The Earned Value Management Terminology

The EVM Base Key Figures

The EVM key figures are a central element of EVM. The three most important key figures received new terms more than 20 years ago. In practice, however, you will probably come across the old EVM terms quite often. That is why I give you a short explanation here first.

In 1996, the EVMS criteria, which were taken over from the DoD Manual 5000.2R, were revised. They were then declared a national standard by the American Standards Institute/Electronic Industries Association (ANSI/EIA) in May 1998. This resulted in the Standard EIA-748 “Earned Value Management Systems (EVMS)”, which was then adopted by the DoD. This standard also changed the terms of the EVM basic performance figures.

• BCWS was renamed in PV  (Planned Value)
• BCWP was renamed in EV  (Earned Value)
• ACWP was renamed in AC  (Actual Cost)

The main purpose of Earned Value Management is to analyze project performance. For this purpose, you only need four basic key figures, which you can easily determine from any good project planning and execution. All other metrics are based on these four metrics. Earned Value Management is based on these four key figures:

EV     Earned Value      or *(BCWP, Budgeted Cost of Work Performed)
PV     Planned Value     or (BCWS,  Budgeted Cost of Work Scheduled)
AC    Actual Cost          or (ACWP,  Actual Cost of Work Performed)

BAC Budget at Completion

* The old EVM key figure are sometimes still in use at large DoD contractors.

Performance Figures for Project Monitoring and Control

Variances 

In the sections above you have learned about EVM basic key figures. Now let’s discover the performance figures for project monitoring and control.

CV    Cost Variance                    CV=EV-AC   or  CV=BCWP-ACWP,  CV% = CV/EV  or  CV/BCWP

SV     Schedule Variance            SV=EV-PV  or  SV=BCWP-BCWS,  SV% = SV/ PV  or  SV/ BCW

VAC  Variance at Completion     VAC = BAC – EAC

(Favorable is positive, Unfavorable is negative)

Performance Indices 

SPI    Schedule Performance Index    SPI=EV/PV   or  SPI=BCWP/BCWS

CPI   Cost Performance Index    CPI=EV/AC  or  CPI=BCWP/ACWP

(Favorable is >1.0, Unfavorable is <1.0)

Key Figures for Project Forecasts

With the following EVM key figures, you can look into the future and know early on what lies ahead for you. In this way, you can react in time and avoid major damage.

EAC – Estimate at Completion

EAC           = AC + (BAC – EV) / 1    optimistic Method 

EAC_CPI       = AC + (BAC – EV) / CPI    realistic Method    

EAC_CPIxSPI   = AC + (BAC – EV) / (CPI x SPI)     pessimistic Method   

(BAC – EV = Remaining Work)

ETC – Estimate to Complete

ETC = (BAC-EV)/1.0                       optimistic Method

ETC_CPI = (BAC-EV)/CPI                  realistic Method

ETC_CPIxSPI = (BAC-EV)/(CPI x SPI) pessimistic Method

To Complete Performance Index

TCPI_BAC = (BAC-EV) / (BAC-AC)

TCPI_EAC = (BAC-EV) / (EAC-AC)

Percent Complete of overall Project

% Schedule       PV_cum / BAC x 100

% Complete      EV_cum / BAC x 100

% Spent            AC_cum / BAC x100

To % complete see also this article: How to Calculate the Earned Value of the Overall Project

The Earned Value Management Quick Access Card

With the following Earned Value Management Quick Access Card you have all formula summarized on one page quickly at a glance. If you think it still needs an important addition, then I am glad about a short message via the contact form.

Find Much More Details About Earned Value Management in This Book