100 Must-Know Concepts and Formulae in Earned Value Calculations & Earned Value Management
Delve into the depths of project management proficiency as we present you with a comprehensive glossary, meticulously curated to encompass the very essence of Earned Value Management (EVM). This resource is designed to be your compass in navigating the intricate landscape of project performance measurement and control.
In this glossary, you'll unearth not just definitions, but keys to unlocking a whole new level of comprehension. With 100 carefully crafted entries, we leave no stone unturned in elucidating the core concepts, terms, and calculations that constitute the realm of EVM.
Whether you're a seasoned project management veteran or just embarking on your journey, our glossary promises to be an indispensable companion
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Actual Cost (AC)
The realized cost incurred for the work completed up to a given point in time.
Actual Cost (AC) refers to the real cost incurred for completing the work up to a specific date or milestone. It includes all direct and indirect costs associated with the project, such as labor, materials, and overhead expenses. AC provides an accurate measure of the actual expenses incurred and is used for cost performance analysis.
Actual Cost of Work Performed (ACWP)
The actual cost incurred for the work performed.
Actual Cost of Work Performed (ACWP), also known as Actual Cost (AC), represents the actual cost incurred for the work performed up to a specific point in time. It includes all the direct and indirect costs associated with the completed work. ACWP is used for measuring actual cost performance.
Baseline
The original approved plan for the project.
Baseline refers to the original approved plan for the project, including the schedule, budget, and scope. It serves as a reference point for measuring project performance and is used for comparison against actual progress and performance. Baseline provides a basis for assessing deviations and managing changes during the project.
Budget at Completion (BAC)
The total budgeted cost for the project.
Baseline refers to the original approved plan for the project, including the schedule, budget, and scope. It serves as a reference point for measuring project performance and is used for comparison against actual progress and performance. Baseline provides a basis for assessing deviations and managing changes during the project.
Budgeted Cost for Work Performed (BCWP)
The total budgeted cost for the project.
Budgeted Cost for Work Performed (BCWP), also known as Earned Value (EV), represents the budgeted cost of the work actually performed up to a specific point in time. It indicates the value of the work that has been completed. BCWP is used for measuring earned value and assessing project progress.
Calculation: BCWP = Earned % Complete * BAC
Budgeted Cost for Work Scheduled (BCWS)
The planned budgeted cost for the work scheduled to be performed.
Budgeted Cost for Work Scheduled (BCWS), also known as Planned Value (PV), represents the planned budgeted cost for the work scheduled to be performed up to a specific point in time. It indicates the value of the work that was planned to be accomplished. BCWS is used for measuring schedule performance.
Calculation: BCWS = Planned % Complete * BAC
Control Account (CA)
A management control point for measuring cost and schedule performance.
Control Account (CA) serves as a management control point within a project. It is used to measure cost and schedule performance, and it represents a significant portion of the project work. CAs are typically associated with specific deliverables or milestones and provide a higher level of control and visibility.
Control Account Manager (CAM)
The individual responsible for managing a control account.
Control Account Manager (CAM) is the individual assigned the responsibility of managing a control account within a project. CAM oversees the performance, budget, and schedule of the assigned control account, ensures proper execution of the work, and reports progress to the project management team. CAM plays a key role in controlling and monitoring project activities.
Cost Baseline
The approved, time-phased budget for the project.
Cost Baseline represents the approved, time-phased budget for the project. It serves as a reference point for comparing and controlling project costs. Cost baseline includes the authorized funding allocated to different project activities and provides a basis for measuring cost performance and variances.
Cost Estimate
The projected or actual monetary value assigned to project activities.
Cost Estimate refers to the projected or actual monetary value assigned to project activities. It involves estimating the costs associated with resources, materials, labor, and other expenses required to complete the project. Cost estimation helps in budgeting, forecasting, and controlling project expenditures.
Cost Estimate at Completion (CEAC)
The projected total cost of the project based on cost estimates.
Cost Estimate at Completion (CEAC) represents the projected total cost of the project based on cost estimates. It considers the estimated cost of the remaining work to estimate the final project cost. CEAC helps in assessing the projected total cost based on cost-based estimates.
Cost Estimate to Complete (CETC)
The projected cost required to complete the remaining work based on cost estimates.
Cost Estimate to Complete (CETC) represents the projected cost required to complete the remaining work based on cost estimates. It considers the estimated cost of the remaining work to estimate the total project cost. CETC helps in assessing the remaining work cost and forecasting the project's total cost using cost-based estimates.
Cost Performance Index (CPI)
The ratio of earned value (EV) to actual cost (AC). It indicates cost efficiency.
Cost Performance Index (CPI) measures the cost efficiency of the project by comparing the earned value (EV) to the actual cost (AC) incurred. A CPI value greater than 1 indicates cost efficiency, while a value less than 1 suggests cost overruns. CPI helps in evaluating cost control measures.
Calculation: CPI = EV / AC
Cost Performance Index Forecast (CPI Forecast)
The projected efficiency of cost performance based on the latest performance data.
Cost Performance Index Forecast (CPI Forecast) represents the projected efficiency of cost performance based on the latest performance data. It measures the ratio of the earned value (EV) to the actual cost (AC) at a specific point in time. CPI Forecast helps in forecasting the cost performance for the remainder of the project.
Calculation: CPI Forecast = EV / AC
Cost Performance Index at Completion (CPIC)
The projected efficiency of cost performance at project completion.
Cost Performance Index at Completion (CPIC) represents the projected efficiency of cost performance at project completion. It measures the ratio of the earned value (EV) to the actual cost (AC) at completion. A CPIC greater than 1 indicates favorable cost performance, while a value less than 1 suggests unfavorable performance. CPIC helps in assessing the overall efficiency of cost performance.
Calculation: CPIC = EV / AC
Cost Variance (CV)
The difference between earned value (EV) and actual cost (AC). Positive value indicates cost savings.
At the heart of project financial analysis lies the concept of Cost Variance (CV), a critical metric that serves as a barometer for the financial health of a project. CV is essentially the arithmetic difference between the budgeted or planned cost of work and the actual cost incurred. This figure can either be positive, indicating that a project is under budget, or negative, suggesting an overage and a potential red flag for project managers.
Understanding CV is pivotal for maintaining control over a project's budget and ensuring that resources are being utilised efficiently. Here are the key points to grasp about CV:
- It measures the financial performance of a project at a given point in time.
- A positive CV indicates a cost saving, whereas a negative CV points to a cost overrun.
- Regular monitoring of CV allows for timely interventions and corrective actions.
By integrating CV analysis into regular project reviews, managers can make informed decisions, steering their projects towards successful completion within the allocated budget.
Calculation: CV = EV - AC
Cost Variance at Completion (CVAC)
The projected difference between the earned value and the actual cost at project completion.
Cost Variance at Completion (CVAC) represents the projected difference between the earned value (EV) and the actual cost (AC) at project completion. It indicates whether the project is expected to be under or over budget based on the current performance. A positive CVAC indicates cost savings, while a negative CVAC suggests cost overruns. CVAC helps in assessing the overall cost performance of the project.
Calculation: CVAC = BAC - AC
Critical Path Method (CPM)
A project scheduling technique that determines the longest path of activities.
Critical Path Method (CPM) is a project scheduling technique that determines the longest path of activities and identifies the sequence of tasks that must be completed on time to ensure the project's timely completion. It helps in understanding the project's duration, identifying critical activities, and managing schedule dependencies.
Data Date
The specific date used as a reference point for performance measurement.
Data Date represents the specific date used as a reference point for performance measurement and reporting. It is the cutoff date for capturing project data and assessing progress. The data date helps in establishing the time frame for evaluating project performance and comparing it against the planned values.
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EVM Index
A performance measurement index that integrates cost and schedule performance.
EVM Index, also known as the Cost-Schedule Index (CSI), is a performance measurement index that integrates cost and schedule performance. It indicates the efficiency at which the project is being executed by comparing the earned value (EV) to the actual cost (AC). An EVM Index greater than 1 indicates favorable performance, while a value less than 1 suggests unfavorable performance. EVM Index helps in evaluating the overall project performance.
Calculation: EVM Index = EV / AC
Earned Schedule (ES)
A technique that measures schedule performance based on earned value.
At the heart of Earned Value Management (EVM) lies the concept of Earned Schedule (ES), a powerful tool that extends the traditional EVM approach to better manage and measure project time performance. Earned Schedule provides a more accurate reflexion of project schedule performance by translating monetary metrics into time-based measurements. This allows project managers to gain a clearer understanding of the time implications of their project's progress.
To grasp the fundamentals of Earned Schedule Analysis, consider the following key points:
- It integrates with the existing EVM system, using the same data to offer a time-based perspective.
