Earned Value Management (EVM)

Question 1

BAC

Answer 1

Budget at Completion - original budget of the project

Question 2

PV

Answer 2

Planned Value - amount of money worth of work that should have been done on the project

PV = planned % complete X BAC

Question 3

EV

Answer 3

Earned Value - amount of money worth of work done on the project

EV = actual % complete X BAC

Question 4

AC

Answer 4

Actual Cost - amount of money already spent on the project

Question 5

CV
(pos = under budget, neg = over budget)

Answer 5

Cost Variance - difference between the work done and the money spent

CV = Earned Value - Actual Cost

Question 6

CPI
(value should be 1 and over for projects UNDER budget)

Answer 6

Cost Performance Index - the rate of how spending vs earning on the project

CPI = Earned Value / Actual Cost

Question 7

SV
(pos for ahead of schedule, neg for behind schedule)

Answer 7

Schedule Variance - difference between amount of work that should be done vs the amount actually done

SV = Earned Value - Planned Value

Question 8

SPI
(should be 1 and over to be ahead of schedule)

Answer 8

Schedule Performance Index - rate of how the project schedule is being met

SPI = Earned Value / Planned Value

Question 9

EAC

Answer 9

Estimate at Completion - forecasting the total cost at the end of the project.

Based on the current spending:
EAC = Budget at Completion / Cost Performance Index

According to original work estimates:
EAC = AC + BAC - EV

Question 10

ETC

Answer 10

Estimate to Completion - forecasting the amount of time that will be needed to complete the current project based on the current performance

ETC = Budget at Completion - Actual Cost

Estimate to Complete (ETC) = Budget at Completion - Earned Value

** note: the ETC is divided by the Cost Performance Index (CPI) when cost factor are expected to persist

Estimate at Completion (EAC) = Actual Cost + ETC

Question 11

VAC
(should be pos for projects that may end at or under budget)

Answer 11

Variance at Completion - difference between the original budget and new forecasted budget.

VAC = Budget at Completion - Estimate at Completion

Question 12

TCPI

Answer 12

To-Complete Performance Index - the performance that needs to be met to finish the project within budget

(BAC - EV) / (BAC - AC) = %

Question 13

Explanation Details
Correct answer: $90,000

The project’s Cost Variance (CV) is $90,000. The CV formula is CV = EV - AC

Neither Earned Value (EV) nor Actual Cost (AC) is provided in the question; therefore, you must solve the question by working backward to the answer.

1. Find the EV:

You can find Earned Value (EV) using the Schedule Variance (SV) formula: SV = EV - PV

$40,000 = EV - $200,000

$40,000 + $200,000 = EV

EV = $240,000

2. Find the AC:

You can find AC using the CPI formula: CPI = EV / AC

1.6 = 240,000 / AC

1.6 x AC = $240,000

AC = $240,000 / 1.6

AC = $150,000

3. Find the Cost Variance (CV):

CV = EV - AC

CV = $240,000 - $150,000

CV = $90,000