Evm

What is Earned Value Analysis?
Earned Value Analysis (EVA) or Earned Value Management (EVM) is considered to be one of the more
difficult concepts for PMP Exam. PMP aspirants are just afraid EVA terms. PMP aspirants dread EVA formulas
and calculations associated with them.
Let me be honest here. My first experience with Earned Value Analysis was on similar lines. I did not find the
concept intuitive when I started preparing for my PMP exam. Even though my first experience was not a
pleasant experience, I persevered. I understood Earned Value Analysis with the help of a small example. One
of my friend helped me in the process. After, I understood the topic, Earned Value Analysis seemed like a walk
in the park. Since then my opinion about Earned Value Analysis has changed completely.
You need a good teacher to get you started with a new concept.
So,
 Is Earned Value Analysis as bad as it is made out to be?
 Why do PMP aspirants find Earned Value Analysis difficult?
 Is there a easy way to understand Earned Value Analysis?
Earned Value Analysis concept is lot simpler than it is made out to be. I believe the current situation is a
combined result of poor teaching and poorly written PMP reference books.
The basic principle of EVA is based on the fact that everyone understand Language of Money. In EVA
everything is measured and reported as Money or Monetary Equivalent. The project team determines
the equivalence between Scope, Schedule, Cost. From thereon everything is reported as Money. EVA
provides a singular view of Schedule and Cost.
Earned Value Analysis (EVA) using an Example
I have written this article to explain EVA using a small example. In another post, I have explained EVA in
simple and easy language. You should read both these articles together. Let us consider a small project for
building wooden tables to understand EVA.
ProjectPlan
Project Scope Build 80 tables
Project Schedule Estimate 5 Days
Cost Estimate per Table 1000 units of money
Project Cost Estimate 80000 units of money
The above table provides a equivalence between Project Scope, Project Schedule and Project Cost. Following
table provides detailed Schedule and Cost Estimates.
Day 1 Day 2 Day 3 Day 4 Day 5
Tables Planned to be Built 10 13 17 20 20
Estimated Cost for the Day 10000 13000 17000 20000 20000
Estimated Cumulative Cost 10000 23000 40000 60000 80000
ProjectTracking

Let us assume that, the project has been started and we are evaluating the progress at the end of Day 3.
Following table provides status at the end of Day 3. Two new rows depict the progress of the project.
Actual Cost for the Day 8000 12000 16000
Actual Cumulative Cost 8000 20000 36000
Is the ProjectTeam making good progress?
Work Scheduled at the end of Day 3 (Cumulative) = Tables that are worth 40000 units of money (Instead of
talking about tables, EVA talks about Monetary Value of Work)
Actual Cost at the end of Day 3 (Cumulative) = 36000 units of money
On the face of it, it looks like, Project Team is making good progress. Planned Work was worth 40000 units
whereas as Actual Cost is 36000 units.
Hey! Let’s wait a minute. What is the Value of Actual Work? Or, in other words, how many tables were
produced at the end of Day 3? So we need a third variable to determine Project Progress. Let us introduce
some more data in the above table.
Tables Actually Built 8 12 15
Value of Tables Actually Built 8000 12000 15000
Cumulative Value of Tables Actually Built 8000 20000 35000
Actual Cost for the Day 8000 12000 16000
Actual Cumulative Cost 8000 20000 36000
Introduction of a new variable changes the whole scenario
Work Scheduled at the end of Day 3 (Cumulative) = Tables that are worth 40000 units of money
Actual Cost at the end of Day 3 (Cumulative) = 36000 units of money
Work Performed = 35 tables or 35000 units of money at Budgeted Cost (Instead of talking about tables, EVA
talks about Monetary Value of Work)
Let us re-write these terms again
Budgeted Cost of Work Scheduled (BCWS) = 40000
Budgeted Cost of Work Performed (BCWP) = 35000
Actual Cost of Work Performed (ACWP) = 36000
These are the 3 basic terms/values of EVA. The modern names for these terms are
 Planned Value (PV) = BCWS
 Earned Value (EV) = BCWP
 Actual Cost (AC) = ACWP
ProjectStatus

