Earned Value Management (EVM)
Measure Project Performance

Earned Value Management (EVM)
Earned Value Management (EVM)
Earned Value Management (EVM) is a project management methodology used to
track project performance as well as forecast future performance. EVM integrates
the scope baseline, schedule baseline and cost to provide performance
measurements. Results can be expressed in dollars and/or percentage.
EVM can be used to report current/past project performance, and predict future
project performance based on current/past performance.
Variance Analysis Forecasting
Current/Past Performance Future Performance

PART 1 - BUILDING BLOCKS
Earned Value Management (EVM)

Earned Value Management (EVM)
Starts with 3 building blocks that will be used in all EVM calculations.
Budgeted amount planned to be spent at a point in
time of the project
Planned Value
(PV)
Earned Value
(EV)
Actual Cost
(AC)
Measurement of completed work according to the
budget at a point in time of the project lifecycle
Cost incurred for the work performed at a point
in time of the project lifecycle
Earned Value Management (EVM)

Earned Value Management (EVM)
Scenario:
You are assigned to manage a 12 month project estimated to cost $36,000 at
the end of the project. Today is the end of month 3 and you are 20%
complete. According to the Finance Department you have spent $7,500 to
date.
Planned Value (PV)
1. Calculate % Planned. 3 months / 12 months = .25
2. Calculate $ Planned. $36,000 * .25 = $9,000
Planned Value
(PV)
Earned Value
(EV)
Actual Cost
(AC)
Earned Value (EV)
1. Determine % Complete = .20
2. Calculate $ Earned = 36,000 * .20 = 7,000
Actual Cost (AC)
1. Actual cost provided = $7,500
Earned Value Management (EVM)

PART 2 - VARIANCE ANALYSIS
Earned Value Management (EVM)

Earned Value Management (EVM)
Variance Analysis can be used to monitor project performance based on
schedule and cost. Each method can be expressed in a dollar value or
percentage.
Schedule Variance
• Schedule Variance (SV)
Project schedule performance expressed in dollars
• Schedule Performance Index (SPI)
Project schedule performance expressed in a percentage
Cost Variance
• Cost Variance (CV)
Project cost performance expressed in dollars
• Cost Performance Index (CPI)
Project cost performance expressed in a percentage
Earned Value Management (EVM)

• Schedule Variance (SV) –Project performance expressed in dollars.
SV = EV – PV
SV = 7,000 – 9,000
SV = (2,000)
• Schedule Performance Index (SPI) – Project performance expressed as
a percent.
SPI = EV / PV
SPI = 7,000 / 9,000
SPI = .78
Earned Value Management (EVM)
Schedule Variance Analysis uses EV and PV to calculate a variance to the
project schedule.
Earned Value Management (EVM)
Earned Value Management
Planned Value PV $9,000
Earned Value EV $7,000
Actual Cost AC $7,500

• Cost Variance (CV) –Project performance expressed in dollars.
CV = EV – AC
CV = 7,000 – 7,500
CV = (500)
• Cost Performance Index (CPI) – Project performance expressed as a
percent.
CPI = EV / AC
CPI = 7,000 / 7,500
CPI = .93
Earned Value Management (EVM)
Cost Variance Analysis uses EV and AC to calculate a variance to the project
budget (cost).
Earned Value Management
Planned Value PV $9,000
Earned Value EV $7,000
Actual Cost AC $7,500
Earned Value Management (EVM)

PART 3 - FORECASTING
Earned Value Management (EVM)
Earned Value Management (EVM)

Earned Value Management (EVM)
We can also use EVM to forecast future project spending. Estimate at
Completion (EAC) can be calculated using the 3 following methods:
Project will continue to perform at the budgeted rate
EAC = AC + (BAC – EV)
Budgeted Rate
Current CPI
Current
CPI & SPI
Project will continue to perform at the current CPI:
EAC = BAC / CPI
Project will continue to perform at the current
CPI & SPI:
EAC = AC + [(BAC – EV) / (CPI * SPI)]
Earned Value Management (EVM)
Estimate at Completion (EAC)

Estimate at Completion (EAC) – Budgeted Rate:
EAC = AC + (BAC – EV)
EAC = 7,500 + (36,000 – 7,000)
EAC = 7,500 + 29,000
EAC = $36,500
Earned Value Management (EVM)
Forecasting using Estimate at Completion (EAC) at the Budgeted rate,
assumes the project will continue to perform at the currently budgeted
rate.
Earned Value Management (EVM)

