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EVA terminology - useful info

2 replies [Last post]
Tom Fuller
User offline. Last seen 12 years 22 weeks ago. Offline
Joined: 23 Jun 2011
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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

Replies

Stephen Devaux
User offline. Last seen 17 weeks 23 hours ago. Offline
Joined: 23 Mar 2005
Posts: 667

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

 

Rafael Davila
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Joined: 1 Mar 2004
Posts: 5229