PMP Exam: Earned Value Management - Part 3, Forecasting Completion

Sir Ganttalot helps you prepare for the PMP exam by explaining Earned Value Management. This is a three part lesson. Part 1 covers basic concepts, i.e. how to derive PV (Planned Value), EV (Earned Value) and AC Actual Cost. (These terms are also known as BCWS, BCWP and ACWP respectively.) Part 2 shows how to apply these items to calculate variances (SV - Schedule Variance, CV - Cost Variance, SPI - Schedule Performance Index, CPI - Cost Performance Index). Part 3 explains how Earned Value Management is used to forecast project performance by calculating EAC - Estimate at Completion, ETC - Estimate to Complete, VAC - Variance at Completion, and TCPI - To Complete Performance Index.

Category:

Education

Tags:

• PMP
• Exam
• Preparation
• Sir
• Ganttalot
• SirGanttalot
• Earned
• Value
• Management
• PMBOK
• BCWS
• BCWP
• ACWP
• SV
• CV
• CPI
• SPI
• EAC
• ETC
• VAC
• TCPI

[jasonvincent027]

any chance you could explain cumulative please. You lost me there.

[SirGanttalot]

It means the total figures from the start of the project until now. So the Cumulative CPI would be the Cumulative Earned Value so far (the budgeted cost of all the work that has been done so far) divided by Cumulative Actual Cost (all the money actually spent so far). CPI(cum) = EV(cum) / AC(cum). It is important to use these cumulative numbers when you do FORECASTING, because your projection forward is going to be more accurate if you use the biggest historical sample possible.

[tgordo100]

Outstanding, I love your series on PMP! Well explained, informative and easy to understand and learn.

[SirGanttalot]

Many thanks for the fedback. I'm very pleased to know the videos are helpful. Best of luck with your studies.

[srini15574]

Thanks for the video...

According to the PMBOK4, EAC in Scenario3 is AC+ [(BAC-EV)/CPIxSPI)].

Is there a reason why you omitted the product of CPI and SPI in your video?

Just want to know why it is not used, or how it can be used.

cheers

srini

[SirGanttalot]

Hello Srini. The various versions of the PMBOK over the years have always just shown a selection of all the possible formulas that are actually used by EV practitioners in the real world. That formula you mentioned is perfectly valid, and for the Exam I would recommend that you learn it, as the PMBOK mentions it. This particular formula is used in circumstances where there has been a LOT of variability in performance, and you need to take account of both schedule and cost performance so far.

[TheJimbaHut]

Thanks, but I think this video was a bit too much. Too many acrynoms and more examples required. Other than that, excellent video series.

[2106harish]

Excellent three videos! Best I have seen on the subject. You explain v well and your voice is inviting...to keep watching the video. I'm an instructor and will use these videos in my training programme tomorrow! Thanks again.

Best regards,

Harish Davda

[adnmaq]

hi

this is fantastic, i just wanted to know, that how should i follow your series to go step by step with the book. As i plan to appear for the exam, any good advice from you will be very helpful.

thanks a alot

[damientoth]

Hi SirGanttalot,

i am a little confused by both the PMBOK & your Scenario 2 given in this video.

The explanation in PMBOK for bottom-up ETC is it is a manual process performed by PM and project team. So it isn't a formula as such. It then decides to give a formula in addition (although does not recommend to use this method), which is clear to me. Equation: EAC = AC + bottom-up ETC

Your scenario 2 states Equation: EAC = AC + new ETC, seems to be the same, but isn't explained well. Is it?

[CTTomAAE]

I am following you with Project 2003. What Project is your videos based on? Project 2003 does not seem to be able to give you the 'S' curve shown in your video. Which Project, if any will give you a baseline S curve?

[stefanicai]

First 2 videos in the series were absolutely great. This one was just good as there were no actual examples of calculating based on actual data. Would have been great to see such as well.

Anyway, great work, thanks!

[spelok66]

FYI.i just learned what is earned value management in my Bachelor programe.. really confused me & i never know whats it all about. pls help me more on this. thanks. regards.steward Pelok...from Malaysia.