- ES is calculated by identifying the Planned Value (PV) that should have been earned by a certain date and comparing it to the Actual Earned Value (EV) of work completed.
- The difference between the PV and EV is then analysed to determine the project's schedule performance.
By adopting Earned Schedule Analysis, project managers can more effectively monitor project timelines, anticipate potential delays, and implement timely corrective actions. It serves as a comprehensive guide to Earned Value Analysis in construction projects, explaining its importance, components, and how to use it for effective project monitoring and cost control.
Earned Schedule Performance Index (ESPI)
A measure of schedule efficiency based on earned schedule metrics.
The Earned Schedule Performance Index (ESPI) is an innovative metric within the realm of Earned Value Management (EVM) that provides a more accurate reflexion of a project's schedule performance. Unlike traditional metrics, ESPI offers a time-based perspective, allowing project managers to gauge the efficiency with which time has been utilised relative to the project plan.
To fully grasp the essence of ESPI, it's crucial to understand its place in the broader EVM system:
- EVM integrates project scope, cost, and schedule measures to provide a comprehensive view of project performance.
- Earned Schedule (ES) extends the EVM concept by incorporating time analysis, addressing the limitations of Schedule Variance (SV) in reflecting true schedule performance.
- ESPI is derived from the Earned Schedule and is calculated by dividing the Earned Schedule by the Planned Value (PV) of work scheduled to be completed by a particular time.
The adoption of ESPI enables project managers to detect potential delays more promptly and adjust their strategies accordingly, ensuring that projects remain on track and within budget.
Calculation: ESPI = EV / ESV
Earned Schedule Variance (ESV)
The difference between the earned schedule and the planned schedule.
Schedule Variance (SV) is a pivotal metric in the realm of project management, particularly within the construction industry. It serves as a gauge for the comparison between the work planned and the work actually accomplished by a specific date. Understanding SV is crucial for maintaining project timelines and ensuring efficient resource allocation.
The importance of SV lies in its ability to provide a snapshot of project health. It allows project managers to:
- Identify deviations from the project plan
- Implement corrective actions promptly
- Communicate progress to stakeholders effectively
Incorporating Earned Value Analysis (EVA) into the monitoring process enhances the precision of SV. EVA is essential for monitoring project progress, controlling costs, and making informed decisions. Key metrics include Planned Value (PV), Earned Value (EV), SV, Cost Variance (CV), Schedule Performance Index (SPI), and Cost Performance Index (CPI). By regularly tracking these metrics, project managers can ensure that both the schedule and budget are adhered to, paving the way for successful project completion.
Calculation: ESV = EV - PV
Earned Value (EV)
The value of completed work expressed in monetary terms up to a given point in time.
Earned Value (EV) represents the value of work actually completed up to a specific date or milestone. It is determined by multiplying the budgeted cost of work performed (BCWP) by the percentage of work completed. EV provides an objective measure of the value generated by the project and is used to assess schedule and cost performance.
Calculation: EV = BCWP x % of work completed
Earned Value Management (EVM)
Project management technique integrating scope, schedule, and cost performance to measure progress and performance.
Earned Value Management (EVM) is a project management technique that integrates the project scope, schedule, and cost parameters to assess project performance and progress. It's a valuable tool for project managers to gain insights into the actual performance of their projects against the planned objectives. By understanding and applying EVM, project managers can make informed decisions to steer their projects toward successful completion.
At the heart of Earned Value Management lies the concept of Earned Value (EV), a measure that represents the value of work actually performed expressed in terms of the approved budget allocated for that work. EV is the quantification of the work completed, providing a snapshot of project progress at any given point in time.
To calculate EV, one must identify the planned work and assign a monetary value to it. This process involves the following steps:
- Determine the scope of work planned to be completed by a certain milestone.
- Assign a monetary value to each component of the work based on the approved budget.
- Multiply the planned work by the percentage of completion to arrive at the EV.
Earned Value Analysis (EVA) is crucial in construction for effective project monitoring, cost control, objective performance measurement, and timely decision-making. It provides metrics to assess project health, progress, and adherence to budgets and schedules. By integrating cost, time, and scope, EVM offers a comprehensive view of a project's status, enabling project managers to make informed decisions and take corrective actions when necessary.
Estimate at Completion (EAC)
The projected total cost of the project based on performance to date.
Estimate at Completion (EAC) is a pivotal financial metric used in project management to forecast the total cost of a project at its conclusion. It represents the expected final budget, taking into account both the work performed to date and the work remaining. The importance of EAC cannot be overstated; it serves as a crucial indicator for project managers, stakeholders, and financiers to understand the financial health and trajectory of a project.
The EAC is not a static figure; it evolves as the project progresses, reflecting changes in scope, resource allocation, and unforeseen challenges. By accurately predicting the EAC, organisations can:
- Ensure that the project remains financially viable
- Make informed decisions about resource management
- Identify potential risks and take proactive measures to mitigate them
For instance, Network Rail's adoption of the NEC4 framework in CP7 projects underscores the significance of flexible and efficient project management practises that aim to reduce risks and enhance user-friendliness. The ability to accurately estimate and update the EAC is integral to such frameworks, ensuring that projects like those in the rail sector can be delivered successfully within the financial parameters set out from the start.
Estimate at Completion (EAC) with EAC Forecast
The projected total cost of the project based on the revised estimate at completion.
Estimate at Completion (EAC) with EAC Forecast represents the projected total cost of the project based on the revised estimate at completion (EAC Forecast). It uses the latest forecasted estimate to estimate the final cost of the project.
Calculation: EAC = EAC Forecast
Estimate at Completion (EAC) with ETC
The projected total cost of the project based on the estimated cost to complete the remaining work.
Estimate at Completion (EAC) with ETC represents the projected total cost of the project based on the estimated cost to complete the remaining work (ETC). It adds the actual cost (AC) incurred to the remaining cost (ETC) to estimate the final cost of the project.
Calculation: EAC = AC + ETC
Estimate at Completion (EAC) with TCPI
The projected total cost of the project based on the required efficiency to achieve a specific management goal for the remaining work.
Estimate at Completion (EAC) with TCPI represents the projected total cost of the project based on the required cost efficiency (TCPI) that must be achieved for the remaining work in order to meet specific management goals. It combines the actual cost (AC) incurred with the remaining work to estimate the final cost of the project.
Calculation: EAC = AC + (BAC - EV) / TCPI
Estimate at Completion Range (EAC Range)
A range of projected values for the estimate at completion (EAC).
Estimate at Completion Range (EAC Range) represents a range of projected values for the estimate at completion (EAC) of the project. It takes into account potential variations and uncertainties in the project's future performance. EAC Range helps in providing a more realistic estimate considering different scenarios and risk factors.
Estimate at Completion with Actuals (EACA)
The projected total cost of the project based on actual costs incurred.
Estimate at Completion with Actuals (EACA) represents the projected total cost of the project based on actual costs incurred to date. It considers the actual performance and expenses to estimate the final project cost. EACA helps in assessing the overall cost performance and forecasting the total cost of the project.
Calculation: EACA = AC + ETC
Estimate at Completion with Combined Performance (EAC-C)
The projected total cost of the project based on combined cost and schedule performance analysis.
Earned Value Management (EVM) is a systematic project management process that integrates project scope, time, and cost parameters to predict project performance and success. Understanding the key elements of EVM is essential for anyone involved in project management, particularly in the construction sector where precision and control are paramount.
- Planned Value (PV): The budgeted cost for work scheduled to be completed by a certain date.
- Earned Value (EV): The budgeted cost for work actually completed to date.
- Actual Cost (AC): The actual cost incurred for work completed to date.
- Budget at Completion (BAC): The total budget for the entire project.
These elements form the foundation of EVM and are used to calculate key performance indicators that help project managers assess progress and performance. With a comprehensive glossary of 100 Earned Value Management definitions, both beginners and experts can deepen their understanding of EVM concepts and calculations, ensuring that projects are delivered on time and within budget.
Estimate at Completion with Cost Performance (EACC)
The projected total cost of the project based on cost performance analysis.
Estimate at Completion (EAC) is a fundamental metric in the realm of project management, serving as a forecast of the total cost of a project at its conclusion. Understanding EAC is crucial for maintaining control over project finances and ensuring that the budget aligns with the project's progress and objectives.
To grasp the concept of EAC, one must be familiar with a comprehensive glossary of Earned Value Management (EVM) terms and concepts. These include:
- EAC: Estimate at Completion
- ETC: Estimate to Complete
- TCPI: To Complete Performance Index
- CPI: Cost Performance Index
- EV: Earned Value
- AC: Actual Cost
- Variance analysis
Each of these elements plays a vital role in the accurate calculation and interpretation of EAC. They are essential for project management proficiency, allowing managers to predict future financial performance and make informed decisions. By mastering these concepts, project professionals can ensure that they are well-equipped to navigate the complexities of project cost management.
