4.3Earned value (EVM) in Project
The essentials in 30 seconds
- Earned value (EVM) measures performance in costs AND schedule from three values: PV (planned work), EV (work accomplished) and AC (cost actually spent).
- From this follow the variances CV = EV − AC and SV = EV − PV, and the indices CPI = EV/AC and SPI = EV/PV; an index below 1 signals a drift (cost or schedule).
- EVM is a quantified, anticipatory diagnosis: it projects the cost at completion (EAC) and lets you act before the end — far beyond a simple “% complete”.
Running mini-case — Meriem diagnoses her project mid-way
Meriem, project manager in an engineering & construction (BTP) company in Algiers, must reassure her management mid-way through the extension project. “% complete” says nothing about real health: she therefore activates earned value. She first checks the prerequisites — a saved baseline and up-to-date progress tracking, with a correct status date. She displays the Earned Value table and reads: planned value (PV), earned value (EV) and actual cost (AC), then the CV and SV variances and the CPI and SPI indices. Her CPI stands at 0.9: she is spending more than the value produced. She projects a cost at completion (EAC) and warns management BEFORE the budget explodes — a quantified, anticipatory diagnosis.
Standalone case for this section: it returns in the course, the diagram, the script and the 48h challenge of section 4.3.
1. Three base values
Earned value (EVM) objectively measures a project's performance in costs AND schedule. It rests on three values: planned value (PV), the budgeted cost of the work planned to date; earned value (EV), the budgeted cost of the work actually accomplished; actual cost (AC), what has actually been spent. Project calculates all this provided there is a baseline and up-to-date progress tracking.
2. Variances and indices
From these values follow the cost variance CV = EV − AC and the schedule variance SV = EV − PV, as well as the indices CPI = EV/AC (costs) and SPI = EV/PV (schedule). A CPI below 1 means you are spending more than the value produced; an SPI below 1 means you are progressing slower than planned. A negative variance is unfavorable.
3. Anticipate, not just observe
The real value of EVM is anticipatory: from the CPI, you project the cost at completion (EAC) and act before the end. A CPI of 0.9 mid-way probably announces a final overrun if nothing changes. EVM turns tracking into a quantified diagnosis, far beyond a simple “% complete”.
🔎 Concrete example — 🔎 Concrete example — Anticipating the overrun
A diagnosis well before the end, as Meriem does:
CPI = 0.9 mid-way -> 0.90 EUR of value per euro spent.
If nothing changes, final overrun likely.
-> project a cost at completion (EAC) and act BEFORE.Reading: a CPI below 1 is not an accounting detail: it announces a final overrun if nothing changes.
Lesson: you project the cost at completion (EAC) and act early, instead of observing after the fact.
Section vocabulary
- Planned value (PV)
- Budgeted cost of the work planned at a given date (from the baseline).
Simple example: Meriem reads the PV at her status date.
What it is not: the cost actually spent to date.
Reflex: planned work → the PV.
- Earned value (EV)
- Budgeted cost of the work actually accomplished to date (progress × budget).
Simple example: Meriem measures the EV of completed work.
What it is not: the work only planned, not yet done.
Reflex: work accomplished → the EV.
- Actual cost (AC)
- Cost actually spent for the work accomplished to date.
Simple example: Meriem adds up the invoices committed to date.
What it is not: the amount budgeted but not yet spent.
Reflex: what has gone out → the AC.
- CPI / SPI
- Performance indices: CPI = EV/AC (costs), SPI = EV/PV (schedule); below 1 = drift.
Simple example: Meriem's CPI is 0.9: cost drift.
What it is not: a simple overall progress percentage.
Reflex: cost/schedule efficiency → CPI/SPI.
- Variances CV / SV
- CV = EV − AC (cost variance); SV = EV − PV (schedule variance); negative = unfavorable.
Simple example: Meriem notes a negative CV on a phase.
What it is not: an index (ratio), not a difference.
