## Study EVM (Earned Value Management) – 2

November 11, 2010 Leave a comment

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:

**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.**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**

**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):

- or for the TCPI based on EAC (describing the performance required to meet a new, revised budget total EAC):

**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.

Wish I success, again! +U!