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30 January 2015

Understanding Earned Value Management: Part 4 –Forecasting Equations for a Project

David A. Zimmer
David A. Zimmer, PMP
Chief Project Professor
American Eagle Group

Understanding Earned Value Management:
Part 4 - Forecasting Equations for a Project

PMBOK® Guide Definition:

Earned Value Management (EVM): A methodology that combines scope, schedule, and resource measurements to assess project performance and progress.

Estimate at Completion (EAC): The expected total cost of completing all work expressed as the sum of the actual cost to date and the estimate to complete.

Estimate to Complete (ETC): The expected cost to finish all the remaining project work.

Variance at Completion (VAC): A projection of the amount of budget deficit or surplus, expressed as the difference between the budget at completion and the estimate at completion.

To-Complete Performance Index (TCPI): A measure of the cost performance that is required to be achieved with the remaining resources in order to meet a specified management goal, expressed as the ratio of the cost to finish the outstanding work to the remaining budget.

Practical Definition:

Earned Value Management (EVM): A set of mathematical formulas for determining current project performance and progress and used to forecast anticipated results; strikes the greatest fear in PMP® aspirants seeking certification.

Estimate at Completion (EAC): The new total budget value calculated during project execution.

Estimate to Complete (ETC): The amount of budget needed from the current point in the project to the new estimated completion.