EVT uses several formulas to analyze and monitor the project budget. EVT formulas can be used to determine if a project is within the budget or will complete within budget. The formulas help the Project Manager determine whether problems or risks may arise.
Earned Value (EV) = Budgeted Cost for Work Complete (BCWC) or Budgeted Cost for Work Performed (BCWP)
Actual Cost (AC) = Actual Cost for Work Completed (ACWC)
Cost Variance (CV) = EV minus AC
CV at the end of a project will be the difference between the budget at completion (BAC) and the actual amount spent.
Cost Performance Index (CPI) = EV divided by AC
CPI is an efficiency indicator to reflect cost performance of a project
You are working on a project that has an EV of $100,000 and an AC of $150,000. Calculate the CPI for the project. Then determine if the project is over budget, under budget, or on budget. Reply to this post with your answer and a brief explanation.
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