Earned Value Management (EVM) Formulas & Interpretation Guide
The complete visual math guide to PV, EV, AC, CV, SV, CPI, SPI, EAC, and TCPI.
📌 Direct Answer / Executive Definition
Earned Value Management (EVM) is a project performance measurement methodology that integrates project scope, cost, and schedule baselines. Key metrics include Cost Variance (CV = EV - AC), Schedule Variance (SV = EV - PV), Cost Performance Index (CPI = EV / AC), and Schedule Performance Index (SPI = EV / PV). Indices greater than 1.0 indicate favorable performance.
Why EVM Formulas & Forecasting Matter for PMP Math & Budget Control
EVM questions appear on every PMP exam. Understanding the indices eliminates memorization stress and allows rapid calculation of projected project completion costs (EAC).
Standard Syntax, Derivation & Framework Pattern
/* EVM Formula Cheat Sheet */
PV = Planned Value (Budgeted Cost of Work Scheduled)
EV = Earned Value (Budgeted Cost of Work Performed)
AC = Actual Cost (Actual Cost of Work Performed)
BAC = Budget at Completion (Total planned project budget)
Variances (Difference > 0 is GOOD):
CV = EV - AC [+ = Under budget, - = Over budget]
SV = EV - PV [+ = Ahead of schedule, - = Behind schedule]
Performance Indices (Ratio > 1.0 is GOOD):
CPI = EV / AC [> 1.0 = Cost efficient ($ earned per $ spent)]
SPI = EV / PV [> 1.0 = Progressing faster than planned]
Forecasts:
EAC = BAC / CPI (If current cost performance is expected to continue)
VAC = BAC - EAC (Variance at Completion)
TCPI = (BAC - EV) / (BAC - AC) (To-Complete Performance Index)Core Rules & Certification Takeaways
- Earned Value (EV) always comes first in variance and index formulas: EV - AC and EV / AC.
- CPI > 1.0 means you are earning more value than spending (under budget). CPI < 1.0 means cost overrun.
- SPI > 1.0 means you are completing work faster than planned. SPI < 1.0 means schedule delay.
- When CPI = 0.80, for every $1.00 spent, the project earns only $0.80 in planned value.
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Frequently Asked Questions (FAQ)
If a project has CPI = 1.2 and SPI = 0.85, what is the status?
The project is under budget (CPI > 1.0, earning $1.20 value per dollar spent) but behind schedule (SPI < 1.0, delivering only 85% of planned work).
What does a negative Cost Variance (CV) indicate?
A negative CV indicates that the project has incurred a cost overrun (spending more actual money than the earned value delivered).
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