Earned Value Management (EVM) is a methodology that integrates scope, schedule, cost, and resource measurements to assess project performance and progress. It provides a structured approach to tracking project health using quantitative data.
Key Aspects of Earned Value Management
- Combines Scope, Schedule, and Cost – Ensures all aspects of project performance are evaluated together.
- Uses Key Performance Metrics – Analyzes project efficiency through Earned Value (EV), Actual Cost (AC), and Planned Value (PV).
- Enables Forecasting – Helps predict cost overruns and schedule delays.
- Supports Proactive Decision-Making – Identifies deviations early for corrective actions.
Core EVM Metrics
| Metric | Formula | Description |
|---|---|---|
| Earned Value (EV) | % Work Completed × BAC | Value of work performed based on budgeted cost. |
| Planned Value (PV) | Planned % of BAC | Budgeted cost for work scheduled at a given point. |
| Actual Cost (AC) | Sum of all incurred costs | Total cost spent on completed work. |
| Cost Performance Index (CPI) | EV ÷ AC | Measures cost efficiency (CPI > 1 is under budget). |
| Schedule Performance Index (SPI) | EV ÷ PV | Measures schedule efficiency (SPI > 1 is ahead of schedule). |
Mermaid Diagram: EVM Workflow
graph LR; A["Project Plan"] -->|Planned Value (PV)| B["Work Scheduled"] B -->|Earned Value (EV)| C["Work Completed"] C -->|Actual Cost (AC)| D["Cost Incurred"] D --> E["Performance & Forecasting"]
Example Scenarios
Software Development
A project with a BAC of $500,000 is 40% complete but has an AC of $250,000.
- EV = $200,000, CPI = 0.8 (Over budget)
- SPI = 1.0 (On schedule)
Construction Project
A bridge project planned for 6 months is at 50% completion, but only 40% of budgeted funds have been used.
- CPI = 1.25 (Under budget)
- SPI = 0.8 (Behind schedule)
Marketing Campaign
A company planned to launch a campaign in 3 months with a budget of $100,000.
At month 2, 70% of the work is complete, but 80% of the budget is spent.
- CPI = 0.875 (Over budget)
- SPI = 1.16 (Ahead of schedule)
Why Earned Value Management Matters
- Provides Objective Performance Measurement – Tracks real project progress.
- Identifies Budget & Schedule Variances Early – Helps avoid cost overruns.
- Supports Forecasting & Risk Management – Predicts future project trends.
- Improves Stakeholder Confidence – Offers data-driven insights.
See also: Earned Value (EV), Planned Value (PV), [[Actual Cost (AC), Cost Performance Index (CPI), Schedule Performance Index (SPI), Budget at Completion (BAC).