Project Management Cost Formulas

Question 1

Budget at Completion - BAC

Answer 1

Planned total expenditure at the end of the project

Question 2

Actual Cost - AC

Answer 2

Actual cost of work performed to date

Question 3

Earned Value - EV

Answer 3

Budgeted cost of work performed to date

Question 4

Planned Value - PV

Answer 4

Budgeted cost of work scheduled to have been performed to date

Question 5

Cost Variance - CV

Answer 5

EV - AC Negative is “bad”.

Question 6

Schedule Variance - SV

Answer 6

EV - PV Negative is “bad”.

Question 7

Cost Performance Index - CPI

Answer 7

EV / AC = Project is accomplishing $(CPI) of work for every $1 spent. CPI < 1.0 is “bad”.

Question 8

Schedule Performance Index - SPI

Answer 8

EV / PV = Project is progressing at (SPI x 100)% of the planned rate. SPI < 1.0 is “bad”.

Question 9

Estimate at Completion - EAC

Answer 9

AC + (BAC - EV) = As of now, how much will the project cost, if future work is performed as had been planned?

AC + (BAC - EV) / CPI = As of now, how much will the project cost, if future work is performed as work has been completed to date?

AC + (BAC - EV) / (CPI x SPI) = As of now, how much will the project cost, if future work is performed as to date and completion is by the original planned date?

Question 10

Estimate to Complete - ETC

Answer 10

EAC - AC = How much more will the project cost?

Question 11

Variance at Completion - VAC

Answer 11

BAC - EAC = How much over or under budget will the project be at completion?

Question 12

To-Complete Performance Index - TCPI

Answer 12

(BAC - EV) / (BAC - AC) = Cost performance needed from now to completion to meet the original budget goal. Note that TCPI > 1.0 is “bad”.

(BAC - EV) / (EAC - AC) = Cost performance needed from now to completion, if the original BAC is revised to be the current EAC for the remainder of the project.

Question 13

Future Value - FV

Answer 13

Present Value x ( 1 + Annual Interest Rate )Years

Question 14

Net Present Value - NPV

Answer 14

Present Value of Benefits - Present Value of Costs → Basis for Comparing Strategically-Equivalent Alternatives

Question 15

Expected Monetary Value - EVM

Answer 15

Σ Probability of Event x Net Present Value of Event