PMI Visual Wall — Batch 1: Foundation & PMBOK 7

PMI VISUAL WALL · BATCH 4

Section 5 — Earned Value Management · Posters 14–15 🖨 Print / Save as PDF — A3 landscape Tip: in the print dialog set paper = A3, layout = Landscape, margins = None, "Background graphics" ON.

Batch 4 — Earned Value Management (Posters 14–15)

This batch covers The Standard for Earned Value Management : the three core measures and the variances/indices they produce, then the full forecasting family (EAC, ETC, VAC, TCPI). One worked example runs across both posters so every formula lands on the same numbers. Same anatomy as the rest of the wall, with a green spine for EVM. Print with the button above (A3, landscape, margins None, background graphics ON).

The one rule that unlocks EVM: EV starts every formula. A variance is a subtraction (EV − something); an index is a division (EV ÷ something). Positive variance and index > 1 are always favourable.

POSTER 14

Section 5 · Earned Value Management — The Engine

EVM Foundations: Measures, Variances & Indices

EVM fuses scope, schedule and cost into one objective read of performance. Three measures — PV, EV, AC — produce two variances ($) and two indices (ratios). The golden rule: EV starts every formula ; subtract for a variance, divide for an index, and positive / > 1 is good.

Visual Map — The EVM S-Curve

Cumulative $ Time → data date (now) PV — planned value (BAC = total PV) EV — earned value AC — actual cost PV = 50k AC = 45k EV = 40k SV = EV − PV = −10k CV = EV − AC = −5k → behind schedule & over cost

EV below PV ⇒ behind schedule ; EV below AC ⇒ over budget. The vertical gaps to EV are the variances.

The Three Measures

PV — Planned Value budgeted cost of work scheduled (the baseline plan). Total PV = BAC , Budget at Completion. EV — Earned Value budgeted cost of work performed. EV = % complete × BAC. AC — Actual Cost actual cost of the work performed — what you really spent.

Variances ($) & Indices (ratios)

SV = EV − PV

• ahead · − behind

CV = EV − AC

• under · − over

SPI = EV ÷ PV

1 ahead · <1 behind

CPI = EV ÷ AC

1 under · <1 over

Worked Example

Item	Value
BAC	$100k
PV (planned 50%)	$50k
EV (40% complete)	$40k
AC (spent)	$45k
SV = 40−50	−$10k behind
CV = 40−45	−$5k over
SPI = 40/50	0.80
CPI = 40/45	0.89

Exam Concepts

• Variances in $, indices are ratios. EV is always first.
• Positive variance & index > 1 = favourable.
• EV = % complete × BAC.
• SV weakness: measured in $, it drifts to 0 at the end even if late — pair it with the schedule network or SPI.
• Cost pair uses AC ; schedule pair uses PV.

Executive View

• One integrated number for scope + schedule + cost.
• Objective early-warning system — trends, not anecdotes.
• CPI is famously stable after ~20% complete — trust the trend.
• Reports up cleanly through program & portfolio.

Relationships

• Needs a sound scope, schedule & cost baseline first (Poster 6 baselines).
• Risk reserves sit inside/outside the baseline (Poster 12).
• Forecasting (EAC/ETC/VAC/TCPI) builds on these — Poster 15.

Industry Example

Capital Project

• A $100k line-upgrade is 40% built but has consumed $45k by the planned-50% point: SPI 0.80 & CPI 0.89 flag it behind and over early enough to act.

Memory Hooks

• "EV is the hero — it opens every formula."
• Variance = minus, Index = divide ; + and >1 are good.
• Cost↔AC, Schedule↔PV (C-A, S-P).

60-sec Review Define PV / EV / AC Write SV, CV, SPI, CPI EV = ? × BAC Why SV in $ is weak Sketch the S-curve

PMI Visual Wall · Poster 14 · EVM — Measures, Variances & Indices · original instructional design · A3 landscape

POSTER 15

Section 5 · Earned Value Management — Forecasting

EVM Forecasting: EAC · ETC · VAC · TCPI

Performance to date predicts the finish. EAC forecasts the total cost, ETC the cost of what's left, VAC the projected over/under, and TCPI the efficiency you must now sustain to hit a target. Pick the EAC formula that matches your assumption about the remaining work.

Visual Map — Choosing Your EAC (assumption → formula)

Assumption about the remaining work	EAC formula	Reading
Current variance was a one-off / atypical	EAC = AC + (BAC − EV)	finish the rest at the budgeted rate
Current cost efficiency continues (the default)	EAC = BAC ÷ CPI	today's CPI holds to the end
Both cost & schedule pressure continue	EAC = AC + (BAC − EV) ÷ (CPI × SPI)	schedule drag worsens cost
Original estimate is no longer valid	EAC = AC + bottom-up ETC	re-estimate the remainder

The Forecasting Family

BAC Budget at Completion — the baseline total (the plan). EAC Estimate at Completion — forecast total cost. ETC Estimate to Complete — cost of the remaining work. VAC Variance at Completion — projected over/under at the end. TCPI To-Complete Performance Index — efficiency needed from here.

Core Formulas

ETC = EAC − AC what's left to spend

VAC = BAC − EAC

• under · − over at end

TCPI = (BAC − EV) ÷ (BAC − AC) to still hit BAC

TCPI = (BAC − EV) ÷ (EAC − AC) to hit the new EAC

Worked Example (same numbers)

From Poster 14	Value
BAC / EV / AC	100 / 40 / 45
CPI / SPI	0.89 / 0.80
EAC = BAC/CPI	$112.5k
ETC = EAC−AC	$67.5k
VAC = BAC−EAC	−$12.5k
EAC (cost×sched)	≈ $129k
TCPI →BAC	1.09

Reading TCPI

• TCPI = work remaining ÷ funds remaining.
• Compare to your CPI : TCPI 0.89 vs CPI 0.89 = on track.
• Here TCPI 1.09 > CPI 0.89 → you must run better than you ever have → the BAC is likely unrecoverable.
• Response: re-baseline, de-scope, or accept the overrun.

Exam Concepts

• ETC = EAC − AC ; VAC = BAC − EAC.
• EAC = BAC/CPI is the default "current-trend" forecast.
• Know all four EAC formulas & their assumptions.
• TCPI > 1 (and > CPI) = must tighten up; recovery is hard.

Executive View

• EAC & VAC answer the board's question: "Where will we land?"
• TCPI tells you if a recovery target is realistic before you promise it.
• Forecasts trigger re-baselining & funding decisions.

Industry Example

Capital Project

• The $100k line upgrade now forecasts $112.5k (EAC) with a −$12.5k VAC. TCPI 1.09 says recovery to budget is unlikely → present a re-baseline + a de-scope option.

Memory Hooks

• BAC=plan · EAC=forecast · ETC=what's left · VAC=the surprise.
• "ETC peels AC off EAC."
• If TCPI > CPI, you're in trouble.

60-sec Review 4 EAC formulas + assumptions ETC and VAC formulas Both TCPI formulas TCPI vs CPI meaning Recompute EAC from CPI

PMI Visual Wall · Poster 15 · EVM — Forecasting (EAC/ETC/VAC/TCPI) · original instructional design · A3 landscape