The process of calculating the Estimate at Completion (EAC) is a critical component in the realm of project management, serving as a dynamic tool to forecast the project's total cost. Understanding the various methods and formulas is essential for accurate and effective cost management.
One of the primary approaches to determining EAC is through the Estimate to Complete (ETC), which is a projection of the costs required to finish the project from any point in its life cycle. The EAC is then calculated by adding the actual costs incurred to date to the ETC. This method hinges on the assumption that past performance will influence future outcomes.
Several formulas are used to calculate EAC, each tailored to different scenarios and levels of cost performance:
- EAC = Actual Cost (AC) + ETC
- EAC = Budget at Completion (BAC) / Cost Performance Index (CPI)
- EAC = AC + (BAC - Earned Value (EV)) / (CPI * Schedule Performance Index (SPI))
Estimate at Completion with Earned Schedule (EACES)
The projected total cost of the project based on earned schedule analysis.
Estimate at Completion with Earned Schedule (EACES) represents the projected total cost of the project based on earned schedule analysis. It combines the earned value analysis with schedule performance indicators to estimate the final project cost. EACES helps in assessing the overall cost performance and forecasting the total cost of the project using earned schedule metrics.
Estimate at Completion with Performance Prediction (EACPP)
The projected total cost of the project based on performance prediction.
Estimate at Completion with Performance Prediction (EACPP) represents the projected total cost of the project based on performance prediction. It uses predictive techniques and trend analysis to estimate the final project cost. EACPP helps in forecasting the total cost of the project based on projected performance.
Estimate at Completion with Revised Estimate (EACRE)
The projected total cost of the project based on a revised estimate.
Estimate at Completion with Revised Estimate (EACRE) represents the projected total cost of the project based on a revised estimate that incorporates updated assumptions, changes in scope, or other factors affecting the cost. EACRE helps in adjusting the estimate at completion to account for significant changes in project circumstances.
Estimate at Completion with Schedule Performance (EACS)
The projected total cost of the project based on schedule performance analysis.
Estimate at Completion with Schedule Performance (EACS) represents the projected total cost of the project based on schedule performance analysis. It combines the earned value analysis with schedule performance indicators to estimate the final project cost. EACS helps in assessing the overall cost performance and forecasting the total cost of the project using schedule-based indicators.
Estimate at Completion with Variance Analysis (EACVA)
The projected total cost of the project based on variance analysis.
Estimate at Completion with Variance Analysis (EACVA) represents the projected total cost of the project based on variance analysis. It considers the variance between the planned and actual performance to estimate the final project cost. EACVA helps in assessing the impact of performance variances on the overall project cost.
Estimate to Complete (ETC)
The projected cost to complete the remaining work of the project.
The Estimate to Complete (ETC) is a pivotal forecasting technique used within project management to predict the additional costs required to finish all remaining project tasks. It is a dynamic figure that changes as the project progresses and more information becomes available.
- Definition: At its core, ETC is the expected cost to complete the work still outstanding. This estimate helps project managers understand what funds will be necessary to bring a project to its conclusion, beyond what has already been spent.
- Formula: The calculation of ETC can vary depending on the data available and the specific circumstances of the project. However, it typically involves assessing the work performed to date and the costs incurred, then forecasting the remaining effort and resources needed.
- Example: For instance, if a construction project has spent 60% of its budget but only completed 50% of the work, the ETC would help determine the additional budget required to complete the remaining 50% of the project.
Understanding ETC is crucial for maintaining control over the financial health of a project and ensuring that budget overruns are anticipated and managed effectively.
Estimate to Complete (ETC) with EAC
The projected cost to complete the remaining work based on the projected total cost of the project.
Estimate to Complete (ETC) with EAC represents the projected cost to complete the remaining work based on the projected total cost of the project (EAC). It subtracts the actual cost (AC) incurred from the estimated cost at completion (EAC) to determine the remaining cost needed to complete the project.
Calculation: ETC = EAC - AC
Estimate to Complete (ETC) with ETC Forecast
The projected cost to complete the remaining work based on the revised estimate to complete.
Earned Value Management (EVM) is a robust tool for gauging project performance and progress. It hinges on a few fundamental terms that are essential for understanding and applying the methodology effectively. Earned Value (EV) represents the value of work actually performed, expressed in terms of the budget assigned to that work. Planned Value (PV), on the other hand, is the budgeted cost for the work scheduled to be completed by a certain date.
Actual Cost (AC) is the total cost incurred for the work completed to date, which may or may not align with the EV or PV. The Budget at Completion (BAC) is the total budget allocated for the entire project. These terms are not just theoretical; they are deeply embedded in project documentation and are critical for establishing EVM parameters.
To calculate key EVM measures such as Cost Variance (CV) and Schedule Variance (SV), one would use the formulas: CV = EV - AC and SV = EV - PV. These calculations allow project managers to assess whether the project is under or over budget and on schedule or delayed. Understanding these terms and their interrelations is the first step towards mastering EVM and steering your project towards success.
Estimate to Complete (ETC) with ETC Remaining
The projected cost to complete the remaining work based on the remaining work's budgeted cost.
The Estimate to Complete (ETC) is a fundamental concept in project management, representing the forecasted cost to finish all the remaining project activities. It is a critical component of the Earned Value Management (EVM) system, which integrates scope, time, and cost data to provide a comprehensive picture of project performance and progress.
To grasp the essence of ETC, consider the following points:
- ETC is a dynamic figure that changes as the project evolves and more information becomes available.
- It is used in conjunction with other EVM metrics to assess the current financial health of a project and predict future performance.
- Accurate ETC calculations enable project managers to make informed decisions, manage expectations, and steer the project towards successful completion within the allocated budget.
Understanding ETC is crucial for project managers who aim to deliver projects on time and within budget. It serves as a vital tool for forecasting and controlling costs, ultimately contributing to the overall success of the project.
Calculation: ETC = ETC Remaining
Estimate to Complete (ETC) with TCPI
The projected cost to complete the remaining work based on the required efficiency to achieve a specific management goal for the remaining work.
Estimate to Complete (ETC) with TCPI represents the projected cost to complete the remaining work based on the required cost efficiency (TCPI) that must be achieved for the remaining work in order to meet specific management goals. It combines the budgeted cost of remaining work with the required efficiency to determine the remaining cost needed to complete the project.
Calculation: ETC = (BAC - EV) / TCPI
Estimate to Complete with Actuals (ETCA)
The projected cost required to complete the remaining work based on actual costs incurred.
Estimate to Complete with Actuals (ETCA) represents the projected cost required to complete the remaining work based on actual costs incurred. It considers the actual performance and expenses to estimate the cost needed to complete the project. ETCA helps in forecasting the final project cost based on the current performance.
Calculation: ETCA = EAC - AC
Estimate to Complete with Combined Performance (ETC-C)
The projected cost required to complete the remaining work based on combined cost and schedule performance analysis.
Estimate to Complete with Combined Performance (ETC-C) represents the projected cost required to complete the remaining work based on combined cost and schedule performance analysis. It integrates the earned value analysis with both cost and schedule performance indicators to estimate the cost needed to complete the project. ETC-C helps in assessing the remaining work cost and forecasting the project's total cost using combined performance indicators.
Estimate to Complete with Cost Performance (ETCC)
The projected cost required to complete the remaining work based on cost performance analysis.
Estimate to Complete with Cost Performance (ETCC) represents the projected cost required to complete the remaining work based on cost performance analysis. It combines the earned value analysis with cost performance indicators to estimate the cost needed to complete the project. ETCC helps in assessing the remaining work cost and forecasting the project's total cost using cost-based indicators.
Estimate to Complete with Earned Schedule (ETCES)
The projected cost required to complete the remaining work based on earned schedule analysis.
Estimate to Complete with Earned Schedule (ETCES) represents the projected cost required to complete the remaining work based on earned schedule analysis. It combines the earned value analysis with schedule performance indicators to estimate the cost needed to complete the project. ETCES helps in assessing the remaining work cost and forecasting the project's total cost using earned schedule metrics.
Estimate to Complete with Performance Analysis (ETCPA)
The projected cost required to complete the remaining work based on performance analysis.
Estimate to Complete with Performance Analysis (ETCPA) represents the projected cost required to complete the remaining work based on performance analysis. It considers the performance trends, variances, and forecasts to estimate the cost needed to complete the project. ETCPA helps in assessing the remaining work cost and forecasting the project's total cost using performance-based indicators.
Estimate to Complete with Performance Prediction (ETCPP)
The projected cost required to complete the remaining work based on performance prediction.
