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# Study EVM (Earned Value Management) - Part 2

, 25 Apr 2011
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Study EVM (Earned Value Management) - Part 2

Once the CPI/SPI has been calculated at some time-stamp, project manager should do some deeper analyses, he need to predict the future cost.

ETC (Estimate To Completion)

Then EAC (Estimate At Completion) = AC + ETC

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

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 is the rationalist one, it considers 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 the PM chooses, as long as the calculated/predicted EAC is not acceptable, then it is an “early warning” to the team.

Even more, PM needs to 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 me success, again! +U!

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Software Developer (Senior) SAP Labs Shanghai
China
Wayne is a software developer, Tech Lead and also a geek. He has more than 6 years' experience in Web development(server: ASP.NET (MVC), Web Service, IIS; Client: HTML/CSS/JavaScript/jQuery/AJAX), Windows development (Winform, Windows Service, WPF/Silverlight, Win32 API and WMI) and SQL Server. Deep understanding of GOF Design Patterns, S.O.L.i.D principle, MVC, MVVM, Domain Driven Design, SOA, REST and AOP.

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Article Copyright 2011 by Wayne Ye