The Fixed Formula Method is a way of estimating earned value (EV) by assigning a specified percentage of a work package’s budget to the start milestone and the remaining percentage upon completion. This method provides a simplified way to track progress, ensuring that value is only recognized at key milestones.
Key Aspects of the Fixed Formula Method
- Pre-Defined Percentage Allocations – A fixed portion of the work package budget is recognized at the start, with the rest assigned upon completion.
- Used for Earned Value Measurement (EVM) – Helps track progress in a structured way.
- Prevents Overstatement of Progress – Ensures EV isn’t earned prematurely.
- Best for Short, Well-Defined Work Packages – Works well in environments where progress is milestone-based.
Common Fixed Formula Percentages
| Fixed Formula Split | Description |
|---|---|
| 50/50 Rule | 50% of the budgeted value is earned at the start, and 50% at completion. |
| 25/75 Rule | 25% is earned at the start, and 75% upon completion. |
| 0/100 Rule | No value is earned until the task is fully completed. |
Example Scenarios
Software Development
A code module work package is estimated at $10,000:
- Using the 50/50 Rule, $5,000 is earned when work begins, and $5,000 is earned at completion.
Construction Project
A structural framework installation follows the 25/75 Rule:
- 25% of budget is recognized at work start.
- 75% is earned when all framework work is complete.
Marketing Campaign
A digital ad campaign setup follows the 0/100 Rule:
- No value is assigned until the full ad campaign is live.
Why Fixed Formula Method Matters
- Simplifies Earned Value Tracking – Reduces complexity in measuring progress.
- Prevents Overestimated Completion Percentages – Ensures progress is only counted at key milestones.
- Improves Financial Forecasting – Provides clear performance insights.
- Best for Work with Clear Milestones – Suitable for projects with defined start and finish phases.
See also: Weighted Milestone Method, Earned Value (EV), Estimate at Completion (EAC), Cost Performance Index (CPI).