Earned Value Management (EVM) Deep Dive

Earned Value Management

EVM is the most important quantitative technique on the PMP exam. It integrates scope, schedule, and cost data to assess project performance and forecast outcomes.

The Three Core Values

Planned Value (PV) — How much work should have been done by now (budgeted cost of work scheduled)
Earned Value (EV) — How much work has actually been done (budgeted cost of work performed)
Actual Cost (AC) — How much was actually spent on the work performed

Variance Analysis

Cost Variance (CV) = EV − AC

Positive = Under budget (good)
Negative = Over budget (bad)
Zero = On budget

Schedule Variance (SV) = EV − PV

Positive = Ahead of schedule (good)
Negative = Behind schedule (bad)
Zero = On schedule

Performance Indices

Cost Performance Index (CPI) = EV / AC

> 1.0 = Under budget
< 1.0 = Over budget
= 1.0 = On budget

Schedule Performance Index (SPI) = EV / PV

> 1.0 = Ahead of schedule
< 1.0 = Behind schedule
= 1.0 = On schedule

Forecasting

The exam primarily tests these EAC formulas:

EAC = BAC / CPI — When past performance will continue (most common on the exam)
EAC = AC + (BAC − EV) — When past variance is atypical
EAC = AC + [(BAC − EV) / (CPI × SPI)] — When both cost and schedule factors affect remaining work

Worked Example

A project has BAC = $100,000. At the reporting date: 50% complete, PV = $60,000, AC = $65,000.

EV = 50% × $100,000 = $50,000
CV = $50,000 − $65,000 = −$15,000 (over budget)
SV = $50,000 − $60,000 = −$10,000 (behind schedule)
CPI = $50,000 / $65,000 = 0.77 (getting $0.77 of work for every $1 spent)
SPI = $50,000 / $60,000 = 0.83
EAC = $100,000 / 0.77 = $129,870