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.…
Lynda.com is a PMI Registered Education Provider. This course qualifies for professional development units (PDUs). To view the activity and PDU details for this course, click here.
The PMI Registered Education Provider logo is a registered mark of the Project Management Institute, Inc.
- Identify the fundamentals of calculating budget at completion, planned value, earned value, and actual cost.
- Recognize the steps to forecast estimate at completion.
- Determine the steps in calculating BAC, PV, EV, and AC.
- Break down how to calculate CV and CPI.
- Examine the elements of forecasting EAC.
- Explore the steps involved in forecasting ETC and VAC.