Estimate to Complete with Performance Prediction (ETCPP) represents the projected cost required to complete the remaining work based on performance prediction. It uses predictive techniques and trend analysis to estimate the cost needed to complete the project. ETCPP helps in forecasting the project's total cost based on projected performance.
Estimate to Complete with Revised Estimate (ETCRE)
The projected cost required to complete the remaining work based on a revised estimate.
Estimate to Complete with Revised Estimate (ETCRE) represents the projected cost required to complete the remaining work based on a revised estimate that incorporates updated assumptions, changes in scope, or other factors affecting the cost. ETCRE helps in adjusting the estimate to complete to account for significant changes in project circumstances.
Estimate to Complete with Schedule Performance (ETCS)
The projected cost required to complete the remaining work based on schedule performance analysis.
Estimate to Complete with Schedule Performance (ETCS) represents the projected cost required to complete the remaining work based on schedule performance analysis. It combines the earned value analysis with schedule performance indicators to estimate the cost needed to complete the project. ETCS helps in assessing the remaining work cost and forecasting the project's total cost using schedule-based indicators.
Estimate to Complete with Variance Analysis (ETCVA)
The projected cost required to complete the remaining work based on variance analysis.
Estimate to Complete with Variance Analysis (ETCVA) represents the projected cost required to complete the remaining work based on variance analysis. It considers the variance between the planned and actual performance to estimate the cost needed to complete the project. ETCVA helps in assessing the impact of performance variances on the remaining work cost.
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Management Reserve (MR)
The contingency budget set aside for unforeseen risks.
Management Reserve (MR) represents the contingency budget allocated by management to address unforeseen risks and uncertainties. It is not part of the project's baseline budget and is used for managing unexpected events or changes. MR provides a cushion to accommodate scope changes or other unforeseen circumstances.
Management by Exception (MBE)
A management approach that focuses on addressing significant deviations from the plan.
Management by Exception (MBE) is a management approach that focuses on addressing significant deviations from the project plan. It involves setting thresholds or tolerances for performance indicators and only intervening when those thresholds are exceeded. MBE helps in efficient project oversight by allowing managers to concentrate their efforts on critical areas requiring attention.
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Performance Measurement Baseline (PMB)
The approved plan for measuring project performance.
Performance Measurement Baseline (PMB) refers to the approved plan that serves as a basis for measuring project performance. It includes the authorized schedule, budget, and scope of work. PMB provides a reference for comparing actual project performance against the planned performance.
Performance Measurement Baseline Change Request (PMBCR)
A formal request to modify the performance measurement baseline.
In the realm of project management, particularly within the construction sector, the Performance Measurement Baseline Change Request (PMBCR) is a pivotal tool. It serves as a formal proposal to modify the established Performance Measurement Baseline (PMB), which is the cornerstone for tracking project progress and financial performance. Understanding PMBCR is essential for those seeking to excel in Earned Value Management (EVM), as it ensures that the PMB reflects the most current project scope, schedule, and cost objectives.
The PMBCR process typically involves several key steps:
- Identification of a need for change due to project evolution or external factors.
- Detailed analysis and documentation of the proposed changes.
- Assessment of the impact on the project's cost and schedule.
- Approval or rejection of the request by the project's governance body.
By integrating PMBCR into the project management framework, professionals can maintain a robust and dynamic approach to project controls. This integration supports not only the month-end close processes but also enhances forecasting, variance analysis, and customer reporting. Mastery of PMBCR and its associated EVM terms, such as cost estimates, performance indices, and variance analysis, is a testament to a project manager's capability to measure and control project performance effectively.
Performance Measurement Baseline Maintenance (PMBC)
The ongoing management and control of the performance measurement baseline.
The Performance Measurement Baseline (PMB) is an essential tool in project management, serving as a time-phased budget plan that provides a framework for assessing performance throughout the lifecycle of a project. It encapsulates the project's scope, schedule, and cost parameters, forming a standard against which project execution can be measured and managed.
Creating a PMB involves several critical steps:
- Establishing the project's scope and objectives.
- Developing a detailed schedule that aligns with the project's milestones.
- Allocating the budget across the scheduled tasks and activities.
Once established, the PMB becomes the cornerstone for monitoring and controlling project progress. It allows project managers to identify variances from the plan early on and to implement corrective actions promptly. This proactive approach to project management ensures that the project remains on track and within budget, ultimately leading to successful project delivery.
Performance Measurement Baseline Update (PMBU)
The process of revising the performance measurement baseline to reflect approved changes.
Performance Measurement Baseline Update (PMBU) refers to the process of revising the performance measurement baseline to reflect approved changes in scope, schedule, or budget. PMBU ensures that the performance measurement baseline remains aligned with the project's current objectives, allowing accurate performance measurement and analysis.
Planned Value (PV)
The authorised budget planned for the work to be accomplished up to a given point in time.
Planned Value (PV) represents the authorized budget allocated for completing scheduled work up to a specific date or milestone. It is determined by multiplying the budgeted cost of work scheduled (BCWS) by the time proportion spent on the task or project. PV is used to measure and track the planned cost of work to be accomplished.
Calculation: PV = BCWS x % of work scheduled
Planning Package (PP)
A higher-level task or set of tasks that require further planning.
Planning Package (PP) represents a higher-level task or set of tasks within a project that requires further planning before being decomposed into work packages. PPs are used to estimate and allocate resources and serve as control points for higher-level planning and monitoring.
Project Performance Index (PPI)
A comprehensive indicator of overall project performance.
The Project Performance Index (PPI) is an integral metric within Earned Value Management (EVM), a methodology widely adopted in construction and project management. PPI provides a quantitative measure of the cost efficiency and schedule performance of a project. It is derived by combining two other critical EVM metrics: the Cost Performance Index (CPI) and the Schedule Performance Index (SPI).
Understanding PPI is essential for project managers who aim to deliver projects on time and within budget. The index serves as a health indicator, revealing whether the project is progressing as planned or if corrective actions are necessary. Here are the key components of PPI:
- Cost Performance Index (CPI): Reflects the cost efficiency of the work performed.
- Schedule Performance Index (SPI): Indicates the schedule efficiency and timeliness of the project.
By monitoring PPI, project managers can make informed decisions, ensuring effective fatigue management in construction, which is crucial for worker safety and productivity. Tools like Site Diary and Fatigue Score can be instrumental in monitoring and mitigating fatigue-related risks, thereby supporting the overall project performance.
Project Performance Review (PPR)
A comprehensive evaluation of project performance against established criteria.
A Project Performance Review (PPR) is a systematic process designed to evaluate the progress and performance of a project against its planned objectives and deliverables. It serves as a critical tool for project managers and stakeholders to ensure that a project remains on track and within budget. By conducting regular PPRs, teams can identify potential issues early on and make informed decisions to steer the project towards successful completion.
The core elements of a PPR typically include:
- Assessment of project scope and objectives
- Review of the project schedule and timelines
- Analysis of the budget and financial performance
- Evaluation of the quality of deliverables
- Identification of risks and mitigation strategies
Incorporating Earned Value Management (EVM) into the PPR process enhances its effectiveness by providing a quantitative measure of project performance. EVM allows you to report on schedules and costs using a dollar value as a base unit, offering a clear and objective perspective on how well the project is adhering to its financial and time constraints. Understanding and applying EVM principles is essential for a robust PPR, as it equips project teams with the ability to forecast future performance and make adjustments accordingly.
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Schedule Baseline
The approved, time-phased schedule for the project.
In the realm of project management, the schedule baseline is the original approved plan for the project's schedule, against which the actual progress is measured. It is a fixed reference point that includes the planned start and finish dates for all tasks, milestones, and deliverables within a project. The schedule baseline is not static; it may be revised and updated to reflect approved changes in the project scope or timeline.
The establishment of a schedule baseline is a multi-faceted process, typically involving:
- Collaboration with Cost Account Managers (CAMs) and Project Managers (PMs) to set budget targets.
- Creation of a structured Control Account and Work Package framework.
- Integration of schedule and resource data into cost management tools, such as Deltek Cobra.
Once in place, the schedule baseline serves as a critical tool for Earned Value Analysis (EVA), enabling project teams to monitor progress, control costs, and make informed decisions. It is essential for maintaining alignment between project objectives and the actual work being performed, ensuring that any deviations are identified and addressed promptly.
Schedule Estimate
The projected or actual duration assigned to project activities.
Schedule Estimate refers to the projected or actual duration assigned to project activities. It involves estimating the time required to complete each task, milestone, or phase of the project. Schedule estimation helps in planning, sequencing, and tracking project activities to ensure timely completion.
Schedule Estimate at Completion (SEAC)
The projected time required to complete the remaining work based on schedule estimates.
