Dear Fadi:
Good day!
That’s a great question. Please note that when a project starts the total EV is zero. As the project progresses it starts to earn the BAC gradually. The EV keeps on accumulating till the all of the project work has been completed.
Assume that some of the project work has been completed and it is likely that the remaining of the project work will be completed at the budgeted rate (as per the original plan). In this case the ETC will be calculated by BAC – EV. This means the amount of EV that we still have to earn to finish the project.
Another project is in the middle of execution. The project costs have been higher than planned so far. If we think that the future costs will still be higher, we will use the ETC formula (BAC – EV)/CPI so that we take the cost variance into consideration.
Here is the key, if the question says that the future costs are going to be as per the plan, use the BAC- EV formula. If the question says that the future costs are going to be up as they have been, use the (BAC – EV)/CPI formula.
Let me know if this resolves your confusion.
Regards,
Khurram
