Earned Value Formulas A Comprehensive Reference Guide

Professionals as well as pmp aspirants frequently need to refer to earned value formulas either for exam preparation of for implementation.

Earned Value Analysis is an effective tool to monitor and control project progress and also predict project health. Earned Value Management indices such as schedule performance index and cost performance index assist in reporting project status. Further Earned Value Analysis can also forecast project completion dates as well as budget required for completing the balance work.

In fact many believe that the earned value management (evm) formulas are difficult to remember. However, with little practice and understanding anyone can recollect these formulas.

Following paragraphs enumerates all essential earned value formulas for preparation of pmp certification examination.

Earned Value Measurement Formulas

Fixed Formula

  • 25 / 75 Method
  • 50 / 50 Method
  • EV = (% ) X Work package BAC

Percent Complete

  • EV = % Work Complete Estimate X Work Package BAC

Variance Analysis Earned Value Formulas

Schedule Variance (SV)

  • Schedule Variance formula SV = EV – PV
  • Positive (>0) = Ahead of schedule
  • Equal To Zero = On schedule
  • Negative (<0) = Behind Schedule

Cost Variance (CV)

  • Cost Variance formula CV = EV – AC
  • Positive (>0) = Under planned cost
  • Equal To Zero = On planned
  • Negative (<0) = Over planned cost

Variance at Completion (VAC)

  • Variance at Completion formula VAC = BAC – EAC
  • Positive (>0) = Under planned cost
  • Equal To Zero = On planned cost
  • Negative (<0) = Over planned cost

Performance Indices Earned Value Formulas

The other name for earned value analysis performance indices is efficiency indicators.

Schedule Performance Index (SPI)

  • Schedule Performance Index Formula SPI = EV / PV
  • Greater than 1.0 = Ahead of schedule
  • Exactly 1.0 = On schedule
  • Less than 1.0 = Behind schedule.

Cost Performance Index (CPI)

  • Cost Performance Index Formula CPI = EV / AC
  • Greater than 1 = Under planned cost
  • Exactly 1 = On planned cost
  • Less than 1 = Over Planned cost

Earned Value Analysis Forecasting Project Performance

Estimate To Complete (ETC)

Estimate to complete (ETC) formula to complete the balance work

  • Method 1 to calculate ETC
    • ETC = Re-estimate manually
  • Method 2 using mathematical equation
    • ETC = (BAC-EV)/CPI
  • Method 3 if EAC is valid then;
    • ETC = EAC – AC

Estimate At Completion (EAC)

Estimate at Completion (EAC) formula for the balance work

  • If future work will be accomplished at the planned rate (EAC at budgeted rate)
    • EAC = AC + BAC – EV
  • If the CPI is expected to be the same (EAC at current CPI)
    • EAC = BAC/CPI
  • Considering impact of both CPI and SPI
    • EAC = AC + [(BAC – EV) / (CPI x SPI)]
  • If the initial plan is no longer valid then
    • EAC = AC + Bottom-up ETC

To Complete Performance Index (TCPI)

  • TCPI = (BAC – EV) / (BAC-AC)
  • TCPI = (BAC-EV) / (EAC-AC)
  • Work Remaining = BAC – EV
  • Funds Remaining = BAC – AC
  • Also, Funds Remaining = EAC – AC
  • Greater than 1.0 = Harder to complete
  • Exactly 1.0 = Same to complete
  • Less than 1.0 = Easier to complete

Also read: Wrong Cost Estimates Implications Solutions

Earned Value Management Formulas & EVM Graph

The following picture summarizes various earned value management formulas. The earned value graph below illustrates attributes of earned value management system. The earned value graph which is a standard S-Curve also helps to understand concepts and remember formula is an easy way.

EVM_S_CURVE_Formulas
Earned Value Management Formulas and EVM S Curve

Also read: Project Management Formulas

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