86 Section 4
Estimate at completion (EAC). EAC is the expected total cost or time of a control account, work package, or
project when the defined scope of work will be completed.
The equation for EAC is the current cost or time spent plus the estimate to complete (ETC):
EAC
c
= AC + ETC
c
EAC
t
= AT + ETC
t
When the independent estimate is used for ETC, then EAC is often referred to as an independent estimate at
completion (IEAC).
Different approaches to estimate the cost and time remaining can be used.
Variance at completion (VAC). The VAC is the variance between the forecasted trend and the baseline for cost
and schedule, and it can be calculated in absolute value or as a percentage over the total:
VAC
c
= BAC − EAC
c
VAC
c
% = VAC
c
/ BAC
VAC
t
= SAC − EAC
t
VAC
t
% = VAC
t
/ SAC
The VAC shows the trend for the total variation of the project cost and schedule, using scenarios with and
without management potential actions. These scenarios of potential variation over the baseline (BAC and SAC)
should not be accepted as inevitable alternative outcomes. Instead, the scenarios should be discussed and
analyzed to form the basis of management decisions. These decisions may include changing the baseline to
accommodate negative performance or to embrace the opportunities of positive performance in accordance
with the integrated change process (see Section 4.6 for further details).
Figure 4-5 shows a summary of the EVM trend variances and how they relate to past variance. In this example,
it is shown as a negative cost performance that is trending toward partial recovery (i.e., VAC
c
< CV), with a time
delay that is trending to get worse (i.e., VAC
t
> SV
t
).
87
Figure 4-5. Graphical View of the EVM Trend Variances
$120
$80
$60
$40
$20
$-
Status Date
BAC
AC
PV
EV
0 1 2 3 6 7 8 9 11 13
Trend for Cost
Overrun at
Completion
Time
ES AT SAC
Current
Time Delay
Current Amount of
Work Behind Schedule
Schedule at
Completion
Current
Cost Overrun
SV
t
CV
IEAC
C
VAC
C
VAC
IEAC
t
VAC
t
Trend for Variance
at Completion
Trend for
Schedule
Slippage
at Completion
SV
w
Additional examples of graphical representations can be found in Appendix X4.
To-Complete Performance Indices. Performance indices regarding the future were described in Section 4.4.1.3
as the performance required to complete on budget (TCPI) and on time (TSPI), according to the baseline.
In situations where management is considering scenarios to change the baseline, these indices can be
calculated against the new objectives in order to assess whether these are realistic. The equations are the
same, with the new objectives for cost and time being used instead of the current baseline (see Figure 4-6).
88 Section 4
Figure 4-6. Example of To-Complete Performance Index for New Objective
Performance Status
Project Baseline Current Status
Cost Performance Index (CPI) =
To Complete on Budget CPI (TCPI) =
IEAC
c
– Independent EAC (Cost) =
VAC
c
– Variance at Completion (Cost) =
Schedule Performance Index (SPI) =
To Complete on Schedule SPI (TSPI) =
IEAC
t
– Independent EAC (Time) =
VAC
t
– Variance at Completion (Time) =
0.8
1.20
$ 1,250
$ –250
0.67
1.50
15
–5
EV/AC
(BAC – EV)/(BAC – AC)
BAC/CPI
BAC – IEAC(c)
EV/PV
(BAC – EV)/(BAC – PV)
SAC/SPI
SAC – IEAC(t)
Past cost efficiency
Future cost performance required to complete within the
approved budget
Trend for the final cost at completion assuming past
efficiency will continue into the future
Trend for final cost variation at completion
Past schedule efficiency
Future schedule performance required to complete within
the approved schedule
Trend for the final schedule at completion assuming past
efficiency will continue into the future
Trend for the final schedule duration variation at completion
Scenario Analysis for Schedule Adjustment
Schedule Adjustment =
New Adjusted Schedule (New SAC) =
To Complete on New Schedule SPI (TSPI) =
Original Work Rate Assumed in the Baseline =
New Work Rate Assumed in the New SAC =
2
12
1.07
$ 80.00
$ 85.71
SAC + Schedule Adjustment
[(BAC – EV)/(New SAC – AT)]/[(BAC – PV)/(SAC – AT)]
(BAC – PV)/(SAC – AT)
(BAC – EV)/(New SAC – AT)
The approved schedule is increased to accommodate past
underperformance
The new total approved schedule duration
Future schedule performance required to complete within
the newly adjusted schedule
= New Work Rate/Original Work Rate = 85.71/80
The original time remaining (i.e., SAC – AT = 5 Time Periods),
a work rate of $80.00 per time period was assumed
= Work Planned Remaining/Time Remaining = ($1,000 –
$600/(10 – 5) = $400/5 time periods
In the new time remaining (i.e., New SAC – AT = 7 Time Periods),
a work rate of $85.71 per time period is now required
= Current Work Remaining/New Time Remaining = ($1,000 –
$400)/(12 – 5) = $600/7 time periods
Scenario Analysis for Budget Adjustment for the Extra Work
Budget Adjustment =
New Adjusted Budget (New BAC) =
To Complete on New Budget CPI (TCPI) =
$ 150
$ 1,150
1.15
BAC + Budget Adjustment
(New BAC – EV)/(New BAC – AC)
The approved budget is increased to accommodate past
underperformance
The new total approved budget
Future cost performance required to complete within the
adjusted budget (New BAC)
= New Work Remaining/New Budget Remaining
Scenario Analysis for Schedule and Budget Adjustment for the Extra Work
New Adjusted Budget (New BAC) =
New Adjusted Schedule (New SAC) =
To Complete on New Schedule SPI (TSPI) =
New Work Rate Assumed in the New BAC
and New SAC =
$ 1,150
12
1.34
$ 107.14
BAC + Budget Adjustment
SAC + Schedule Adjustment
(New BAC – EV)/(New SAC – AT)
The new total approved budget
The new total approved schedule duration
Future schedule performance required to complete on schedule
within the new scenario of schedule and budget adjustment
= New Work Rate/Baseline Work Rate = 107.14/80.00
In the new time remaining (i.e., New SAC – AT = 7 Time Periods),
a work rate of $107.14 per time period is now required