 The project is Behind Schedule. The Project Team Planned to build 40 tables but they Actually
built only 35. Or in EVA parlance we can say Project Team Planned to do Work worth 40000 units but
Actually completed the Work worth 35000.
 The project is Over Budget. The Project Team Actually built 35 tables but Spent 36000 units of money.
Or in EVA parlance we can say Project Team Actually completed Work worth 35000 but Actual Cost of
Work was 36000 units of Money.
Variance Formulas
Schedule Variance (SV) = EV – PV
Cost Variance (SV) = EV – AC
EfficiencyFormulas
Schedule Performance Index (SPI) = EV/PV
Cost Performance Index (CPI) = EV/AC
Calculations
SV = 35000 – 40000 = -4000
CV = 35000 – 36000 = -1000
SPI = 35000 / 40000 = 0.875
CPI = 35000 / 36000 = 0.97
Important Points to Remember
 EV is the first term in all the 4 formulas.
 Negative variance means Project is behind.
 Positive variance means Project is ahead.
 Efficiency less than 1 means Project is behind.
 Efficiency of greater than 1 means Project is ahead.

Do you find Earned Value Management System a difficult
concept?
I generally ask the above question in my class before I start explaining what is Earned Value Management System.
Usually I find most of the students have not even heard about Earned Value Management System, let alone gauge
its difficulty.
On the other hand, a small proportion of students know about Earned Value Management System. They think that
the conceptis difficult, profound and impractical. However, I believe, the difficulty level of Earned Value Management
is grossly overrated. This is one of the simpler concept of Project Management.
Then why do most of the students find Earned Value Management System problematic?
The reason is not difficult to fathom. The subject is not treated well i many Project Management books; especially the
books for PMP exam preparation. Most of the books treat Earned Value Management System as a Mathematical
concept with lots of Formulas. Let us be truthful to ourselves, Mathematics is not a forte for many. In fact, it may be a
bugbear for many of us.
In my opinion Earned Value Management System is more about Common Sense than anything else.
Mathematical Formulas can be easily derived if we understand the basics of Earned Value Management System.
In some of my other posts I have explained Earned Value Management using small examples. In this post I have
explained Earned Value Management terms in simple and easy language. You should read these posts together to
get a complete understanding of Earned Value Management System.
I have also compiled a PMP® Formulas Pocket Guide. You can download it free. It is a comprehensive guide to all
PMP® Exam formulas.
Earned Value Management System (EVMS)
EVMS is a methodology to assess project performance by combining Scope, Time and Cost. In simple terms
EVMS is a Project’s performance management system.
In EVMS, Work is considered as the basic unit for performance measurement and evaluation. There could be
many different definitions of Work. The definition can vary from one organization to the other (or from one project to
the other). However, ideally it is the Work as defined in Work Breakdown Structure (WBS). E.g. Work could be a
small Work Package or it could be an Entire Project or anything in-between.
In EVMS, project’s performance is evaluated on a given date (often called the Control Date). There are 3 basic
ingredientsof EVMS which are essentialfor ascertaining the project’s performance.These ingredientsare 3 different
monetary values of Work.
1. Work that was Planned to be Completed by the Control Date. Refer to Planned Value below.
2. Work that was Actually Completed by the Control Date. Refer to Earned Value below.
3. The Cost (Expenditure) of work that was Actually Completed by the Control Date. Refer to Actual
Costbelow.
In EVMS, all 3 values are usually enumerated and reported as Monetary Values. Sometimes these values are
reported as a monetary equivalent like Effort.
Budget At Completion (BAC)
It is the Estimated (or Planned or Budgeted) Cost required to complete the Entire Work. Usually the Entire
Workmeans Total Project Work (as defined in WBS). But it can also mean the Work defined for a Milestone(s).

