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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 |
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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!
Email: PPadmin@planningplanet.com
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