= New Work Remaining/New Time Remaining = ($1,150 –
$400)/(12 – 5) = $750/7 time periods
Budget at Completion (BAC) =
Schedule at Completion (SAC) =
$ 1,000
10
Actual Time (AT) =
Planned Value (PV) =
Ear
ned Value (EV) =
Actual Cost (AC) =
5
$ 600.00
$ 400.00
$ 500.00
89
Confronted with a scenario of a 5-month potential delay (IEAC
t
= 15 months) and a cost overrun of $250
due to emerging extra work, management is considering some replanning actions to complete the project in
12 months (SAC
new
) and/or allowing for a $150 increase in the budget (BAC
new
) to cover the cost of extra future
work required. Adjusting only the schedule and assuming that no extra work will emerge implies an increase
over the baseline work rate by 7% (TSPI
new
= 1.07), which is far more realistic than trying to complete in
10 months with an unlikely work rate increase of 50% (TSPI = 150%). Assuming that extra future work will
emerge and adjusting the budget accordingly, cost efficiency should also be improved but only to 1.15, which
is less than 1.20 if this extra work was not accommodated and the budget was not changed. In the scenario
where both schedule and budget changes are made to the baseline, this implies a work rate increase of 34%
(TSPI
new
= 1.34), which is still more realistic than a 50% increase with no changes. The required cost and
schedule performance variations implied in the management actions are measured in percent against the
performance assumed in the current baseline, prior to approving the changes. The EVM to-complete indices
provide a means of objective information to assess the feasibility and effectiveness of management actions.
4.4.2.1 SCOPE VARIANCE AND PERFORMANCE
EVM variance metrics and indices consider that the scope is fixed and needs to be accomplished in full. In some
cases, the scope is flexible enough to accommodate stricter cost and time objectives.
EVM metrics can be adapted to measure trends in scope variation and final scope performance, depending on past
cost and time performance. For example, the trend for scope at percent complete as a function of past CPI and SPI
and expected future CPI and SPI, measures the fraction of the original scope that is likely to be accomplished. When
greater than 100%, this means that the scope can be potentially enhanced as an opportunity that management may
decide to explore.
Conversely, considering a required scope increase, the future pressure on cost and time performance can be
calculated in the form of the TCPI and TSPI (future performance) required to accomplish that scope.
4.4.2.2 TREND ANALYSIS
Identifying trends in the performance metrics can help a project manager decipher or anticipate a potential
performance problem. For example, a cumulative CPI that is within an acceptable range, but has been trending down
toward a preestablished threshold for that index for several measurement periods, may be cause for some concern
and prompt an examination of the underlying cause for the trend. When the trend is seen at the project level, the WBS
will enable the manager to drill down to lower levels to see what underlies the trend.
90 Section 4
The use of the management reserve (MR) may also be monitored on EVMS reports. For example, a large drawdown
of the management reserve early in the project may indicate that many unforeseen events have occurred. This
may suggest a trend for the inability to resolve unforeseen threats later as the project progresses. Thresholds may
be established that would trigger management involvement to investigate when a large percentage of MR is used
early in the project. For example, if 50% of MR has been used and the project scope is 20% or less complete, then
management should investigate the causes of the MR use. Any large call for additional funding from the MR should
lead to a reassessment of project assumptions and reevaluation of the corresponding planning decisions.
4.4.2.3 SUMMARY OF EVM METRICS
Table 4-4 is a collection of the main EVM metrics that can be produced by an EVMS and the important management
questions they address.
EVM Metric Management QuestionDescription
Baseline:
Current Status:
Future:
Budget at completion
Schedule at completion
Planned value
Earned value
Actual cost
Earned schedule
Actual time
Cost variance
Schedule variance (work)
Schedule variance (time)
Cost performance index
Schedule performance index (work)
Schedule performance index (time)
To-complete CPI
To-complete SPI
Independent estimate to complete
Independent estimate at completion
Estimate to complete
Estimate at completion
BAC
SAC
PV
EV
AC
ES
AT
CV
SV
w
SV
t
CPI
SPI
w
SPI
t
TCPI
TSPI
IETC
IEAC
ETC
EAC
What is the currently approved budget?
What is the currently approved schedule?
How much work is planned to be accomplished?
How much work has been accomplished?
How much cost has been incurred to date?
How much time was planned for the amount of work accomplished?
How much time has elapsed?
How much is the project overspending or underspending?
How much work is ahead or behind schedule?
How much time is the project ahead or behind schedule?
How much work is being accomplished for every unit of currency spent?
For the time elapsed, what is the actual work rate against the baseline?
For the work done, what is the actual work rate against the baseline?
What is the required future cost performance to complete the project on a
specific budget?
What is the required future time performance to complete the project on a
specific time?
What is the trend for the cost and time required to complete the project given
its past performance?
What is the trend for the final cost and time given its past performance?
What is the cost and time required to complete the project?
What is the trend for the final cost and time given the past performance and
management actions?
Table 4-4. Summary of EVM Metrics
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