Earned Value Acronyms and Formulas

This chapter has several formulas that you need to memorize. Because they are so important, they are included here again. These mathematical formulas are not hard; you simply have to know them and apply them to a set of questions. These formulas deal with earned value. They will be shown here and again later in the book because of their importance on the test.

Both the old and new acronyms are shown here; the new ones are used on the test, but the old ones are included here for completeness. The new ones are much clearer and make more sense.

EV = Earned Value. The value of the work on the project that is already complete.

PV = Planned Value. What you show in your plan for the project.

AC = Actual Cost. The actual cost of performing the work on the project.

Cost Variance (CV) = Earned Value-Actual Cost. In acronyms, EV-AC.

Cost Performance Index (CPI) = Earned Value divided by Actual Cost, or EV/AC.

Schedule Performance Index (SPI) = Earned Value divided by Planned Value, or EV/PV.

In the CD at the back of the book, you will find an electronic version of these formulas. I recommend printing them out and keeping them handy because you will need to know them for the exam.

The earned value section of the exam can be found in different sections of the PMBOK. It was put in the Execution and Control phases of this book because it belongs there. Your knowledge of earned value and how to use it can be very helpful in explaining how a project is being conducted.

I should mention again that in many cases, doing an accurate job of earned value analysis is extremely difficult. Most of the time in projects, the preciseness that we present in theory is not as clear as it is in a book. However, you need to do some sort of analysis on variances as you execute and control the project, and earned value is another tool with which you can work.