The Earned Value Management formulas
There are two useful numbers that you can compute with the EAC. One of them is called Estimate to Complete (ETC), which tells you how much more money you’ll probably spend on your project.
And the other one, Variance at Completion (VAC), predicts what your variance will be when the project is done.
ETC = EAC - AC €11, 507 – €5, 750 = €5, 757 (how much the rest of the project likely to cost)
Since EAC predicts how much money you’ll spend, if you subtract the AC, you’ll find out how much money the rest of the project will end up costing.
VAC = BAC –EAC €10, 000 – €11, 507 = €1, 507 (extra money required)
If you end up spending more than your budget, the VAC will be negative… just like CV and SV!
Finding missing information
Let’s say you’re given...
… the CPI and Earned Value, and you want to figure out the actual costs. Why would you ever see this? Sometimes it’s hard to figure out how important a project is unless you know how much it’s really spending—if a project is more expensive, people in your company probably care more about it.
If you’re told that a project’s CPI is 1.14 and its EV is €350,000, how do you figure out the actual costs?
CPI=EV/AC
1.14=€350,000/AC
AC = € 307, 017
Let’s say you’re given...
… the Earned Value and actual percent complete, and you want to figure out the project’s budget. This can be really helpful when you need to “read between the lines” when you need to make a decision about a project when someone doesn’t want to give you all the information you need.
When you have a project’s EV of $438,750 and its actual % complete of 32.5%, how do you figure out the total budget (BAC)
EV = BAC x Actual % Complete
$438,750 = BAC x 32.5%
$438,750 = BAC x 0.325
BAC = $1, 350, 000
Let’s say that you’re running 15% over budget today. If your budget is $100,000, then your CPI will be
CPI=EV/AC
CPI=($100,000)/($115,000)=0.87
And the other one, Variance at Completion (VAC), predicts what your variance will be when the project is done.
ETC = EAC - AC €11, 507 – €5, 750 = €5, 757 (how much the rest of the project likely to cost)
Since EAC predicts how much money you’ll spend, if you subtract the AC, you’ll find out how much money the rest of the project will end up costing.
VAC = BAC –EAC €10, 000 – €11, 507 = €1, 507 (extra money required)
If you end up spending more than your budget, the VAC will be negative… just like CV and SV!
Finding missing information
Let’s say you’re given...
… the CPI and Earned Value, and you want to figure out the actual costs. Why would you ever see this? Sometimes it’s hard to figure out how important a project is unless you know how much it’s really spending—if a project is more expensive, people in your company probably care more about it.
If you’re told that a project’s CPI is 1.14 and its EV is €350,000, how do you figure out the actual costs?
CPI=EV/AC
1.14=€350,000/AC
AC = € 307, 017
Let’s say you’re given...
… the Earned Value and actual percent complete, and you want to figure out the project’s budget. This can be really helpful when you need to “read between the lines” when you need to make a decision about a project when someone doesn’t want to give you all the information you need.
When you have a project’s EV of $438,750 and its actual % complete of 32.5%, how do you figure out the total budget (BAC)
EV = BAC x Actual % Complete
$438,750 = BAC x 32.5%
$438,750 = BAC x 0.325
BAC = $1, 350, 000
Let’s say that you’re running 15% over budget today. If your budget is $100,000, then your CPI will be
CPI=EV/AC
CPI=($100,000)/($115,000)=0.87