Earned Value Formulas
Earned Value Formulas
Earned Value Formulas
BAC—Budget at No formula—it’s the +RZPXFKPRQH\\RX¶OO To tell the sponsor the total amount of
completion project budget spend on the project value that he’s getting for the project
PV = BAC x
Planned % What your schedule says 7R¿JXUHRXWZKDWYDOXH\RXUSODQVD\V
PV—Planned value complete you should have spent you should have delivered so far
+RZPXFKRIWKH
Actual % To translate how much work the team’s
EV—Earned value ¿QLVKHGLQWRDGROODUYDOXH
EV = BAC x project’s value you’ve
complete
really earned
+RZPXFK\RX¶YH
The amount of money you spend
What you’ve actually
AC—Actual cost spent on the project actually spent so far
doesn’t always match the value
you get!
EV 7R¿JXUHRXWZKHWKHU\RX¶YH
SPI—Schedule SPI = Whether you’re behind or
delivered the value your schedule
performance index PV ahead of schedule
said you would
+RZPXFKEHKLQGRU
SV—Schedule SV = EV – PV ahead of schedule you
To put a dollar value on exactly how far
variance are
ahead or behind schedule you are
EV
CPI—Cost CPI = Whether you’re within Your sponsor is always most interested
AC
performance index your budget or not in the bottom line!
BAC-EV +RZZHOO\RXUSURMHFW
TCPI—To-complete TCPI = must perform to stay on
To forecast whether or not you can stick
BAC-AC
performance index budget
to your budget
+RZPXFKDERYHRU
CV = EV – AC Your sponsor needs to know how much
CV—Cost variance below your budget
it costs to get him the value you deliver
you are
You can tell if your project is ahead of schedule Being a long way under
or under budget by looking for larger numbers. budget isn’t always a
good thing. It means you
If the CPI is much bigger than 1, it means you’re under asked for and were given
budget. And you can tell how much under by looking at the resources that you didn’t
CV—that’s what variance is for! It helps you see just how much need—and which your
the actual cost varies from the value you were supposed to earn company could have used
Ahead of schedule by now.
or under budget elsewhere.
A project that’s behind schedule or over budget will CPI and SPI
have lower numbers. can’t be below
zero, because
When you see a SPI that’s between 0 and 1, that tells you that the project they’re ratios!
is behind schedule…and that means you’re not delivering enough value
to the sponsor! That’s when you check the SV to see how much less value
you’re delivering. And the same goes for cost—a low CPI means that your
Behind schedule project is over budget, and CV will tell you how much more value you
or over budget promised to deliver to the sponsor.
374 Chapter 7