Introduction
Earned Value Management (EVM) is one of the most powerful techniques for measuring project performance and progress. It integrates scope, schedule, and cost to give you a single, objective measure of project health.
Core Formulas
Planned Value (PV)
The budgeted cost of work scheduled to be done by a given date.
Earned Value (EV)
The budgeted cost of work actually completed by a given date.
Actual Cost (AC)
The actual cost incurred for the work completed by a given date.
Cost Performance Index (CPI)
CPI = EV / AC
A CPI less than 1 means you are over budget. A CPI greater than 1 means you are under budget.
Schedule Performance Index (SPI)
SPI = EV / PV
An SPI less than 1 means you are behind schedule.
Real-World Example
Consider a $100,000 project with a planned completion of 50% by month 3. The actual cost incurred is $60,000, but only 40% of the work is complete.
| Metric | Value |
|---|---|
| PV | $50,000 |
| EV | $40,000 |
| AC | $60,000 |
| CPI | 0.67 |
| SPI | 0.80 |
This tells us the project is both over budget and behind schedule — critical early warning signs.
Forecasting
Estimate at Completion (EAC)
EAC = BAC / CPI
If your BAC is $100,000 and CPI is 0.67, your EAC would be approximately $149,254.
Conclusion
EVM gives project managers an objective, quantifiable way to track performance. By monitoring CPI and SPI regularly, you can catch problems early and take corrective action before it's too late.