Earned Value Management

Earned Value Management is an objective method by which a project’s progress with respect to schedule and cost can be tracked and the time/cost required to complete the project can be estimated.

The details are explained in the sections below.

EVM Terms (and their Notation, Unit and Description)

Term	Notation	Formula	Unit	Description
Budget at Completion	BAC	–	$ or Person-Months	The original total budget for the project.
Planned Value	PV	–	$ or Person-Months	Total portion of the approved total budget that is planned to be spent on an activity till date.
Actual Cost	AC	–	$ or Person-Months	Total costs incurred in accomplishing work till date
Cumulative % of Total Work Completed Till date	PWC	Specify total size of each task in suitable units. Eg. # Test Cases Executed for Test Execution Task. PWC = Sum_of_Size_of_tasks_completed_till_date / Total_size_all_tasks_in_the_project	%
Earned Value	EV	PWC * BAC	$ or Person-Months	An estimate of the value of the actual work that is completed till date.
Cost Variance	CV	EV – AC	$ or Person-Months	Difference between EV and AC ie (CV = EV-AC)
Schedule Variance	SV	EV – PV	$ or Person-Months	Difference between EV and AC ie (SV = EV-PV)
Cost Performance Index	CPI	EV/AC	%	Ratio of EV to AC
Schedule Performance Index	SPI	EV/PV	%	Ratio of EV to PV
Estimate at completion (Estimated cost at completion)	EAC	BAC/CPI (or) BAC/(EV/AC) (or) BAC * (AC/EV)	$ or Person-Months	Estimated cost at completion assuming current performance continues into future. Explanation: EV -> AC; => 1 -> AC/EV; ==> BAC -> BAC* (AC/EV);
Estimate time to complete	ETC	Original Duration/SPI	Months	Estimated total time to complete assuming current performance continues into future

EVM Illustrations:

Below is an illustration of using CPI and SPI to know the summary status of various projects. The size of the bubble could be based on one parameter and colour could indicate some other parameter.