## Finding Big Variances

Two variances relate to the entire project, and they're both easy to learn. The first variance you don't really know until the project is 100 percent complete. This is the project variance, and it's simply BAC-AC. If your project had a budget of \$500,000 and you spent \$734,000 to get it all done, then the project variance is \$500,000-\$734,000, which equates, of course, to -\$234,000.

The second variance is part of our forecasting model, and it predicts what the project variance will likely be. It's called the variance at completion (VAC), and the formula

 Actual Costs \$162,000 \ Budget at Completion \$500,000 \ Earned Value \$150,000 -â–º -- """

Estimate at Completion \$538,344

Estimate at Completion \$538,344

Figure 7-14 The EAC can also use the CPI as a modifier.

 Name Formula Sample Mnemonic Device Variance VAR = BAC - AC Victor Earned Value EV = % complete x BAC Eats Cost Variance CV = EV - AC Carl's Schedule Variance SV = EV - PV Sugar Cost Performance CPI = EV/AC Corn Index Schedule SPI = EV/PV S (This and the following two spell "SEE") Performance Index Estimate at EAC = BAC/CPI E Completion Estimate to ETC = EAC - AC E Complete Variance at VAC = BAC - EAC Victor Completion

Table 7-1 Simple Ways to Memorize EVM Formulas

Table 7-1 Simple Ways to Memorize EVM Formulas is VAC=BAC-EAC. Let's say your project has a BAC of \$500,000 and your EAC is predicted to be \$538,344. The VAC is \$500,000-\$538,344, for a predicted variance of \$38,344. Of course, this formula assumes that the rest of the project will run smoothly. In reality, where you and I hang out, the project's VAC could swing in either direction based on the project's overall performance.