Schedule Estimate at Completion (SEAC) is a pivotal metric in project management, particularly within the realms of construction and contracting. It represents the total estimated cost of a project, taking into account all known variables up to a certain point in time. SEAC is crucial for maintaining financial control and ensuring that projects are completed within budgetary constraints.
To accurately define SEAC, one must consider various factors, including initial budget estimates, current expenditure, and projected costs due to changes in scope or unforeseen challenges. The process typically involves the following steps:
- Reviewing the original budget and project plan.
- Monitoring current spending and comparing it with the planned budget.
- Forecasting future costs based on project performance and market conditions.
- Adjusting the estimate to reflect any changes or new insights.
Incorporating commercial management software can significantly enhance the precision of SEAC calculations. Such software automates site reporting, project portfolio reporting, and project cost control, which are essential for optimising resources, reducing errors, and improving project management efficiency. By leveraging these technological advancements, project managers can deliver more reliable and accurate financial forecasts, which are indispensable for successful project delivery.
Schedule Estimate to Complete (SETC)
The projected time required to complete the remaining work based on schedule estimates.
Schedule Estimate to Complete (SETC) is a pivotal metric in project management, particularly within the framework of Earned Value Management (EVM). SETC provides a forecast of the time required to complete the remaining project work, based on current project performance and progress. This estimation is crucial for project managers who need to ensure that timelines are adhered to and that any potential delays are addressed proactively.
In practise, SETC is used to gauge the schedule performance of a project and to predict its completion date. It is a dynamic tool that adapts to the project's evolving circumstances, offering a real-time perspective on the schedule's health. For instance, during the project planning phase, SETC can be instrumental in estimating potential tax credits, aligning with financial planning and strategic decision-making.
The calculation of SETC involves several steps, which include assessing the work completed to date, the original schedule, and the current rate of progress. By integrating these factors, project managers can derive a reliable estimate that informs scheduling decisions and resource allocation. The ability to accurately predict the time to completion is a valuable skill in the construction and project management sectors, where deadlines are often tight and budgets are closely monitored.
Schedule Performance Index (SPI)
The ratio of earned value (EV) to planned value (PV). It indicates schedule efficiency.
Schedule Performance Index (SPI) measures the schedule efficiency of the project by comparing the earned value (EV) to the planned value (PV). An SPI value greater than 1 indicates schedule efficiency, while a value less than 1 suggests schedule delays. SPI helps in assessing schedule performance.
Calculation: SPI = EV / PV
Schedule Performance Index Forecast (SPI Forecast)
The projected efficiency of schedule performance based on the latest performance data.
The Schedule Performance Index (SPI) is a vital metric in the realm of project management, serving as a barometer for gauging the progress of a project against its planned schedule. SPI is calculated by dividing the Earned Value (EV) by the Planned Value (PV), providing a numerical value that indicates whether a project is ahead, on track, or behind schedule. An SPI greater than 1 signifies that the project is progressing faster than anticipated, a value of 1 indicates that the project is on schedule, and a value less than 1 suggests a delay in progress.
Understanding and applying SPI effectively requires familiarity with key project management terms, such as schedule estimates, performance indices, cost estimates, and variance analysis. These elements are crucial for efficient project planning and control:
- Schedule estimates form the basis for determining the Planned Value (PV).
- Performance indices, including SPI, offer insights into the current status of the project.
- Cost estimates are compared with actual costs to derive the Cost Performance Index (CPI).
- Variance analysis helps identify deviations from the planned trajectory, enabling timely corrective actions.
Incorporating SPI into regular project assessments allows managers to make informed decisions, adjust strategies, and communicate transparently with stakeholders about the project's health and trajectory.
The Schedule Performance Index (SPI) is a vital metric in project management, offering a snapshot of project progress against the planned schedule. To calculate SPI, one must understand the relationship between Earned Value (EV) and Planned Value (PV). EV represents the value of work actually performed, while PV indicates the value of work that was expected to be completed at a given point in time.
To determine SPI, the formula is straightforward:
- Calculate the Planned Value (PV) as a percentage of the planned completion multiplied by the Budget at Completion (BAC).
- Compute the Earned Value (EV) based on the actual work completed.
- Divide EV by PV to obtain the SPI.
For instance, if a project with a BAC of \$100,000 is 50% complete, the PV would be \$50,000. If the actual work completed (EV) is valued at \$40,000, the SPI would be 0.8, indicating the project is behind schedule. This simple yet powerful calculation can provide early warnings of schedule slippage, allowing project managers to take corrective action promptly. It is essential to note that an SPI value greater than 1 signifies a project ahead of schedule, while a value less than 1 indicates a delay.
Schedule Performance Index at Completion (SPIAC)
The projected efficiency of schedule performance at project completion.
The Schedule Performance Index at Completion (SPIAC) is a pivotal metric in the realm of project management, particularly within the construction and aviation sectors. It serves as a forward-looking indicator, providing a projection of the schedule efficiency expected at the project's conclusion. SPIAC is calculated by comparing the budgeted cost of work scheduled with the estimated cost at completion.
Understanding SPIAC is crucial for project managers who aim to deliver projects on time and within budget. It offers a nuanced view of the project's progress, allowing for timely interventions if the schedule performance deviates from the plan. The key components of SPIAC include:
- The Budgeted Cost of Work Scheduled (BCWS), which is the planned budget for the project activities up to a certain point.
- The Budgeted Cost of Work Performed (BCWP), also known as Earned Value, which reflects the value of work actually completed.
- The Estimate at Completion (EAC), which is the forecasted total cost of the project.
Incorporating SPIAC into the project management process can be particularly beneficial for sectors like airport construction and aviation, where adherence to schedules is paramount. Effective management tools, such as shift planners and fatigue management systems, can complement the use of SPIAC by ensuring that the workforce is optimally deployed to meet project timelines.
Schedule Variance (SV)
The difference between earned value (EV) and planned value (PV). Positive value indicates schedule ahead.
Schedule Variance (SV) is a critical metric in the realm of project management, particularly within the construction industry. It serves as a gauge for assessing the timeliness of project progress against the established schedule baseline. Understanding SV is essential for maintaining project momentum and ensuring timely delivery.
At its core, SV compares the value of work actually performed (Earned Value or EV) with the scheduled value (Planned Value or PV) of work. Here's a simplified breakdown of the concept:
- Earned Value (EV): The measure of work performed expressed in terms of the budget authorised for that work.
- Planned Value (PV): The approved budget assigned to the scheduled work to be accomplished for an activity or work component.
A positive SV indicates that a project is ahead of schedule, while a negative SV suggests that the project is lagging behind. This distinction is pivotal for project managers who aim to steer their projects back on course. By integrating SV with other project management techniques, such as earned value management (EVM), professionals can gain a comprehensive view of project health, encompassing scope, schedule, and cost data.
Once you've grasped the fundamentals of Schedule Variance (SV), the next logical step is to learn how to calculate it. SV is the difference between the Earned Value (EV) and the Planned Value (PV) of the work performed. To put it simply, it tells you whether you are ahead or behind your planned schedule.
To calculate SV, follow these steps:
- Determine the Planned Value (PV) - the estimated cost of the work planned to be done by a certain date.
- Calculate the Earned Value (EV) - the budgeted cost of the work actually completed by that date.
- Subtract the PV from the EV to find the Schedule Variance.
Calculation: SV = EV - PV
If the SV is positive, your project is ahead of schedule. Conversely, a negative SV indicates that your project is behind schedule. Understanding and acting upon this metric is essential for maintaining control over your project's timeline and, ultimately, its success. Integrating SV with other key performance indicators, such as Cost Variance (CV), enhances your ability to manage subcontractors and utilise Earned Value Analysis (EVA) metrics for project success in construction.
Schedule Variance at Completion (SVAC)
The projected difference between the earned value and the planned value at project completion.
Schedule Variance at Completion (SVAC) is a pivotal metric within Earned Value Management (EVM), a methodology widely adopted in project management to assess performance and progress. SVAC offers a forward-looking projection, estimating the schedule variance upon project completion, as opposed to traditional Schedule Variance (SV) which reflects the current status. This distinction is crucial for long-term planning and strategic adjustments.
Understanding SVAC begins with grasping the basics of EVM, which includes familiarising oneself with key parameters such as Schedule Variance (SV) and Cost Variance (CV). These parameters are instrumental in analysing the project's progress and financial health. SVAC, in particular, extends the utility of SV by forecasting the potential schedule deviation at the end of the project, allowing for proactive management of timelines.
To effectively utilise SVAC, one must follow a systematic approach:
- Calculate the current SV to understand the present state of the project.
- Analyse the factors contributing to any variance.
- Project the future performance based on current trends and data.
- Derive the SVAC to anticipate and plan for potential schedule impacts.
By integrating SVAC into regular project reviews, managers can gain a comprehensive view of both current and future project performance, enabling them to make informed decisions and keep the project on track.
