Explanatory Preamble
To understand the following discussion you first have to know all the jargon, so here are the explanations for the alphabets soup.
The Earned Value Technique, loosely referred to as "EV" is a project management control tool defined as: "An objective measure of the value of work performed expressed in terms of the budget planned for the work." In other words, what you got for what you spent. The key acronyms are:
| EV |
= |
Earned Value = percent complete x corresponding budget |
| BCWS
| = |
Budgeted Cost of Work Scheduled, now more properly known as
the Planned Value (PV) |
| ACWP
| = |
Actual Cost of Work Performed, i.e. the actual cost |
| BCWP
| = |
Budgeted Cost of Work Performed, now more properly known as
the Earned Value (EV) |
| CV
| = |
Cost Variance = earned minus actual = BCWP-ACWP |
| SV
| = |
Schedule Variance = earned minus budget = BCWP-BCWS
BCWS-ACWP = Spending Variance = budget minus actual |
| BAC
| = |
Budget At Completion |
| EAC
| = |
Estimated (cost) At Completion
EAC = variance at completion |
| CPI
| = |
Cost Performance Index = BCWP/ACWP |
| SPI
| = |
Schedule Performance Index = BCWP/BCWS
Combined cost-schedule index = CPI x SPI |
You can extrapolate performance to date to calculate the EAC as follows:
EAC = BAC/CPI = BACxACWP/BCWP
This calculation assumes, of course, that the performance experienced to date will continue unchanged to the end of the project. For a variety of reasons it never is and so this calculation is in fact of no practical value.
You can see the relationships of these various elements by going to http://www.maxwideman.com/issacons3/iac1343/sld006.htm
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