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Cost Metrics Glossary – Project PASS PMP
Purpose
This glossary provides short, exam-ready definitions of core cost management and Earned Value Management (EVM) terms.
All definitions are aligned with PMI usage and directly referenced in:
Terms and Definitions
1. Cost Performance Index (CPI)
Formula: EV ÷ AC
A measure of cost efficiency.
- CPI < 1.0 = Over budget
- CPI > 1.0 = Under budget
Used in: Cost Performance Report
2. Cost Variance (CV)
Formula: EV − AC
The dollar difference between earned value and actual cost.
- CV < 0 = Over budget
- CV > 0 = Under budget
Used in: Cost Change Log
3. Earned Value (EV)
The value of work actually completed, based on the baseline.
Used to calculate CPI, CV, and EAC.
4. Actual Cost (AC)
The real cost incurred for completed work.
Tracked continuously and compared to EV and PV.
5. Planned Value (PV)
The budgeted cost of work scheduled to be completed by a point in time.
Helps calculate SPI (Schedule Performance Index) and performance trends.
6. Estimate at Completion (EAC)
Formula (typical): BAC ÷ CPI
Forecast of total project cost based on current spending trends.
- EAC > BAC = Expecting overrun
Used in: Cost Performance Trend Chart
7. Budget at Completion (BAC)
The total approved project budget, based on the Cost Baseline.
Used as the target for completion.
8. Management Reserve (MR)
Budget set aside for unknown unknowns (outside scope of baseline).
Not included in BAC. Triggered only via formal change request.
9. Contingency Reserve
Funds allocated for known risks.
Usually tracked separately but included in the cost baseline.
Usage Tips
- Include glossary links in each report and change log
- Validate that each term used in reporting is correctly defined here
- Keep glossary synced with ECO and PMP exam terminology