Reflex: planned/actual difference → CV or SV.
In practice — In practice — Use earned value
- Make sure you have a saved baseline (level 3) and up-to-date progress tracking: EVM prerequisites, as Meriem checks.
- Display an earned value table (View > Tables > More Tables > Earned Value / Cost indicators).
- Read PV, EV and AC, then the CV and SV variances and the CPI and SPI indices.
- Interpret: CPI below 1 = overrun, SPI below 1 = delay; project the cost at completion (EAC).
Step-by-step script — read EVM like Meriem (5 min)
1) Check the prerequisites: a saved baseline, up-to-date progress tracking and a correct status date. 2) Display the Earned Value table (View > Tables > More Tables). 3) Note PV, EV and AC. 4) Calculate or read the variances CV = EV − AC and SV = EV − PV, then the indices CPI = EV/AC and SPI = EV/PV. 5) Interpret with the marker “1 = on plan” and project the cost at completion (EAC).
Without a baseline or up-to-date tracking, the indicators remain empty: it is the number one prerequisite of earned value.
Copy-paste template — my EVM reading
Values : PV (planned) | EV (earned) | AC (actual)
Variances: CV = EV - AC (cost) | SV = EV - PV (schedule)
Indices : CPI = EV / AC | SPI = EV / PV
Marker : 1 = on plan; < 1 = drift (cost or schedule)
Prerequisites: baseline + up-to-date tracking + status date
Anticipate: project the cost at completion (EAC)An overrun detected
Meriem reads a CPI of 0.9 mid-way and alerts management.
A measured delay
An SPI below 1 shows that work is progressing slower than planned.
Prerequisites checked
Meriem checks her baseline and status date before interpreting.
Projected final cost
Meriem projects a cost at completion (EAC) to anticipate.
✓ Best practices
- Check the prerequisites: baseline + tracking + status date.
- Read variances (CV, SV) and indices (CPI, SPI) together.
- Use the indices to anticipate and act early.
✗ Common pitfalls
- Expecting EVM figures without a baseline (impossible).
- Forgetting to fill in costs (EV/AC null).
- Neglecting the status date (surprising values).
Key takeaways
- EVM cross-references three values: planned value (PV), earned value (EV), actual cost (AC).
- Variances: CV = EV − AC (cost), SV = EV − PV (schedule); negative = unfavorable.
- Indices: CPI = EV/AC, SPI = EV/PV; below 1 = drift.
- Prerequisites: a saved baseline AND up-to-date progress tracking.
48h challenge — apply it tomorrow
Like Meriem, display your project's Earned Value table and note PV, EV and AC, then the CV/SV variances and the CPI/SPI indices. Write in one sentence the diagnosis (cost or schedule drift?), then project a cost at completion (EAC). If the indicators are empty, check the baseline and the status date before concluding.
- I know what PV, EV and AC measure and where they come from.
- I interpret CV, SV, CPI and SPI with the marker “1 = on plan”.
- I check the prerequisites and project a cost at completion.
Frequently asked questions
Why are my earned value indicators empty or wrong?
EVM requires two often missing prerequisites: a saved baseline (without a baseline, no PV, therefore no calculation) and up-to-date progress tracking with costs filled in (otherwise EV and AC are null or inconsistent). Also check the project's status date (Project > Project Information): EVM is calculated at that date. Baseline + costs + progress + correct status date, and everything calculates automatically.
How to interpret CPI and SPI simply?
Remember “1 = right on plan, less than 1 = bad, more than 1 = good”. The CPI (costs): at 0.9, you get 0.90 € of value per euro spent, so you are overrunning; at 1.1, you are more efficient than planned. The SPI (schedule): at 0.8, you have completed only 80 % of the work planned to date, so you are late. The main point is to anticipate: a CPI of 0.9 mid-way announces a likely final overrun if nothing changes.
What does earned value (EVM) measure?