What is Earned Value Management (EVM) ?

The Project Management Triangle by CONTIDB

Earned Value Management (EVM) is a project management technique used to measure project performance by integrating scope, schedule, and cost. It provides a clear, data-driven way to assess how much work has been completed, how much was planned, and how much it actually cost, helping project teams and stakeholders identify variances early and make informed decisions.

Earned Value Management (EVM) is widely used by the U.S. government and major construction firms to control project cost, schedule, and scope. CONTIDB supports this need by offering certified EVM experts who help clients implement and optimize performance management strategies.

Main Components of EVM

1. Planned Value (PV)

   
   

   Budgeted cost of scheduled work at a given point in time.

   
   

   Formula: PV = Planned % Complete × Budget at Completion (BAC)

2. Earned Value (EV)

   
   

   Budgeted value of the actual work completed.

   
   

   Formula: EV = Actual % Complete × BAC

3. Actual Cost (AC)

   
   

   Total cost incurred for work performed so far.

   
   
   
   

   

   The Earned Value chart

   
   
   
   

EVM Key Values and Definitions

• BAC: Total approved project budget

• PV: Budgeted value of scheduled work

• EV: Budgeted value of completed work

• AC: Actual cost spent to date

Performance Metrics and Forecasts

• Cost Variance (CV): EV – AC

  • Positive = under budget

  • Negative = over budget

• Schedule Variance (SV): EV – PV

  • Positive = ahead of schedule

  • Negative = behind schedule

• Cost Performance Index (CPI): EV ÷ AC

  • 1 = on budget

  • <1 = over budget

• Schedule Performance Index (SPI): EV ÷ PV

  • 1 = on schedule

  • <1 = behind schedule

• Estimate at Completion (EAC):

  • EAC = BAC ÷ CPI

  • EAC = AC + (BAC – EV) ÷ CPI

  • EAC = AC + (BAC – EV)

• Estimate to Complete (ETC):

  • ETC = EAC – AC

  • ETC = (BAC – EV) ÷ CPI

• Variance at Completion (VAC): BAC – EAC

  • Positive = under budget

  • Negative = projected overrun

Worked Example

Scenario:Project duration = 12 monthsTotal budget = $12MAfter 3 months:

• 10% of work completed

• $2.5M spent

Calculations:

• PV = $12M × (3 ÷ 12) = $3M

• EV = $12M × 10% = $1.2M

• AC = $2.5M

Performance:

• CV = EV – AC = 1.2M – 2.5M = –$1.3M

• CV% = –108%

• SV = EV – PV = 1.2M – 3M = –$1.8M

• SV% = –60%

• CPI = 1.2 ÷ 2.5 = 0.48

• SPI = 1.2 ÷ 3 = 0.4

Forecasts:

• EAC = 12 ÷ 0.48 = $25M

• ETC = (12 – 1.2) ÷ 0.48 = $22.5M

• Time to Complete = (12 – 1.2) ÷ 0.4 = 27 months

• Total Project Duration = 3 + 27 = 30 months

Conclusion:Without corrective action, the project will take 2.5 times longer and cost more than double the original budget.

Becoming an EVM Expert

To specialize in EVM, professionals often pursue certifications from AACE International. The Earned Value Professional (EVP) is the leading credential focused on EVM. Other relevant certifications include the Certified Cost Professional (CCP) and Planning & Scheduling Professional (PSP). These require education, project experience, and passing an exam. Beyond certification, real expertise comes from applying EVM on complex projects and using tools like Primavera P6, Microsoft Project, and Deltek Cobra.