Join Aileen Ellis for an in-depth discussion in this video Calculating cost variance (CV) and cost performance index (CPI), part of Project Management: Calculating Earned Value.
Let's now determine how we are doing…from a cost standpoint.…We will solve this first using logic…and then verify through Earned Value equations.…At this point in time, we have one side complete.…It should have cost $100 for the one side.…It did cost $400.…Therefore, we are running over budget by $300.…We could say the Cost Variance is a -$300.…
Let's solve again but this time let's do it…through the Earned Value equation.…Cost Variance equals Earned Value minus Actual Cost.…If we plug the numbers in,…Cost Variance equals $100 - $400.…The Cost Variance is a -$300.…What does this really mean?…It means we have spent $300 more…on the project than we should for the work…that is complete.…
Let's look at the XY bar chart.…We can see the Earned Value line, the red line,…is lower than the Actual Cost line, the green line.…Therefore, we have less work complete than money spent.…We are running over budget.…Let's determine the Cost Performance Index.…We call this the CPI.…We'll calculate first and then explain what it means.…
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- What is earned value management?
- Who uses EVM?
- Determining budget at completion, planned value, and earned value
- Calculating schedule and cost variance as well as schedule and cost performance index
- Forecasting future costs
- Computing TCPI for project success
- Exploring limitations of EVM<br><br>
- The PMI Registered Education Provider logo is a registered mark of the Project Management Institute, Inc.