Cost analysis is basically determining progress in terms of the amount of work completed (EV-Earned Value) vs. what was paid to get the work done (AC-Actual Cost) So in our previous film example, we know that the EV was $40,000 and the AC was $80,000.
The formula for the Cost Performance Index (CPI) is EV/AC = $40,000/$80,000 = .5
As with the SPI, if the result is =1 then the spending is on track at this single point in time. If it is >1, the film is under budget at this time. If if is 0 the film is UNDER budget. IF CV<0 it is OVER budget. So in this EXAMPLE, the CV=-$40,000 and the project is currently $40,000 OVER budget.
There are a host of other calculation that can be done but that is it for this quick series on Earned Value Management or EVM.
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