More Controlling: Standard PMI/PMBOK Terms
Let's round up the resource and cost controlling topic by taking a quick look at what standard terms the well-known PMBOK Guide defines regarding "Cost Control: Tools and Techniques" ;-).
I have to admit that I normally do not use the standard terms as defined by the Project Management Institute (PMI) in their "Guide to the Project Management Body of Knowledge" (PMBOK Guide). The major reason for this is that typically only experienced project managers know their meaning and for most people, common terms are simply easier to understand.
However, if you are talking to a senior project manager who knows the PMI terms, you have the advantage that you can communicate in a more exact way and prevent potential misunderstandings. The abbreviated terms also come in handy if you need "small" labels, e.g., for table headers in more complex reports.
- Planned value (PV) is what I called "baseline" in my previous post, i.e., the planned/budgeted/negotiated value
- Actual cost (AC) is of course "actual"
- Estimate at completion (EAC) is equal to my "projection"
- Estimate to complete (ETC) is the estimated cost for the remaining work required in order to complete the work package or project, i.e., EAC = AC + ETC (in our case; the PMBOK also describes other, more complex forecasting methods)
- Earned value (EV) is something slightly more complex (you might have heard about "earned value project controlling") and worth a separate post on another day... ;-)
Please note that deviations are called "variances" in the PMBOK Guide. The standard PMI terms for the deviation I described in my previous post might be variance at completion (VAC) against planned value (but defined vice versa as PV - EAC). However, I am not 100% sure here, since I could not find the proper definition in the PMBOK.
This brings me to a question for you: I have seen several definitions for deviations/variances some resulting in a positive value when you are above budget, some resulting in a negative value. Which one do you prefer and why?