Study EVM (Earned Value Management) – 2

Once the CPI/SPI were calculated at some time-stamp, project manager should be deeper analyses, he need to predict the future cost:

ETC (Estimate To Completion)

Then EAC (Estimate At Completion) = AC + ETC

How to calculate ETC based on current situation (EV/AC/PV and SPI&CPI), there are usually three methods:

  1. Regardless of current Schedule/Cost Performance Index
    This way is simple, I don’t care what’s happened, EAC = BAC + EAC – AC, in other words, project team is confident to finish the project below estimated cost.
  2. Estimated based on current CPI
    This way is straight-forward, review current CPI and estimate future cost based on it:
    EAC = AC + (BAC -EV)/CPI = BAC / CPI
  3. Consider both CPI/SPI impact
    I think this way the rationalist one, it consider both SPI and CPI, in additional, PM could give a “weight” to SPI or CPI according to his/her experience and judgement, so the formula is:
    EAC  = (BAC – EV) / (CPI * SPI)

No matter which method PM chooses, as long as the calculated/predicted EAC is not acceptable, then it is an “early warning” to the team.

Even more, PM need calculate TCPI, the content below as copied from EVM on Wikipedia, it is very clear for me.

The To Complete Performance Index (TCPI) provides a projection of the anticipated performance required to achieve either the BAC or the EAC.

For the TCPI based on BAC (describing the performance required to meet the original BAC budgeted total):
TCPI_{BAC} = { BAC - EV \over BAC - AC }
or for the TCPI based on EAC (describing the performance required to meet a new, revised budget total EAC):
TCPI_{EAC} = { BAC - EV \over EAC - AC }
Independent estimate at completion (IEAC)
The IEAC is a metric to project total cost using the performance to date to project overall performance. This can be compared to the EAC, which is the manager’s projection.
IEAC = \sum AC + { \left( BAC - \sum EV \right) \over CPI }

Wish I success, again!  +U!

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About Wayne Ye
Wayne is a software developer, Tech Lead and also a geek, he has more than 6 years experience in developing Web/Windows based applications using ASP.NET, HTML/CSS, JavaScript/AJAX, Web Service, Silverlight, Winform, WPF, Win32 API/WMI, he also invests tremendous effect in GOF Design Patterns, S.O.L.i.D principle, MVC, MVVM, Domain Driven Design, SOA, HTTP/REST and AOP. In his spare time, he likes writing tech/life blogs on WayneYe.com, and separate time with his dear wife and lovely son. Wayne's Geek Life http://WayneYe.com Infinite passion on programming.

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