Hi guys - See below, which might assist in understanding EVA terminology.
TERMINOLOGY
VALUE
DESCRIPTION
SOURCE OF INFORMATION
Budget at Completion (BAC)
Contract budget
The total budget for each activity
Contract schedule
Earned Value (EV)
Contract budget x actual % complete
What we’ve actually earned for work performed to date
Contract schedule, daily reports
Planned Value (PV)
Contract budget x planned % complete
What we planned to earn to date
Contract schedule, tender
Schedule Performance Index (SPI)
Earned value / planned value
Compares what we’ve actually earned to date with what we planned to earn to date
Contract schedule, daily reports, tender
Schedule Variance (SV)
Earned value – planned value
Difference between planned profit/loss to date and actual profit/loss to date
Contract schedule, daily reports, tender
Cost Performance Index (CPI)
Earned value / actual cost
Compares what we’ve actually earned to date with what we’ve actually spent to date
Contract schedule, daily reports, IPM cost reports
Cost Variance (CV)
Earned value – actual cost
Profit or loss to date
Contract schedule, daily reports, IPM cost reports
Estimate at Completion (EAC)
BAC / CPI
Estimated total cost to complete the activity
Contract schedule, daily reports, IPM cost reports
Estimate to Complete (ETC)
EAC – actual cost
Estimated total cost to complete the activity
Contract schedule, daily reports, IPM cost reports
Value at Completion (VAC)
BAC – EAC
Estimated profit/loss for activity
Contract schedule, daily reports, IPM cost reports
To Complete Performance Index (TCPI)
(BAC – EV) / (BAC – AC)
Similar to CPI. This is an indicator of “slack” or “negative slack” until the end of the activity
Contract schedule, daily reports, IPM cost reports
Tom,
You might want to add:
Critical ratio EAC (SPI X CPI)
Cost EAC = BAC / (SPI X CPI)
If BAC = $1M, SPI = .90 and CPI = .80, CR = (.90 X .80) = .72.
Thus, Cost EAC = $1M / .72 = $1,388,889
This formula takes into account that, if you are both over budget and behind schedule, you'll be overspending (indirect costs, LOEs etc.) for longer than planned. There is much empirical data to show that this is the most accurate EV predictor of Cost EAC.
Fraternally in project management,
Steve the Bajan
Beware, SPI can be flawed!
http://www.earnedschedule.com/Docs/Earned%20Schedule%20-%20A%20Breakthrough%20Extension%20to%20EVM.pdf