What is Earned Value Management?
Earned value management is a methodology used in project management to assess project performance and progress. This has the ability to incorporate project management triangle: scope, time, and cost. Earned value management is able to deliver accurate estimates of project performance problems in a single integrated framework, which is a significant addition to project management.
This excel template is useful for earned value EVM calculation in any construction project.
Earned Value Formula
1.Planned Value:
According to the PMBOK Guide, “Planned Value (PV) is the authorized budget assigned to work to be accomplished for an activity or WBS component.”
PV = Percent Complete (planned) x Task Budget
2.Earned Value:
According to the PMBOK Guide, “Earned Value (EV) is the value of work performed expressed in terms of the approved budget assigned to that work for an activity or WBS component.”
EV = Percent Complete (actual) x Task Budget
3.Actual Cost:
According to the PMBOK Guide, “Actual Cost (AC) is the total cost actually incurred in accomplishing work performed for an activity or WBS component.”
AC = Actual Cost of the Task
4.Schedule Variance:
SV = EV – PV
5.Schedule Performance Index:
SPI = EV/PV
- If SPI < 1, the activity is behind schedule
- If SPI = 1, the activity is on schedule
- If SPI > 1, the activity is ahead of schedule
6.Cost Variance:
CV = EV – AC
- The project is over-budget if the CV is negative
- If the CV is zero, the project will be on the budget
- If the CV is positive, it means that the project is under budget
7.Cost Performance Index:
CPI = EV/AC
- If CPI < 1, the project is over budget
- If CPI = 1, the project is on budget
- If CPI > 1, the project is under budget
8.Budget At Completion:
BAC = Project Budget
9.Estimate At Completion:
EAC = BAC/CPI
EAC = AC + (BAC – EV)
EAC = AC + [(BAC – EV)/(SPI x CPI)]
EAC = AC + ETC
10.Estimate To Complete:
ETC = EAC – AC
11.Variance At Completion:
VAC = BAC – EAC
12.To Complete Performance Index:
TCPI = (BAC – EV) / (BAC – AC)
TCPI = (BAC – EV) / (EAC – AC)
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