Planned Value (PV)
It is also called Budgeted Cost of Work Scheduled (BCWS). It is the Monetary Value of the Work that was
Planned (Estimated) to be Completed by the Control Date.
Earned Value (EV)
It is also called BudgetedCost of Work Performed (BCWP).Itis the MonetaryValue ofthe Work that was Actually
Completed by the Control Date. It is NOT the Cost of Work completed. Rather it is the value of the
Workcompleted as per the original Budget. e.g. if X% of the Work is completed then EV would be X% of BAC.
Actual Cost (AC)
It is also called Actual Cost of Work Performed (ACWP).It is the Cost of of Work that was Actually Completed by
the Control Date. Or simply, it is the Actual or Booked Expenditure.
Schedule Variance (SV)
It is the difference between the monetary value of Work that was Actually Completed and the monetary value
of Work that was Planned to be Completed. In EVMS terminologyit is the difference between EV and PV. It provides
a status check on Project Schedule.
Cost Variance (CV)
It is the difference between the monetary value of Work that was Actually Completed and the Cost of Work that
was Actually Completed. In EVMS terminology it is the difference between EV and AC. It provides a status check
on Project Cost.
Schedule Performance Index (SPI)
It is the ratio of the monetary value of Work that was Actually Completed and the monetary value of Work that was
Planned to be Completed. In EVMS terminology it is the ratio of EV and PV. It is the measure of Schedule
Efficiency of the project.
Cost Performance Index (CPI)
It is the ratio ofthe monetaryvalue of Work that was Actually Completed and the Cost of Work that was Actually
Completed. In EVMS terminology it is the ratio of EV and AC. It is the measure of Cost Efficiency of the project.
Estimate To Complete (ETC)
It is the Estimated Cost of the Remaining Work (Work that is remaining on the Control Date). Or simply, it is the
money required to complete the Remaining Work.
Estimate At Completion (EAC)
It is the Revised Estimated Budget for the Entire Work. The Original Budget was estimated as BAC. But on the
Control Date Project may have a Cost Variance (CV). Due to the Cost Variance, Original Budget (BAC) may no
longer be valid. The original budget may need to be adjusted. EAC is the Adjusted (or Proposed or Revised)
Budget.
Variance At Completion (VAC)
It is the difference between the Original Budget and the Revised Budget. In EVM terminology it is the difference
between BAC and EAC.
To Complete Performance Index (TCPI)
It is the Projected Future Cost Efficiency to complete the project within Approved Budget. CPI is the Actual
Efficiency of the project till the ControlDate whereas TCPI is the Projected Future Efficiency to complete the remaining
work.

Quick Reference for Earned Value Management
Formulas
If you are looking for a comprehensive list of all the Earned Value Management Formulas, then you are at the right
place. If you are preparing for PMP® Exam, you will find all the Earned Value Formulas. This article would provide
you with a step up in doing Earned Value Calculations.
I have written a series of articles on Earned Value Management(EVM) where I have explained the Concept in detail
including all the Earned Value Formulas. This post is written with a completely different perspective from my previous
articles. It consolidatesall my previous articles and gives an overview of all the Earned Value Management Formulas.
In this post, I have covered some new Earned Value Formulas as well.
You can bookmark this article as a ready reference for all the Earned Value Management Formulas. It will help you
in doing Earned Value Calculations.
If you are looking for more than an overview of Earned Value Management Formulas, then you should read
my previousarticles. A detailed exposition of Earned Value Formulas will help you in doing Earned Value Calculations
correctly.
I have also compiled a PMP® Formulas Pocket Guide. You can download it free. It is a comprehensive guide to all
PMP® Exam formulas including all Earned Value Formulas.
What is EVM?
EVM is a Project Monitoring and Controlling (M&C) methodology. Just like many other M&C methodologies, EVM
measures & reportsproject’sprogress in terms of Schedule and Cost. And also, like many other M&C methodologies,
EVM has 3 different types of values & measurements:
1. Project Plan
2. Project Status
3. Project Forecast
However, EVM is conceptually different from other M&C methodologies. In EVM Schedule & Cost measurements
are combined together and they are reported as Monetary Values. The Monetary Values are reported either in
monetary units (currency) or as an equivalent of monetary units like Effort. Let us take a close look at these values
along with the Formulas behind them.

