Earned Value Management Formulas
I don’t suggest memorizing a lot of information while preparing for the PMP Exam, but do try to memorize these formulas and understand how they work. Ideally the exam won’t contain too many formulas related questions but knowing these will help you handle them while taking the exam.
All the very best!
| SL NO | Name | Acronym | Formula | Clarity |
| 1 | Budget at Completion | BAC | BAC = Total Budget | The sum of all budgets established for the work to be performed. |
| 2 | Actual Cost | AC | AC = Cost Spent | |
| 3 | Earned Value | EV | EV = Actual% Complete * BAC | |
| 4 | Cost Variance | CV | CV = EV – AC | Cost Variance represents the amount of budget deficit or surplus at a given point in time. |
| 5 | Percent Complete | PC | PC = EV/BAC*100% | |
| 6 | Cost Performance Index | CPI | CPI = EV/AC | One of the most common PMP formulas for control cost is CPI. It measures the cost efficiency of budgeted resources, expressed as a ratio of earned value to actual cost |
| 7 | Schedule Variance | SV | SV = EV – PV | Schedule Variance’s aim is to measure schedule performance through the difference between the earned value and the planned value. |
| 8 | Schedule Performance Index | SPI | SPI = EV/PV | The schedule performance index (SPI) is a measure of schedule efficiency, it represents the ratio of earned value to planned value. It is one of the most common PMP formulas for control schedule. Its aim is to measure how efficiently the project team is accomplishing the work. |
| 9 | Project Future CPI | PP | PP = Net Investment/Average annual Cash flow | |
| 10 | Variance At Completion | VAC | VAC = BAC – EAC | Variance at Completion is a projection of the amount of budget deficit or surplus, it represents the difference between the budget at completion and the estimate at completion |
| 11 | To Complete Performance Index | TCPI is a measure of the cost performance in order to achieve meeting a specified management goal with the remaining resources. It represents the ratio of the cost to finish the outstanding work to the budget available. | ||
| 12 | Utilizing BAC | TCPI | TCPI = (BAC – EV)(BAC-AC) | |
| 13 | Utilizing EAC | TCPI | TCPI = (BAC – EV)(EAC-AC) | |
| 14 | Estimate at Completion – Standard formula | EAC | EAC= BAC/CPI | The expected total cost of completing all work expressed as the sum of the actual cost to date and the estimated sum to complete the project. |
| 15 | Future work at planned costs formula | EAC | EAC = AC+BAC-EV | |
| 16 | Initial costs estimates flawed | EAC | EAC = AC + Bottom up ETC | |
| 17 | CPI & SPI affect remainder of project | EAC | (EAC)=AC+{(BAC-EV)/(CPI*SPI)} | |
| 18 | Estimate To Complete | ETC | ETC = EAC – AC |
Here are some more common formulas used in Project Management
- Earned Value Management (EVM) – measures project performance and progress by comparing actual work completed to the planned work
- Cost Performance Index (CPI) = Earned Value (EV) / Actual Cost (AC)
- Schedule Performance Index (SPI) = Earned Value (EV) / Planned Value (PV)
- Estimate At Completion (EAC) = Actual Cost (AC) + (BAC – EV) / CPI
- Critical Path Method (CPM) – identifies the longest path of activities in a project, which helps to determine the project duration
- Early Start (ES) = the earliest possible start time for an activity
- Early Finish (EF) = the earliest possible finish time for an activity
- Late Start (LS) = the latest possible start time for an activity
- Late Finish (LF) = the latest possible finish time for an activity
- PERT (Program Evaluation and Review Technique) – used to estimate the duration of a project by considering optimistic, pessimistic, and most likely estimates of activity durations
- Expected Time (TE) = (Optimistic Time + (4 x Most Likely Time) + Pessimistic Time) / 6
- Standard Deviation (SD) = (Pessimistic Time – Optimistic Time) / 6
- Cost of Quality (COQ) – measures the total cost of quality efforts, including prevention, appraisal, and failure costs
- Total Quality Cost = Prevention Cost + Appraisal Cost + Failure Cost
- Net Present Value (NPV) – compares the present value of expected cash inflows to the present value of expected cash outflows to determine the profitability of a project
- NPV = (Cash Inflow / (1 + Discount Rate)^n) – Initial Investment
- Return on Investment (ROI) – measures the financial return on a project investment
- ROI = (Gain from Investment – Cost of Investment) / Cost of Investment