PERFORMANCE INDEX (SPI)
- SPI = EV / PV
- Measure of whether schedule is ahead of or behind what planned for given point in time.
3.1) PERFORMANCE FORECASTING METRICS
ESTIMATE COMPLETION (EAC)
- EAC = BAC / CPI
- Projection of expected total cost of work component, schedule activity, or project at completion, based on available data at given point in time.
ESTIMATE COMPLETE (ETC)
- ETC = EAC – AC
- Projection of expected costs of remaining work, based on available data at given point in time.
VARIANCE AT COMPLETION (VAC)
- VAC = BAC – EAC
- Projection of expected variance between budget at completion and estimate at completion, based on available data at given point in time.
TO-COMPLETE PERFORMANCE INDEX (TCPI)
- 2 formula:
- TCPI = (BAC – EV)/(BAC – AC); based on BAC (original BAC only money available)
- TCPI = (BAC – EV)/(EAC – AC); based on EAC (new revised EAC approved)
- Projection of anticipated cost efficiency required to complete work with money available.
- Results: TCPI greater than 1.0 more difficult to achieve, TCPI less than 1.0 easier to achieve.