Planned Values
Budget At Completion (BAC) Planned Value (PV)
Definition
It is the Estimated or Planned Cost required to complete
the Project. But sometimes it could also mean Estimated or
Planned Cost required to complete a Milestone(s).
It is the Monetary Value of the Work that
was Estimated or Planned to be
Completed by the Control Date.
EVM
Formulas
No Formula
No Formula. It is sometimes expressed as
a percentage of BAC.
Reference Basics of EVA Basics of EVA
Project Status – Basic Values
Earned Value (EV) Actual Cost (AC)
Definition
It is the Monetary Value of the Work that
was Actually Completed by the Control Date.
It is the Actual Cost of Work
Performed by the Control Date.
EVM
Formulas
No Formula. It is sometimes expressed as a percentage of
BAC and sometimes as a percentage of PV.
No Formula
Project Status – Derived Values
Variance Values
Schedule Variance (SV) Cost Variance (CV)
EVM
Formulas
SV = EV – PV CV = EV – AC
Note
Negative Variance means Project is Behind
Schedule.
Negative Variance means Project is Over Budget.
Efficiency Values
Schedule Performance Index (SPI) Cost Performance Index (CPI)
EVM
Formulas
SPI = EV / PV CPI = EV / AC
Note SPI < 1 means Project is Behind Schedule. CPI < 1 means Project is Over Budget.
Note: EV always comes first in all the Variance and Efficiency Formulas.
Project Forecast
Budgetary Forecast
Estimate To Complete (ETC) Estimate At Completion (EAC)

Definition
It is the Estimated Cost of the Remaining
Work on the Control Date.
It is the Revised Estimated Budget for the
Projecton the Control Date.
EVM Formulas
ETC = (BAC – EV) / CPI
ETC = (BAC – EV)
ETC = (BAC – EV) / CPIp
EAC = AC + ETC
EAC = AC + (BAC – EV)
EAC = AC + (BAC – EV) / CPI
EAC = BAC / CPI
EAC = AC + [(BAC – EV) / (CPI * SPI)]
Reference What is Estimate To Complete in EVM? EAC Formula
Generic
Equation
ETC = (BAC – EV) / CPIp EAC = AC + ETC
Variance Values
Variance At Completion (VAC)
EVM Formulas VAC = BAC – EAC
Reference EVMS Explained in Easy Language
Note Negative Variance means Actual Cost of Project is likely to be more than the Planned Cost
Efficiency Forecast
To Complete Performance Index (TCPIB) To Complete Performance Index (TCPIE)
Definition
It is the Projected Future Cost Efficiency to
complete the project within Original Budget.
It is the Projected Future Cost Efficiency to
complete the project within Revised Budget.
EVM
Formulas
TCPI = (BAC – EV) / (BAC – AC) TCPI = (BAC – EV) / (EAC – AC)
Reference To Complete Performance Index To Complete Performance Index
Generic
Equation
TCPI = (BAC – EV) / (funds remaining)
Is this the complete list of Earned Value Formulas to do Earned Value
Calculations?
Yes. This is a complete list for PMP® Exam study. You would be able to do all the possible Earned Value
Calculations using these Formulas. Otherwise, EVM is a big topic and there are many more Earned Value
Management Formulas that are not explained here.
To Complete Performance Index and Efficiency Forecasts