SVAC is a predictive measure, indicating the expected variance between the scheduled completion and the actual completion of a project. To calculate SVAC effectively, one must follow a structured approach:
- Begin by gathering all necessary project data, including the baseline schedule and actual progress reports.
- Calculate the Earned Value (EV) to understand the value of work actually performed against the planned value.
- Determine the Schedule Performance Index (SPI) by dividing EV by the Planned Value (PV).
- Forecast the project's completion date based on current performance trends.
- Integrate this data with cash flow forecasts, ensuring that the time-sensitive nature of cash flows is considered.
It is essential to regularly review and adjust the SVAC calculation as the project progresses. This dynamic process allows for the incorporation of real-time data, such as that provided by tools like Gather's siteview, which offers real-time geolocation data capture, visualisation, and reporting. By doing so, project managers can reduce costs and improve decision-making, ensuring that the project remains on track both financially and temporally.
To-Complete Performance Index (TCPI)
The required efficiency to achieve a specific management goal for the remaining work.
To-Complete Performance Index (TCPI) represents the required cost efficiency that must be achieved for the remaining work in order to meet specific management goals. It compares the remaining work to be performed with the budgeted cost of remaining work. TCPI helps in assessing the future cost performance required to meet project objectives.
To-Complete Performance Index Range (TCPI Range)
A range of projected values for the to-complete performance index (TCPI).
To-Complete Performance Index Range (TCPI Range) represents a range of projected values for the to-complete performance index (TCPI) of the project. It takes into account potential variations and uncertainties in the project's future performance. TCPI Range helps in assessing the required efficiency to achieve specific management goals based on different scenarios and risk factors.
To-Complete Performance Index with Combined Performance (TCPI-C)
The efficiency required to achieve the project objectives based on combined cost and schedule performance analysis.
To-Complete Performance Index with Combined Performance (TCPI-C) represents the efficiency required to achieve the project objectives based on combined cost and schedule performance analysis. It measures the ratio of the remaining work value to the remaining budget, considering the combined performance indicators. TCPI-C helps in assessing the efficiency needed to meet the project objectives using combined performance indicators.
Calculation: TCPI-C = (BAC - EV) / (BAC - AC)
To-Complete Performance Index with Cost Performance (TCPI-C)
The efficiency required to achieve the project objectives based on cost performance analysis.
To-Complete Performance Index with Cost Performance (TCPI-C) represents the efficiency required to achieve the project objectives based on cost performance analysis. It measures the ratio of the remaining work value to the remaining budget, considering the cost performance indicators. TCPI-C helps in assessing the efficiency needed to meet the project objectives using cost-based indicators.
Calculation: TCPI-C = (BAC - EV) / (BAC - AC)
To-Complete Performance Index with Earned Schedule (TCPIES)
The efficiency required to achieve the project objectives based on earned schedule analysis.
The To-Complete Performance Index with Earned Schedule (TCPIES) is a pivotal metric in project management, offering a forward-looking perspective on the financial health of a project. TCPIES provides a quantifiable measure of the cost efficiency required to complete a project within its budget, whether that budget is the original Baseline At Completion (BAC) or the revised Estimate At Completion (EAC).
To grasp the essence of TCPIES, consider the following points:
- It acts as a gauge for the remaining work's cost performance.
- TCPIES is calculated using the Earned Schedule method, which enhances traditional Earned Value Management (EVM) by incorporating time factors.
- The index offers a realistic assessment of what is needed to stay on budget, thus serving as a critical tool for project managers.
Understanding TCPIES is crucial for maintaining control over project costs and ensuring successful delivery. It empowers project teams to proactively manage resources and make informed decisions to steer projects back on track when deviations occur.
The To-Complete Performance Index with Earned Schedule (TCPIES) is a pivotal metric in project management, offering a forecast of the cost performance required to meet a specific project objective. Calculating TCPIES involves a series of steps that, when followed meticulously, can provide a clear path to project completion within budget and time constraints.
Firstly, it is essential to determine the Earned Value (EV) of the work completed to date, which reflects the true progress against the budget. Next, the Planned Value (PV) must be ascertained, representing the value of work planned to be completed by a certain date. The Actual Cost (AC) of the work performed is then calculated, giving insight into the real expenditure. With these figures at hand, the Earned Schedule (ES) analysis can be conducted to adjust the schedule performance into the cost variance equation.
The final step is to compute the TCPIES using the formula: TCPIES = (BAC - EV) / (BAC - AC + ES), where BAC stands for Budget at Completion. This formula yields the cost performance index that must be maintained for the remainder of the project to meet the established goals. It is a forward-looking measure, unlike traditional cost performance indices, which only reflect past performance.
By integrating TCPIES into regular project reviews, managers can gain a dynamic tool for steering projects back on course, should they begin to deviate from the planned budget or schedule. The insights gained from TCPIES calculations are invaluable for making informed decisions and ensuring project success.
Calculation: TCPIES = (BAC - EV) / (EACES - AC)
To-Complete Performance Index with Performance Analysis (TCPIPA)
The efficiency required to achieve the project objectives based on performance analysis.
To-Complete Performance Index with Performance Analysis (TCPIPA) represents the efficiency required to achieve the project objectives based on performance analysis. It measures the ratio of the remaining work value to the remaining budget, considering the performance trends, variances, and forecasts. TCPIPA helps in assessing the efficiency needed to meet the project objectives using performance-based indicators.
Calculation: TCPIPA = (BAC - EV) / (BAC - AC)
To-Complete Performance Index with Performance Prediction (TCPIPP)
The efficiency required to achieve the project objectives based on performance prediction.
To-Complete Performance Index with Performance Prediction (TCPIPP) represents the efficiency required to achieve the project objectives based on performance prediction. It uses predictive techniques and trend analysis to measure the efficiency needed to meet the project objectives. TCPIPP helps in assessing the projected performance efficiency to achieve project goals.
Calculation: TCPIPP = (BAC - EV) / (EACPP - AC)
To-Complete Performance Index with Revised Estimate (TCPIRE)
The efficiency required to achieve the revised estimate at completion.
At the heart of Earned Value Management (EVM) lies the concept of earned value, a metric that represents the value of work performed at any given point in a project. Unlike traditional measures that focus solely on budget and time, earned value provides a more comprehensive view by integrating cost, schedule, and scope dimensions.
To grasp the essence of earned value, consider these three fundamental elements:
- Planned Value (PV): The budgeted cost for work scheduled to be completed by a certain date.
- Actual Cost (AC): The actual cost incurred for the work completed to date.
- Earned Value (EV): The budgeted amount for the work actually completed by the specified date.
By comparing these elements, project managers can determine not only where the project stands in terms of budget and schedule but also how efficiently resources are being utilised. This triad forms the basis for a suite of performance metrics that can guide decision-making and forecast future performance. The versatility of EVM as a tool is underscored by its ability to adapt to various project sizes and complexities, making it an indispensable part of modern project management.
The To-Complete Performance Index with Revised Estimate (TCPIRE) is a crucial metric in Earned Value Management (EVM) that provides project managers with a forecast of the cost performance required to meet a specific management goal. Calculating TCPIRE involves a series of steps that, when followed meticulously, can offer a clear picture of the project's financial health.
To begin with, you must have a clear understanding of the project's Earned Value (EV), which is the measure of work performed expressed in terms of the budget authorised for that work. Next, ascertain the Actual Cost (AC), which is the realised cost incurred for the work performed. The third step involves determining the Revised Estimate at Completion (EACrev), which is the expected total cost of the project as re-estimated at a point in time.
Once these figures are in hand, TCPIRE can be calculated using the formula:
TCPIRE = (BAC - EV) / (EACrev - AC)
Where BAC is the Budget at Completion. This formula will yield the cost performance index that indicates the efficiency at which resources must be utilised for the remainder of the project to meet the revised budget. It is essential to note that a TCPIRE value less than 1 suggests that the project is expected to be completed under budget, while a value greater than 1 indicates a need for greater efficiency to meet the budget constraints.
To-Complete Performance Index with Schedule Performance (TCPI-S)
The efficiency required to achieve the project objectives based on schedule performance analysis.
The To-Complete Performance Index with Schedule Performance, or TCPI-S, is an integral part of Earned Value Management (EVM), a methodology widely adopted in project management to measure project performance and progress in an objective manner. TCPI-S provides a forward-looking metric that estimates what the cost efficiency needs to be for the remaining portion of the project to meet a specific management goal, such as the original budget or an adjusted one.
TCPI-S is particularly useful in scenarios where schedule performance must be taken into account alongside cost efficiency. It allows project managers to integrate both time and cost factors into their performance analysis, offering a more comprehensive view of the project's trajectory. The calculation of TCPI-S involves several key steps:
- Determining the Earned Value (EV) of work completed to date.
