let's learn about turned value management in this video which is an important part of comparing the plan baselines and actual outcomes earned value management II V M is a methodology used to measure project performance against the project baselines it integrates the scope baseline with the cost baseline along with the scheduled baseline to form the performance baseline which helps the project management team assess in measure project performance and progress let's look into some important terms and earned value management with respect to the project cost first one is planned value which is denoted as PV is the authorized budget to sign to scheduled work next is earned value which is denoted as EV is the work performed in terms of budget authorized for that work actual cost is denoted as AC and is the actual cost incurred in work performed budget at completion is denoted as BAC which is the budgeted amount for the total work estimate at completion is denoted as ei C which is the expected total cost for the project at completion estimate to complete is denoted as et C and is the expected cost to finish all the remaining project work Varian's that completion is denoted as backend indicates the projected budget surplus or deficit at the end of the project let's look into the formula for earned value management cost variance cv is calculated using the formula f - a c- value of cv is over budget positive is under budget schedule variance SV is calculated using the formula f - p v- FV is behind schedule positive is ahead of schedule cost Performance Index CPI is calculated by dividing there by AC this indicates how much worth of work we are getting out of every $1 spent scheduled performance index SPI is calculated by dividing F by PV SPI indicates at what rate the project is progressing against the originally planned estimate at completion EAC is calculated by using different formulas first is dividing BAC by CPI and indicates work performed at current CPI second is AC plus B AC minus F which indicates rest of the project at budgeted rate third AC plus BAC - have divided by CPI into SPI which indicates factoring in both CPI and SPI fourth is AC plus et Cie which indicates reevaluated based on forecast value for e TC estimate to complete ET c is calculated by using the formula e AC minus AC ET c indicates how much more the project would cost from here to the end of the project Varian's that completion is calculated by the formula b AC minus e AC this indicates how much over were under budget we expect to be at the end of the project to complete performance index T CPI is calculated using two formulas first is B AC minus F divided by B AC minus AC this shows at what rate the project need to progressed so that it can be completed at the planned budget second is B AC minus F divided by e AC minus AC this formula is helpful when the project should be completed to a specified value EAC below let's look into an example for EVM calculation let's take a software project which has four sequential phases and each phase takes one month to complete estimated cost per phases $10,000 say now we are an end of the third month as shown in the picture let's calculate the planned value PV PV is equal to $10,000 for first month plus $10,000 for second month and $10,000 for third month hence the total value of PV and is equal to $30,000 so by third month we should have done 30 thousand dollars worth of work now we will calculate the actual earned value eevee eevee can calculated by adding the completed work of $10,000 for first and $10,000 for second month since only 50% of work is completed and for third month is $5000 by summing up these values we can estimate the EVs $25,000 so we can conclude that we have actually accomplished work worth $25,000 now we will calculate the actual cost the cost for the first month is $10,000 $12,000 for second month and $9,000 for third month adding all we can estimate the actual cost as $31,000 now the cost variance CV can be calculated by subtracting AC from C V hence CV is equal to 25 thousand dollars minus $31,000 that is equal to $6,000 which tells that we are over budget by $6,000 next we will calculate the schedule variance s ax T using the formula e V minus PV hence SV is equal to $25,000 - $30,000 which is $5,000 this positive sign shows that we are behind the schedule cost Performance Index CPI can be calculated as follows CPI is equal to 25 thousand dollars divided by $31,000 and yields the result of 0.80 this CPI indicates we are getting 80 cents out of every dollar spent same way scheduled performance index SBI can be calculated as follows SPI can be estimated by dividing $25,000 by $30,000 and that gives the result of 0.83 this SPI indicates we are progressing that 83 percent of the rate originally planned now we will calculate the estimate at complete TAC and estimate to complete e TC using BAC budget at completion NC pi ei C is equal to $40,000 divided by 0.8 zero and the value is $50,000 hence the hope this video is helpful if you like this video please hit the like button and share your comments stay subscribed for more knowledge sharing videos thank you for watching this video