Summary of Financial Terms

Abbreviation	Name	Definition	How Used	Equations	Interpretation of Result
PV	Planned Value	The authorized budget for the work	The value of the work planned to be completed at a point in time
EV	Earned Value	The measure of work performed expressed in terms of budget authorized for the work	Planned value of the work completed to a point in time, without reference to actual costs	EV = sum of the planned value of completed work
AC	Actual Cost	The actual cost incurred for the work performed during a specific time period	The actual cost of all the work completed to a point in time
BAC	Budget at Completion	The sum of all budgets established for the work to be performed	The value of the total planned work; the project cost baseline
CV	Cost Variance	The amount of budget deficit or surplus at a given point in time, calculated as the difference between the earned value and actual cost	The difference between the value of the work completed, and the actual costs	CV = EV – AC	Positive = Under planned cost Neutral = On Cost Negative = Over planned cost
SV	Schedule Variance	The amount by which the project is ahead or behind the planned delivery date, at a given point in time, calculated as the difference between the earned value and the planned value	The difference between the work completed at a point in time and the work planned to be completed at the same point in time	SV = EV – PV	Positive = Ahead of schedule Neutral = On Schedule Negative = Behind Schedule
VAC	Variance at Completion	Projection of the amount of budget deficit or surplus, calculated as the difference between the budget at completion and the estimate at completion	Estimated difference in cost at the end of the project	VAC = BAC – EAC	Positive = Under planned Cost Neutral = On planned Cost Negative = Over planned Cost
CPI	Cost Performance Index	Measure of the efficiency of budgeted resources; calculated as the ratio of earned value to actual cost		CPI = EV/AC	Greater than 1.0 = under planned cost Exactly 1.0 = on planned cost Less than 1.0 = over planned cost
SPI	Schedule Performance Index	Schedule efficiency expressed as the ratio of earned value to planned value		SPI = EV/PV	Greater than 1.0 = ahead of schedule Exactly 1.0 = On schedule Less than 1.0 = Behind schedule
EAC	Estimate at Completion	Expected total cost of completing all work; calculated as the cost of the actual work plus the estimate to complete	If CPI is expected to stay the same until the project is complete	EAC = BAC/CPI
			If future work will be at the planned rate	EAC = AC + BAC – EV
			If initial plan is no longer valid	EAC = AC + Bottom-up ETC
			If both CPI and SPI influence the remaining work	EAC = AC + [(BAC – EV)/(CPI + SP)]
ETC	Estimate to Complete	The expected cost to complete the remaining project work.	Assuming work is on plan, the cost of completing work	ETC = EAC – AC
			Reestimate the remaining work from the bottom up	ETC = Reestimate
TCPI	To Complete Performance Index	A measure of the cost performance that must be achieved with the remaining resources in order to meet the goal	The efficiency that must be maintained to complete the work on plan	TCPI = (BAC – EV) / (BAC – AC)	Over 1.0 = Harder to complete Exactly 1.0 = Same to complete Less than 1.0 = Easier to complete