Consider the following scenario.
You are managing a project. The project is running over-budget for some reason(s). Your Sponsor comes and tells
you to do whatever you can to complete the Project within Budget. How will you do it?
The obvious answer would be to reduce the costs somehow. By reducing the costs, you would have to complete
the remaining project work at an increased cost efficiency.
Now we have a different question “to what extent should we increase the cost efficiency?”. Th e answer can be
determined by calculating To Complete Performance Index (TCPI).
The Background
I have written a series of articles on Earned Value Management and related concepts. This post is written in
continuation to:
 Basics of Earned Value Management
 What is Estimate To Complete in Earned Value Management
 Estimate At Completion and its relation with Estimate To Complete
It would be helpful to read above 3 articles to understand the basic concepts of EVM before reading this article. Let
us quickly review some of the EVM terms:
Budget At Completion (BAC) – Approved budget at the start of a project.
Earned Value (EV) – EV is the monetary value of the completed work by the Control Date.
Actual Cost (AC) – AC is actual project expenditure (for the completed work) by the Control Date.
Cost Performance Index (CPI) – CPI is defined as ratio of EV and AC (EV / AC). It is Project’s cost efficiency on the
Control Date.
Estimate At Completion (EAC) – If there is a Cost Variance (CV) the original budget (BAC) may no longer be
applicable. EAC is the revised estimated budget for the entire project.
Let us analyze CPI further. On the Control Date, Project CPI could be one of the following:
 CPI < 1 – it means that value earned is less than money spend – project is over budget.
 CPI = 1 – it means that value earned is equal to money spend – project is going as per the budget.
 CPI > 1 – it means that value earned is more than money spend – project is under budget.
What is To Complete Performance Index?
To Complete Performance Index (TCPI) is future projected cost efficiency of the project. TCPI is estimated by
analyzing project’s past performance. There is a difference between CPI and TCPI.
 CPI is the project’s past cost efficiency whereas TCPI is the project’s future cost efficiency.
 CPI is an actual efficiency for the completed work whereas TCPI is an estimated efficiency for the
remaining work.

Let us use our example from Basics of Earned Value Management. The CPI was 0.97 in our example. Refer to EAC
Formula IV. If the project team finishes the remaining work with a cost efficiency of 0.97 then EAC would be
80000/0.97. Clearly EAC would be more than our original budget of 80000 units. The project team would not be able
to complete the project within original budget (BAC) if it continues to perform at historic cost efficiency (CPI).
If the project team wants to complete the project within original budget (BAC) then the future cost efficiency (TCPI)
should be greater than 1.
Generic “To Complete Performance Index” Equation
Going by the definition of TCPI and applying pure mathematical logic, we can write TCPI equation as.
TCPI = (monetary value of remaining work)/(remaining funds)
Numerator of the above equation
monetary value of remaining work = monetary value of total work – monetary value of completed work
monetary value of remaining work = BAC – EV (refer to Basics of Earned Value Analysis or Earned Value
Management System Explained in Easy Language)
Denominator of the above equation
remaining funds = total budget – actual expenditure
remaining funds = total budget – AC (refer to Basics of Earned Value Analysis or Earned Value Management
System Explained in Easy Language)
So our TCPI equation reduces to
TCPI = (BAC – EV) / (total budget – AC)
Formula I – TCPI for completing project within Original Budget (BAC)
Replacing total budget with BAC, TCPI equation reduces to
TCPIB = (BAC – EV) / (BAC – AC)
Formula II – TCPI for completing project within Revised Budget (EAC)
Replacing total budget with EAC, TCPI equation reduces to
TCPIE = (BAC – EV) / (EAC – AC)
A note to PMP Aspirants
There are number of formulas in EVM. I have covered basic formulas along with their practical utility in other articles.
You need to understand the utility of these formulas to answer PMP question. A mere memorization of the formulas
would not be helpful – you may not be able to apply the correct formula in a given question.

