Abbott Project Management Playbook

• Planned Value (PV) - The authorized, budgeted amount to complete an activity. It is the Cost Baseline. The total value of all planned work for an activity is known as the Budget at Completion (BAC). At the beginning of a project, PV = BAC. • Earned Value (EV) - The value (not the cost) of an activity represented by the completed portion of the PV. • Actual Cost (AC) - The cost incurred to achieve the earned value. An activity whose actual cost is greater than the earned value is either behind schedule, over budget, or both.

Only the PV is known from the project start until the end because it is recorded as the cost baseline. The actual cost and the earned value are based on periodic progress measurements during project execution.

EVM also derives several metrics to determine performance, variances, and forecasted outcomes, all of which can be done at any level of the project from the total project down to an individual work package.

Calculation of performance indices and variances metrics used in forecasting and trend analysis • Cost Variance (CV) = EV – AC o CV measures project performance by determining how much the work is over or under the budget at a given time. • Cost Performance Index (CPI) = EV ÷ AC o The CPI is a measure of expended cost to budgeted o CPI > 1.0 is good • Schedule Performance Index (SPI) = EV ÷ PV o The SPI is a measure of planned productivity to actual o SPI > 1.0 is good • Reference “Key Formulae for Analysis & Forecasting” under the Useful Links tab for more info and equations Calculating a Cost Forecast • Estimated Cost at Completion (EAC) = Budget (BAC) ÷ CPI o The EAC is the estimated total cost to complete all the work, including the actual cost incurred for the work already performed. • Estimated Cost to Complete (ETC) = EAC – AC o The estimated cost to complete the activity from a certain point in time to completion.

Calculating a Schedule Forecast •

Estimated Project Duration = Original Duration ÷ SPI

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