PROJECT COST MANAGEMENT - REVIEW

For you:

After Reviewing the Time Management chapter 6, I am now reviewing Cost Management, Chapter 7 – page 210 in Rita’s book has a nice exercise which clarified for me, the meaning behind each cost element. I recommend this exercise:

PV: What is the estimated value of the work planned to be done (BCWS)
EV: What is the estimated value of the work actually accomplished (BCWP)
AC: What is the actual cost of Work performed (ACWP)
BAC: Budget at Completion
CV Cost Variance (EV-CV)
CPI: Cost Performance Index (CPI=EV/AC)
SV: Schedule Variance (SV=EV-PV)
SPI: Schedule Performance Index (SPI=EV/PV)
EAC: Estimate At Completion (BAC/CPI)
ETC: EAC – AC
VAC: BAC – EAC

There are many formulas for EAC. See page 207 in RITA’s book (or look up in (PMBOK). Memorize this. Do the exercises – they help.
Points; EV comes first in every formula.
If it is a variance, the formula is EV minus something.
If it is index, it is EV divided by something
If the formula relates to cost, use AC
If the formula relates to schedule, use PV
For interpretation, negative is BAD and positive GOOD. (SV and CV)
For interpretation, greater than one is GOOD, less than one is BAD (SPI and CPI)