Cost and Schedule Analysis
Earned value fundamentals
Earned value management integrates scope, cost, and schedule. Master these: PV (planned value), EV (earned value, budget for work performed), and AC (actual cost). From them derive SV = EV − PV, CV = EV − AC, SPI = EV / PV, and CPI = EV / AC. For forecasting, EAC = BAC / CPI when current cost performance is expected to continue, and EAC = AC + (BAC − EV) when remaining work proceeds at budgeted rates. ETC = EAC − AC and VAC = BAC − EAC. Interpret indices: CPI below 1 means over budget; SPI below 1 means behind schedule.
Schedule analysis
Understand critical path (longest path, zero float), total float versus free float, and how float consumption signals risk. Know that crashing adds resources for cost, while fast-tracking overlaps activities and adds risk. Be able to compute float as late start minus early start.
Traps
- Mixing up SV sign: negative SV means behind schedule, but it is expressed in currency, not time.
- Using SPI on a project near completion - SPI tends to converge to 1.0 and misleads late in the project.
- Forgetting that EV uses the budgeted rate, not actual cost.
Rule of thumb
Worked example: BAC = 200, EV = 80, PV = 100, AC = 90. CPI = 80/90 = 0.89 (over budget), SPI = 80/100 = 0.80 (behind). EAC = 200/0.89 ≈ 225. VAC = 200 − 225 = −25 (projected overrun).