Estimate at Completion (EAC) – Current CPI
EAC = BAC / CPI
EAC = 36,000 / .78
EAC = $46,153.84
Earned Value Management (EVM)
Forecasting using Estimate at Completion at the current CPI, assumes the
project will continue to perform at the Cost Performance Index (CPI)
Earned Value Management (EVM)

Estimate at Completion (EAC) – Current CPI & SPI
EAC = AC + [(BAC – EV) / (CPI * SPI)]
EAC = 7,500 + [(36,000 – 7,000) / (.78 * .93)]
EAC = 7,500 + [29,000 / .7254]
EAC = 7,500 + 39,977.94
EAC = 47,477.94
Earned Value Management (EVM)
Forecasting using Estimate at Completion at the current CPI & SPI,
assumes the project will continue to perform at the Cost Performance
Index (CPI) and Schedule Performance Index (SPI)
Earned Value Management (EVM)

To Complete Performance Index (TCPI)
Based on Balance at Completion:
TCPI = [(BAC – EV) / (BAC - AC)]
TCPI = [(36,000 – 7,000) / (36,000 – 7,500)]
TCPI = (29,000) / (28,500)
TCPI = 1.01
Earned Value Management (EVM)
Earned Value Management (EVM)
To Complete Performance Index (TCPI) Measure of schedule performance
on a project.

To Complete Performance Index (TCPI)
Based on Estimate to Complete:
TCPI = (BAC - EV) / (EAC – AC)
TCPI = (36,000 – 7000) / (36,500 – 7,500)
TCPI = 29,000 / 29,000
TCPI = 1.0
Earned Value Management (EVM)
Earned Value Management (EVM)
To Complete Performance Index (TCPI) Measure of schedule performance
on a project.

PART 4 - PERFORMANCE REVIEWS
Earned Value Management (EVM)

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
PV 3,000 6,000 9,000 12,000 15,000 18,000 21,000 24,000 27,000 30,000 33,000 36,000
EV 3,240 5,400 7,200 10,000 13,000 15,000
AC 3,500 7,000 10,000 14,000 17,500 21,000
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Earned Value Management (EVM)
Performance Reviews
Earned Value Management (EVM)
Planned Value
PV
Actual Cost
AC
Earned Value
EV
Time
Cost
BAC
EACForecastingVariance Analysis
Status Date
Variance Analysis: We can graph the project performance to show the project is currently
behind schedule and over budget
Forecast: We can also graph the estimated future performance to show the project will
exceed the budget.

APPENDIX – EVM QUICK REFERENCE
Earned Value Management (EVM)

Earned Value Management (EVM)
Earned Value Management – Quick Reference
Name Description Equation
Planned Value PV Budgeted amount planned to be spent Budgeted Rate * % Planned
Earned Value EV Measurement of completed work according to
the budget
% Complete * BAC
Actual Cost AC Cost incurred for the work performed
Budget at Completion BAC Total Planned Value for the project
Cost Variance CV The difference in budgeted amount and actual
spend at a given time.
CV = EV - PV
Schedule Variance SV The difference in Planned value and earned
value indicating if the project is ahead or
behind schedule
SV = EV - PV
Variance at Completion VAC The difference between the planned budget at
completion and estimate to complete
VAC = BAC - EAC
Cost Performance Index CPI Measurement of Cost efficiency expressed as a
percentage
CPI = EV / PV
Schedule Performance Index SPI Measurement of schedule efficiency expressed
as a percentage
SPI = EV / PV
Estimate at Completion EAC Estimated cost to complete the project
Based on current CPI
Based on budgeted rate
Based on current CPI & SPI
EAC = BAC/CPI
EAC = AC + (BAC – EV)
EAC = AC + [(BAC – EV) / (CPI * SPI)]
Estimate to Complete ETC Expected cost to complete work remaining ETC = EAC - AC
To Complete Performance Index TCPI Measurement of performance required to
meet the project goals. Expressed as a
percentage.
EAC = AC + [(BAC – EV) / (CPI * SPI)]
TCPI = [(BAC – EV) / (BAC - AC)]