Earned Value Management
12
EVM Formulas
Variances, indices, and forecasts
1.0
Target Index
SPI and CPI at 1.0 means on plan
$0
Target Variance
SV and CV at zero means on plan
three curves tell the whole story
The S-Curve
Planned Value sets the runway. Earned Value shows what you really built. Actual Cost shows what it really cost. The gaps are your variances.
PV · dashed
what you planned to earn by now
EV · solid
what you actually built, valued in budget $
AC · solid
what you actually spent
how to read this
- › Three lines. At any point on the timeline, measure the vertical gap between them to see variance.
- › EV below PV (as shown) = you built less than planned. That gap is Schedule Variance (SV).
- › AC above EV (as shown) = you spent more than the value you earned. That gap is Cost Variance (CV).
- › When a manager asks "how's the project?" this chart answers in 3 seconds — where you planned to be, what you built, what it cost.
- › EV is always the measuring stick. Everything else compares to it.
The Formula Cheat Sheet
Variances · negative is bad
SV = EV − PV
CV = EV − AC
Indices · below 1.0 is bad
SPI = EV / PV
CPI = EV / AC
Forecasts · three EAC variants
EAC = BAC / CPI · default
EAC = AC + (BAC − EV) · atypical variance
EAC = AC + (BAC − EV) / (CPI × SPI) · cost and schedule
ETC = EAC − AC
VAC = BAC − EAC
TCPI = (BAC − EV) / (BAC − AC)
Worked Example
BAC = $480,000 · PV = $240,000 · EV = $192,000 · AC = $228,000
SV = 192,000 − 240,000 = −$48,000 behind schedule
CV = 192,000 − 228,000 = −$36,000 over budget
SPI = 192,000 / 240,000 = 0.80 · 20% behind
CPI = 192,000 / 228,000 = 0.84 · 84¢ per $1 spent
EAC = 480,000 / 0.84 = $571,429
VAC = 480,000 − 571,429 = −$91,429 projected overrun
Under 1.0 is bad. Over 1.0 is good. Negative variance is bad. Positive variance is good. Memorize this compass before the exam.
Exam Traps
EV is always in the first position
SV = EV − PV, not PV − EV. CV = EV − AC, not AC − EV. SPI = EV/PV. CPI = EV/AC. Memorize it as "EV always on the left or on top." Questions deliberately flip the order to catch you.
SV becomes unreliable at the end of the project
A late project still shows SV = 0 and SPI = 1.0 at completion because all planned value is eventually earned. For late-stage schedule assessment, use schedule-based metrics (earned schedule), not SV/SPI.
Three EAC formulas, three different conditions
BAC/CPI = "current performance continues." AC + (BAC − EV) = "remaining work at original rate." AC + (BAC − EV)/(CPI × SPI) = "both cost and schedule matter." Read the question carefully and match the condition.
TCPI above 1.0 means you have to do better than planned
A TCPI of 1.15 means the team must deliver 15% more efficiently on remaining work than originally estimated. The higher it is, the less realistic. TCPI far above 1.0 is a signal to revise the plan, not push harder.
Above 1.0 is good
CPI and SPI above 1.0 means ahead. Below 1.0 means behind. Positive variance is good, negative is bad.
Do not guess EAC
EAC = BAC/CPI is the default. If the question specifies atypical or one-time variance, use AC + (BAC − EV) instead.
You planned to drive halfway across the country by day 5 and spend $500 (PV). You actually made it only 40% of the way (EV = $400 of planned value earned). But gas was expensive, so you spent $600 (AC). PV, EV, and AC are three different dollar amounts asking three different questions.
SV = EV − PV = 400 − 500 = −$100. You are behind schedule by $100 worth of progress. CV = EV − AC = 400 − 600 = −$200. You are over budget by $200. Negative means bad.
SPI = 400/500 = 0.80. You are doing 80% of planned progress. CPI = 400/600 = 0.67. You are getting 67 cents of value for every dollar spent. Below 1.0 means trouble.
If the same cost problem continues, EAC = BAC/CPI. If total trip budget was $1,000, then $1,000/0.67 ≈ $1,494. You are projected to finish $494 over budget. That is when you call the sponsor.
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