Final answer:
Earned Value Management (EVM) uses EV, PV, and AC to calculate various project performance metrics. When CPI is greater than or equal to 1.0, the project is on or under budget. When CPI is less than 1.0, the project is over budget. When SPI is greater than or equal to 1.0, the project is ahead of schedule. When SPI is less than 1.0, the project is behind schedule.
Step-by-step explanation:
Earned Value Management (EVM) is a project management technique that uses three key measures to assess project performance: Earned Value (EV), Planned Value (PV), and Actual Cost (AC). These measures are used to calculate various EVM metrics including: Cost Variance (CV), Cost Performance Index (CPI), Schedule Variance (SV), Schedule Performance Index (SPI), Estimate to Complete (ETC), Estimate at Completion (EAC), and Variance at Completion (VAC).
To calculate CV, subtract AC from EV (CV = EV - AC). To calculate CPI, divide EV by AC (CPI = EV / AC). To calculate SV, subtract PV from EV (SV = EV - PV). To calculate SPI, divide EV by PV (SPI = EV / PV). ETC can be calculated as EAC minus EV (ETC = EAC - EV). EAC can be calculated using several formulas, including BAC / CPI or AC + ETC. VAC can be calculated as BAC minus EAC (VAC = BAC - EAC).
When CPI is greater than or equal to 1.0, it indicates that the project is performing well and is on or under budget. When CPI is less than 1.0, it indicates that the project is over budget. When SPI is greater than or equal to 1.0, it indicates that the project is ahead of schedule. When SPI is less than 1.0, it indicates that the project is behind schedule.