Earned Value Management: Read Your Project Schedule and Cost Health
EVM is not memorized; you read which way the number points.
- PV — Planned Value: work planned to date
- EV — Earned Value: work actually completed
- AC — Actual Cost: what was spent
Earned value answers two questions: Are we on schedule? Are we on cost? Using three values: Planned Value PV for planned work, Earned Value EV for completed work, and Actual Cost AC for what was spent. From these come Schedule Variance SV and Cost Variance CV, and the indices Schedule Performance Index SPI and Cost Performance Index CPI; above 1 is good, below 1 means a delay or overrun.
Thinking cost overrun and schedule delay are the same. CPI is cost, SPI is time, and they can differ.
SPI for time, CPI for cost, below 1 is a warning.
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Earned value brings scope, schedule, and cost into one picture. Planned Value PV is the value of work planned to date, Earned Value EV is the value of work actually completed, and Actual Cost AC is what was spent on it. State is read from the variances and ratios: a positive variance and an index above 1 means good progress; the opposite is a warning. Forecasting uses values such as Budget at Completion BAC, Estimate at Completion EAC, and Estimate to Complete ETC. The exam usually asks you to interpret the direction of these values, not to perform long calculations.
Frequently asked questions
What is the difference between earned value and actual cost?
Earned Value EV is the value of work actually completed, while Actual Cost AC is what was spent on that work.
How do I know a project is behind schedule in EVM?
If SPI is below 1 or SV is negative, the completed work is less than planned to date.
Does a cost overrun mean a schedule delay?
No. CPI measures cost and SPI measures time, and they can differ.
What does a CPI of 0.9 mean?
A cost overrun of about 10% versus plan, i.e. you get 0.9 of value per unit spent.
Does the exam require long EVM calculations?
Usually not. You interpret the direction of an index and infer the project state.
What is Budget at Completion BAC?
The sum of all approved budgets for the project, used to forecast final cost.