- Assessing the Planned Value (PV) and Actual Cost (AC) to gauge schedule and cost performance.
- Establishing the Budget at Completion (BAC) or the revised Estimate at Completion (EAC) as the target to achieve.
- Calculating the remaining work and the required cost performance to meet the project's financial objectives.
By incorporating TCPI-S into their toolkit, project managers can gain valuable insights into the future health of their projects, enabling them to make informed decisions and take corrective actions where necessary. It serves as a comprehensive guide to project management metrics, including schedule estimates, performance indices, variance analysis, cost estimates, and efficiency measurements, ensuring that projects are not only completed within budget but also on schedule.
The To-Complete Performance Index with Schedule Performance (TCPI-S) is a pivotal metric in Earned Value Management, providing a clear indication of the cost performance required to meet a project's budget and schedule objectives. Calculating TCPI-S involves a series of steps that, when followed meticulously, can offer profound insights into the project's trajectory.
To begin with, you must have a firm grasp of the key values involved in the calculation:
- BAC (Budget at Completion): The total budget for the project.
- EV (Earned Value): The value of work actually performed.
- AC (Actual Cost): The actual cost incurred for the work performed.
- PV (Planned Value): The budgeted cost of work scheduled.
Once these figures are identified, the TCPI-S can be calculated using the formula: TCPI = (BAC - EV) / (BAC - AC). This formula will yield the cost performance index needed to complete the remaining work within the original budget. It is essential to interpret the results accurately to communicate the project's financial health to stakeholders and make informed decisions moving forward.
To-Complete Performance Index with Variance Analysis (TCPIVA)
The efficiency required to achieve the project objectives based on variance analysis.
To-Complete Performance Index with Variance Analysis (TCPIVA) represents the efficiency required to achieve the project objectives based on variance analysis. It measures the ratio of the remaining work value to the remaining budget, taking into account the variance between planned and actual performance. TCPIVA helps in assessing the efficiency needed to meet the project objectives considering the impact of performance variances.
Calculation: TCPIVA = (BAC - EV) / (BAC - AC)
Trend Analysis
The examination of performance data over time to identify patterns and forecast future performance.
Trend Analysis is the examination of performance data over time to identify patterns, trends, and relationships. It involves analyzing historical data to understand project performance, identify recurring patterns, and make informed forecasts about future performance. Trend Analysis helps in proactive decision-making and anticipating potential project outcomes.
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Variance Analysis
The process of comparing planned values to actual values to identify discrepancies.
At its core, variance analysis is a quantitative tool used in project management to assess the performance of a project by comparing planned outcomes with actual results. It involves a meticulous examination of the differences between what was expected and what has been achieved, both in terms of time and cost.
- Cost Variance (CV), for instance, measures the deviation between the actual costs incurred and the budgeted amounts. A negative CV indicates that a project is over budget, while a positive figure suggests it is under budget.
- Earned Value (EV) is another critical metric, representing the estimate of the value of work completed against the planned progress.
By identifying these variances early, project managers can implement corrective actions to steer a project back on course, ensuring efficiency, cost control, and timely decision-making. Variance analysis is not just about identifying discrepancies; it's about understanding their causes and impacts to facilitate better management and successful project outcomes.
arned Value Management (EVM) is a robust methodology that provides a quantitative measure of project performance. The calculation of Earned Value (EV) is central to this approach, enabling project managers to assess actual progress against planned progress. To calculate EV, one must understand the key components: Planned Value (PV), Actual Cost (AC), and Earned Value itself.
The process of calculating EV involves several steps:
- Establish the project's baseline, which is the approved budget allocated for the work scheduled.
- Determine the Planned Value (PV) up to the current reporting date.
- Record the Actual Cost (AC) of the work performed up to the same date.
- Measure the physical work completed and express it as a percentage of the total project.
- Calculate the Earned Value (EV) by applying this percentage to the project's baseline.
Once EV is determined, it can be compared with AC and PV to derive critical metrics such as Cost Variance (CV) and Schedule Variance (SV). These metrics offer invaluable insights into the health of a project, indicating whether it is over or under budget and ahead of or behind schedule. For instance, a Schedule Performance Index (SPI) above 1 suggests that the project is ahead of schedule, while an SPI below 1 indicates it is behind. By regularly performing this analysis, project managers can make informed decisions to steer the project towards successful completion.
Variance Threshold
A predefined limit used to determine the significance of variances.
In the realm of project management, Earned Value Management (EVM) stands as a pivotal methodology for measuring project performance and progress. A key component within this system is the variance threshold, which serves as a benchmark for identifying significant deviations from the project plan.
The variance threshold is essentially a predetermined point at which a variance is considered significant enough to warrant attention and, potentially, corrective action. This concept is crucial because it helps project managers to:
- Focus on significant discrepancies that could impact project success
- Avoid the minutiae of inconsequential variations
- Allocate resources effectively to areas that require intervention
Variance analysis, as highlighted by Simplilearn.com, is a fundamental practise in EVM that involves comparing planned values (PV) and earned values (EV) with actual costs (AC). By calculating these variances, project managers can determine whether they are over or under budget and schedule, and by how much. The variance threshold then acts as a guide to gauge the severity of these variances and decide on the necessary course of action.
The process of calculating the variance threshold is a meticulous one, requiring a clear understanding of the project's financial metrics. Earned Value Analysis (EVA) is crucial in project management for cost forecasting, performance evaluation, and effective decision-making. It involves key metrics like PV, EV, AC, SV, CV, SPI, and CPI.
To begin with, one must first establish the baseline for the project, which is the approved budget and schedule. Following this, the actual cost (AC) and the earned value (EV) are calculated. The variance threshold is then determined by comparing these figures against the planned value (PV). Here's a simplified step-by-step approach:
- Calculate the Planned Value (PV).
- Determine the Earned Value (EV).
- Ascertain the Actual Cost (AC).
- Compute the Schedule Variance (SV) and Cost Variance (CV).
- Establish the Variance Threshold based on the project's tolerance levels.
It's essential to note that the variance threshold is not a static figure; it should be reviewed and adjusted as the project progresses to reflect any changes in scope, schedule, or cost. This dynamic approach ensures that the project remains on track and within the acceptable limits of variance, thereby safeguarding the project's financial health and success.
Variance at Completion (VAC)
The difference between budget at completion (BAC) and estimate at completion (EAC). Positive value indicates cost savings.
At the heart of project management, Earned Value Management (EVM) stands as a proven methodology for assessing project performance and progress. It is a technique that integrates the project scope, schedule, and cost parameters to provide a comprehensive view of the project's health.
EVM is underpinned by three basic elements:
- Planned Value (PV): The authorised budget for work scheduled to be completed.
- Actual Cost (AC): The realised cost incurred for the work performed.
- Earned Value (EV): The value of work actually completed at a given point in time.
By comparing these elements, EVM enables project managers to gain insights into both the current state of the project and its projected outcome. It helps in identifying variances from the plan and facilitates proactive decision-making. Moreover, EVM promotes transparency among stakeholders and can motivate the project team by providing a clear picture of project status. The methodology, developed by the United States Department of Defence in the 1960s, has evolved to become a cornerstone in the field of project management, offering a structured approach to tracking performance and managing resources effectively.
Variance at Completion (VAC) is a pivotal metric within Earned Value Management (EVM), offering a forward-looking glimpse into the financial health of a project. It serves as an early warning system, indicating whether a project is trending towards a budget surplus or deficit by the time of its completion. VAC is calculated by subtracting the Estimate at Completion (EAC) from the Budget at Completion (BAC):
VAC = BAC \- EAC
This simple yet powerful formula encapsulates the expected financial outcome, allowing project managers to anticipate and prepare for potential budgetary adjustments. Understanding VAC is crucial for maintaining control over project finances and ensuring that the final expenditure aligns with the initial budgetary constraints. By integrating VAC analysis into regular project reviews, managers can make informed decisions to steer projects back on course, should they begin to deviate from the planned budget.
Variance at Completion (VAC) with EAC
The difference between budget at completion (BAC) and estimate at completion (EAC). Positive value indicates cost savings.
At the heart of Earned Value Management (EVM) lies the ability to combine measurements of project scope, schedule, and cost in a single integrated system. EVM is recognised for its capacity to provide accurate forecasts of project performance problems, which is essential for effective project management.
Fundamental to EVM is the concept of 'earned value', or EV, which is the measure of work performed expressed in terms of the budget authorised for that work. To grasp the full picture of a project's health, several key metrics are used:
- Earned Value (EV): The value of work actually performed.
- Planned Value (PV): The planned value of work scheduled to be performed.
- Actual Cost (AC): The actual cost incurred for the work performed.