Estimate At Completion Formula Explained
Which formula should be used for calculating Estimate At Completion?
This question is often asked by the PMP aspirants. They get confused by the different formulas written in the books.
On the other hand, a person who regularly uses Earned Value Management would never ask this kind of question.
Let me explain.
In my opinion, the aspirants should not be faulted for confusion regarding Estimate At Completion formula. This
confusion has been mainly perpetrated by the PMP reference books.Most of the reference booksjust list & document
the formulas. They do not explain them sufficiently. Their focus is mainly on memorizing and answering the exam
questions without really explaining the true utility of each formula.
Is it possible to answer the exam questions correctly without understanding the concept? I don’t think so.
In this post, I will talk about project forecasting using Estimate At Completion. I will first explain the concept of
forecasting and then Iwill talk about Estimate At Completion Formula.Thisarticle complements my article on Estimate
To Complete (ETC). You should read these two articles together.
If you already understand the basics of Earned Value Management (EVM), you can skip to the next section.
Otherwise, you should read the following articles to understand the basics of EVM, before going ahead:
 Basics of Earned Value Analysis
 Earned Value Management Explained in Easy Language
Forecasting & Estimate At Completion
You are in middle of a project. Your Project Sponsor comes and asks you – how much would it cost to complete the
project. The Sponsor wants you to forecast & estimate the project budget.
You can make an educated guess and answer the question. But, would that be a good Forecast? Probably not.
Instead, we can take a more scientific approach to arrive at the answer.
This is where Estimate At Completion (EAC) comes into the picture. EAC is the estimated forecast of total budget to
complete the project.
We already know that, in EVM, original budget is depicted as Budget at Completion (BAC). But in the middle of a
Project, the original budget may no longer be valid. This can happen due to if there is are cost variances. You can
analyze the project’s past performance and come out with a new budgetary estimate to complete the project. This
new budgetary estimate, which is based on project’s past performance, is called Estimate At Completion (EAC).
EAC can become the Revised Project Budget only after the Sponsor’s approval.
If we wanted, we can write a simple definition of EAC as

Based on project’s past performance, the estimated total amount of money needed to complete
the Project is called Estimate At Completion.
You can refer to Max Wideman Glossary to read some other standard definitions of EAC. Let us now look at the
generic Estimate At Completion formula.
A Generic Estimate At Completion Formula
In my opinion, EVM is more about common sense and less about mathematical formulas. If we go with the above
definition, EAC can be simply expressed by the following equation
EAC = (Actual Expenditure Till Date) + (Estimated Future Expenditure)
Let us analyze and solve this equation.
Refer to Basics of Earned Value Analysis or Earned Value Management System Explained in Easy Language
Actual Expenditure Till Date = AC
Refer to my article on Estimate to Complete or Earned Value Management System Explained in Easy Language
Estimated Future Expenditure = ETC
So EAC equation can be written as
EAC = AC + ETC
This is the only Estimate At Completion Formula that we need. It can be used to derive a few other formulas and it
can be also used to calculate EAC in any scenario.
5 Formulas Derived from the Generic EAC Formula
 Formula I – EAC = AC + ETC
 Formula II – EAC = AC + (BAC – EV)
 Formula III – EAC = AC + (BAC – EV)/CPI
 Formula IV – EAC = BAC/CPI
 Formula V – EAC = AC + [(BAC – EV)/(CPI * SPI)]
There are 4 formulas listed in the PMBOK Guide 5th Edition. Most of the PMP reference books also list the same 4
formulas. But, I have listed 5 formulas here. The PMBOK Guide lists Formula II but does not list Formula III. I have
listed both these formulas as Formula II is a special case of Formula III. In fact Formula IV is also a special case of
Formula III.
Let me explain each one of them in detail.
EAC Formula I
Formula I is same as our Generic EAC Equation.
EAC = AC + ETC
In the PMBOK Guide and in some other books you will find this formula written as
EAC = AC + Bottom-up ETC
What is “Bottom-up” ETC?
Refer to Scenario IV of my article on Estimate to Complete. The term “Bottom-Up” has no specific significance in the
EAC formula. ETC can be either derived mathematically by using formulas or it can be estimated afresh. A fresh ETC
can by found by estimating the cost of remaining (unfinished) work in the Work Breakdown Structure (WBS). You can
re-estimate the cost of remaining work components at the bottom of WBS and then total then total them Upwards in
the WBS to determine a fresh ETC.

