Cost Planned Completion: Earned Value Management Metrics for Exam
PMBOK v8 Definition
Cost planned completion refers to the earned value management (EVM) metrics that measure project cost and schedule performance against the planned baseline. The key metrics include Planned Value (PV) – the authorized budget assigned to scheduled work; Earned Value (EV) – the measure of work performed expressed as the planned value of completed work; Actual Cost (AC) – the realized cost incurred for work performed; and Budget at Completion (BAC) – the sum of all budgets established for the work to be performed. These metrics are used to calculate variances and performance indices, including Schedule Variance (SV = EV − PV), Cost Variance (CV = EV − AC), Variance at Completion (VAC = BAC − EAC), and Cost Performance Index (CPI).
Why It Matters for the Exam
This concept appears frequently in PMI exam questions related to the Monitoring and Controlling Process Group and the Project Cost Management Knowledge Area. Questions typically test your ability to calculate and interpret EVM metrics, determine whether a project is ahead/behind schedule or under/over budget, and identify the correct formula for each variance or index.
Key Points to Remember (for the exam)
- Schedule Variance (SV): SV = EV − PV. Positive = Ahead of schedule. Neutral = On schedule. Negative = Behind schedule.
- Cost Variance (CV): CV = EV − AC. Positive = Under planned cost. Neutral = On planned cost. Negative = Over planned cost.
- Variance at Completion (VAC): VAC = BAC − EAC. Positive = Under planned cost. Neutral = On planned cost. Negative = Over planned cost.
- Earned Value (EV): The planned value of all work completed to a point in time, usually the data date, without reference to actual costs. EV = Sum of the planned value of completed work.
- Actual Cost (AC): The realized cost incurred for the work performed on an activity during a specific time period.
- Budget at Completion (BAC): The value of total planned work: the project cost baseline.
- Common Confusion: SV measures schedule performance in cost terms (monetary value), not time units (days/weeks). A positive SV means you have completed more work than planned in monetary terms, not necessarily that you will finish early.
Typical PMI Exam Example
A project has a Planned Value (PV) of $50,000, an Earned Value (EV) of $45,000, and an Actual Cost (AC) of $48,000 as of the data date. Calculate the Schedule Variance and Cost Variance. Answer: SV = EV − PV = $45,000 − $50,000 = −$5,000 (Behind schedule). CV = EV − AC = $45,000 − $48,000 = −$3,000 (Over planned cost).
PMI Exam Traps
- Trap: Confusing SV with time-based schedule delays → Reality: SV is expressed in monetary terms (cost of work not completed), not calendar days.
- Trap: Assuming a positive SV means the project is under budget → Reality: SV measures schedule performance only; cost performance is measured by CV or CPI.
- Trap: Confusing VAC (Variance at Completion) with CV (Cost Variance) → Reality: VAC is a projection of the total budget deficit/surplus at completion (BAC − EAC), while CV is the current cost variance at the data date (EV − AC).
- Trap: Using AC instead of PV in the SV formula → Reality: SV = EV − PV, not EV − AC.
Important PMI Connections
| Related Concept | Relationship Type | Exam Attention Point |
|---|---|---|
| Estimate at Completion (EAC) | Used to calculate VAC | VAC = BAC − EAC; EAC is the expected total cost of completing all work |
| Estimate to Complete (ETC) | Component of EAC | ETC is the expected cost to finish remaining work; used to derive EAC |
| Performance Measurement Baseline (PMB) | Foundation for PV | PV is the authorized budget assigned to scheduled work; total PV = BAC |
| Control Account | Where EVM metrics are applied | EVM develops and monitors three key dimensions (PV, EV, AC) for each work package and control account |
Quick Review Questions
- A project has EV = $100,000, PV = $90,000, and AC = $110,000. What are the SV and CV values, and what do they indicate?
- If BAC = $500,000 and EAC = $520,000, what is the VAC, and is the project under or over planned cost at completion?
- What is the difference between EV and AC in terms of what each measures?
- A project has a CPI of 1.2. What does this indicate about cost efficiency?
- If SV is negative but CV is positive, what does this combination tell you about the project?
PMBOK v8 Reference
Section 5 – Tools and Techniques (Earned Value Management), pages 206-207