These metrics serve as the building blocks for more advanced calculations, such as the Cost Performance Index (CPI) and the Schedule Performance Index (SPI), which help in assessing the project's cost efficiency and timeliness, respectively. Understanding these fundamentals is crucial for anyone looking to master EVM and ensure their project's success.
Earned Value Management (EVM) is a robust tool that enables project managers to measure and analyse project performance and progress. Key metrics such as Cost Variance (CV) and Schedule Variance (SV) provide immediate insights into the cost efficiency and timeliness of a project, respectively. These metrics are derived from fundamental EVM formulas:
Cost Variance (CV)= Earned Value (EV) \- Actual Cost (AC)Schedule Variance (SV)= Earned Value (EV) \- Planned Value (PV)Cost Performance Index (CPI)= EV / ACSchedule Performance Index (SPI)= EV / PV
Understanding these formulas is crucial for effective project control and management. For instance, the Estimate at Completion (EAC) can be calculated using several methods, depending on the project's circumstances and the data available. The Variance at Completion (VAC), which is the difference between the Budget at Completion (BAC) and the EAC, indicates whether the project will be over or under budget. These calculations, when interpreted correctly, can lead to strategic decisions that steer a project back on course or optimise its outcomes. The PMP Formulas Cheat Sheet can serve as a handy reference for these essential calculations, ensuring that project managers are equipped to maintain control over their projects' financial health.
Variance at Completion (VAC) with EAC Forecast
The difference between budget at completion (BAC) and revised estimate at completion (EAC Forecast). Positive value indicates cost savings.
Variance at Completion (VAC) with EAC Forecast measures the variance between the budget at completion (BAC) and the revised estimate at completion (EAC Forecast) of the project. It provides insights into whether the project is expected to be under or over budget based on the latest forecasted estimate. A positive VAC indicates cost savings, while a negative VAC suggests cost overruns. VAC helps in assessing the overall cost performance of the project.
Calculation: VAC = BAC - EAC Forecast
Variance at Completion (VAC) with TCPI
The difference between budget at completion (BAC) and the earned value (EV) adjusted by the required efficiency to achieve a specific management goal for the remaining work. Positive value indicates cost savings.
Variance at Completion (VAC) with TCPI measures the variance between the budget at completion (BAC) and the earned value (EV) adjusted by the required cost efficiency (TCPI) for the remaining work. It provides insights into whether the project is expected to be under or over budget based on the required efficiency. A positive VAC indicates cost savings, while a negative VAC suggests cost overruns. VAC helps in assessing the overall cost performance of the project.
Calculation: VAC = BAC - (EV / TCPI)
Variance at Completion (VAC) with TCPI Remaining
The difference between budget at completion (BAC) and the earned value (EV) adjusted by the required efficiency to achieve a specific management goal for the remaining work. Positive value indicates cost savings.
Variance at Completion (VAC) is a pivotal metric within the realm of Earned Value Management (EVM), offering a clear indication of the anticipated financial position of a project at its conclusion. It essentially measures the difference between the Budget at Completion (BAC) and the Estimate at Completion (EAC), providing project managers with a forecast of the expected budget surplus or deficit.
The importance of VAC lies in its ability to serve as an early warning system, alerting project managers to potential budgetary issues that may arise. By integrating VAC into regular project performance analysis, managers can make informed decisions to steer the project back on course. The following are key reasons why VAC is indispensable in project management:
- It enables proactive financial control and oversight.
- It facilitates the identification of trends that could impact project costs.
- It aids in the assessment of the effectiveness of corrective actions taken.
Project performance analysis tools include TCPI, variance analysis, trend analysis, and schedule performance metrics. A comprehensive understanding of these tools, as defined in the glossary, is essential for proficiency in project management. By mastering EVM terms and calculations, project managers can significantly enhance their ability to deliver projects within budget and on time.
Once you've grasped the fundamental concepts of Earned Value Management (EVM), calculating Variance at Completion (VAC) becomes a straightforward process. VAC is a critical metric that provides insight into the financial performance of your project, indicating the expected cost variance upon project completion.
To calculate VAC, follow these steps:
- Determine the Budget at Completion (BAC), which is the total planned cost for the project.
- Calculate the Earned Value (EV) by assessing the percentage of work completed and multiplying it by the BAC.
- Estimate the Actual Cost (AC) incurred to date.
- Compute the Estimate at Completion (EAC), which forecasts the total cost of the project based on current performance.
- Finally, subtract the EAC from the BAC to find the VAC.
Understanding the VAC allows project managers to make informed decisions about resource allocation, cost control, and project planning. It is calculated as the difference between the BAC and the EAC, providing a clear picture of whether the project will finish under, over, or exactly on budget.
Calculation: VAC = BAC - (EV / TCPI Remaining)
Variance at Completion with Combined Performance (VACCPSP)
The difference between the budgeted cost and the earned value of the project, considering both cost and schedule performance.
Variance at Completion with Combined Performance (VACCPSP) represents the difference between the budgeted cost and the earned value of the project, considering both cost and schedule performance. It indicates the combined variance at the completion of the project based on combined performance analysis. VACCPSP helps in evaluating the combined performance at the end of the project.
Calculation: VACCPSP = BAC - EV
Variance at Completion with Cost Performance (VACCP)
The difference between the budgeted cost and the actual cost of the project.
Variance at Completion with Cost Performance (VACCP) represents the difference between the budgeted cost and the actual cost of the project. It indicates the cost variance at the completion of the project based on cost performance analysis. VACCP helps in evaluating the cost performance at the end of the project.
Calculation: VACCP = BAC - AC
Variance at Completion with Earned Value (VACEV)
The difference between the earned value and the actual cost of the project.
Variance at Completion with Earned Value (VACEV) represents the difference between the earned value and the actual cost of the project. It indicates the cost variance at the completion of the project based on earned value analysis. VACEV helps in evaluating the cost performance at the end of the project.
Calculation: VACEV = EV - AC
Variance at Completion with Performance Analysis (VACPA)
The difference between the budgeted cost and the projected cost of the project based on performance analysis.
Variance at Completion with Performance Analysis (VACPA) represents the difference between the budgeted cost and the projected cost of the project based on performance analysis. It indicates the variance at the completion of the project based on performance analysis. VACPA helps in evaluating the performance analysis at the end of the project.
Calculation: VACPA = BAC - EAC
Variance at Completion with Performance Prediction (VACPP)
The difference between the budgeted cost and the projected cost of the project based on performance prediction.
Variance at Completion with Performance Prediction (VACPP) represents the difference between the budgeted cost and the projected cost of the project based on performance prediction. It indicates the variance at the completion of the project based on predicted performance. VACPP helps in evaluating the projected performance at the end of the project.
Calculation: VACPP = BAC - EACPP
Variance at Completion with Schedule Performance (VACSP)
The difference between the budgeted cost and the earned value of the project.
Variance at Completion with Schedule Performance (VACSP) represents the difference between the budgeted cost and the earned value of the project. It indicates the schedule variance at the completion of the project based on schedule performance analysis. VACSP helps in evaluating the schedule performance at the end of the project.
Calculation: VACSP = BAC - EV
Work Breakdown Structure (WBS)
What is Work Breakdown Structure (WBS)? Earned Value Management explained.
Work Breakdown Structure (WBS) is a hierarchical breakdown of project deliverables and activities into smaller, manageable components. It organizes the project scope into a structured framework, providing a clear and systematic representation of the work to be performed. WBS helps in organizing, planning, and controlling project activities.
Work Package (WP)
A discrete task or set of tasks within a project.
Work Package (WP) represents a discrete task or set of tasks within a project that can be assigned to a specific team or individual. It is the lowest level of the project's work breakdown structure (WBS). WPs are manageable units of work that can be planned, executed, and monitored independently.
Work Package Manager (WPM)
The individual responsible for managing a work package.
The role of a Work Package Manager (WPM) is pivotal in ensuring the seamless execution of construction projects. A WPM is entrusted with the meticulous planning, coordination, and supervision of work packages - distinct segments of a project that are assigned to teams or individuals. These packages are the building blocks of the project, and the WPM's role is to ensure that each is delivered on time, within budget, and to the required quality standards.
Key responsibilities include:
- Defining the scope and objectives of each work package
- Developing detailed work plans, schedules, and budgets
- Coordinating with other project managers and team members
- Monitoring progress and performance against the work plan
- Identifying and resolving issues that may arise during the project lifecycle
The WPM's role is not just about managing tasks; it's about leading teams to achieve project goals. This requires a clear understanding of responsibility for all charges and the ability to make informed decisions, often in a dynamic and challenging environment. The WPM must also be adept at communicating with stakeholders, including customers, service management, and team members, to ensure transparency and accountability throughout the project.
Key takeaways
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