EAC Formula II
Refer to my article on Estimate to Complete. By replacing ETC Formula II in the EAC Equation, the EAC Equation
reduces to
EAC = AC + (BAC – EV)
EAC Formula III
Refer to my article on Estimate to Complete. By replacing ETC Formula I in the EAC Equation, the EAC Equation
reduces to
Note: We can also use Formula III of ETC in the EAC Equation. It will give us another formula which would be similar
to EAC Formula III.
EAC Formula IV
Let us mathematically solve EAC Formula III.
EAC = AC + (BAC / CPI) – (EV / CPI)
Refer to Basics of Earned Value Analysis. Let us replace CPI in above Equation with (EV/AC). The above Equation
reduces to
EAC = AC + (BAC / CPI) – EV/(EV/AC)
EAC = AC + (BAC / CPI) – AC
EAC = BAC / CPI
EAC Formula V
The Sponsor wants to know the revised budgetary estimate to complete the project work within the Original Schedule
at the current CPI. None of the above formulas will work in this case as none of them uses Schedule Performance
Index (SPI).
We already know that project’s current efficiency is measured by two indices – Cost Performance Index
(CPI) and Schedule Performance Index (SPI). If CPI is ‘C’, it means that $C worth of work was done for every $1
spent. If SPI is ‘S’, it means that ‘S’ units of work was done for each duration unit (e.g. day).
Formula III uses only CPI. To give an answer to the Sponsor, we need SPI also. If we can modify the Formula III to
include SPI, then it becomes
EAC = AC + (BAC – EV) / (CPI * SPI)
Summary
EAC Formula when future work will be completed at budgeted rate (at planned efficiency)
EAC = AC + BAC – EV
EAC Formula when future work will be completed at current rate (at present CPI)
EAC = BAC / CPI

EAC Formula when future work will be completed within original Schedule at current rate (considering both present
CPI & SPI)
EAC = AC + (BAC – EV) / (CPI * SPI)
While doing the PMP questions, you should avoid memorizing the formulas. Pure memorization does not help. It is
better understand the concept and then apply the formula(s) as required.
I have compiled a PMP Formulas Pocket Guide that is based on the PMBOK Guide 5th Edition. You can download
the Pocket Guide for free. It is the most comprehensive guide to all the PMP Exam formulas. If you are looking for
more, you can also buy detailed PMP Exam Formula Study Guide by Cornelius Fichtner. It contains explanations of
all the formulas along with examples and 105 PMP practice questions.
Please leave a comment, if you have seen a any other EAC formula and you were not able to understand it.

Estimate At Completion Formula Explained
Which formula should be used for calculating Estimate At Completion?
This question is often asked by the PMP aspirants. They get confused by the different formulas written in the books.
On the other hand, a person who regularly uses Earned Value Management would never ask this kind of question.
Let me explain.
In my opinion, the aspirants should not be faulted for confusion regarding Estimate At Completion formula. This
confusion has been mainly perpetrated by the PMP reference books.Most of the reference booksjust list & document
the formulas. They do not explain them sufficiently. Their focus is mainly on memorizing and answering the exam
questions without really explaining the true utility of each formula.
Is it possible to answer the exam questions correctly without understanding the concept? I don’t think so.
In this post, I will talk about project forecasting using Estimate At Completion. I will first explain the concept of
forecasting and then Iwill talk about Estimate At Completion Formula.This article complements my article on Estimate
To Complete (ETC). You should read these two articles together.
If you already understand the basics of Earned Value Management (EVM), you can skip to the next section.
Otherwise, you should read the following articles to understand the basics of EVM, before going ahead:
 Basics of Earned Value Analysis
 Earned Value Management Explained in Easy Language
Forecasting & Estimate At Completion
You are in middle of a project. Your Project Sponsor comes and asks you – how much would it cost to complete the
project. The Sponsor wants you to forecast & estimate the project budget.
You can make an educated guess and answer the question. But, would that be a good Forecast? Probably not.
Instead, we can take a more scientific approach to arrive at the answer.
This is where Estimate At Completion (EAC) comes into the picture. EAC is the estimated forecast of total budget to
complete the project.
We already know that, in EVM, original budget is depicted as Budget at Completion (BAC). But in the middle of a
Project, the original budget may no longer be valid. This can happen due to if there is are cost variances. You can
analyze the project’s past performance and come out with a new budgetary estimate to complete the project. This
new budgetary estimate, which is based on project’s past performance, is called Estimate At Completion (EAC).
EAC can become the Revised Project Budget only after the Sponsor’s approval.
If we wanted, we can write a simple definition of EAC as

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