Earned Value Management Formulas

Earned Value Management

Earned value management (EVM) is a methodology that combines scope, schedule, and resource measurements to assess project performance and progress. It is a commonly used method of performance measurement for projects. It integrates the scope baseline with the cost baseline, along with the schedule baseline, to form the performance baseline, which helps the project management team assess and measure project performance and progress. It is a project management technique that requires the formation of an integrated baseline against which performance can be measured for the duration of the project. The principles of EVM can be applied to all projects in any industry. 

Earned Value Management Formulas

Dimension	Meaning	Formula	Interpretation
Schedule Variance (SV)	Schedule variance (SV) is a measure of schedule performance expressed as the difference between the earned value and the planned value	SV = EV – PV	-ve: Behind schedule 0: On schedule +ve: Ahead of schedule
Cost Vairance (CV)	Cost variance (CV) is the amount of budget deficit or surplus at a given point in time, expressed as the difference between earned value and the actual cost.	CV = EV - AC	-ve: under budget 0: On budget +ve: over budget
Schedule Performance Index (SPI)	The schedule performance index (SPI) is a measure of schedule efficiency expressed as the ratio of earned value to planned value. It measures how efficiently the project team is using its time.	SPI = EV / PV	<1: Behind schedule 0: On schedule >1: Ahead of Schedule
Cost Peformance Index (CPI)	The cost performance index (CPI) is a measure of the cost efficiency of budgeted resources, expressed as a ratio of earned value to actual cost. It is considered the most critical EVM metric and measures the cost efficiency for the work completed.	CPI = EV / AC	< 1: under cost 0: on cost >1: over cost
Estimate At Completion (EAC)	If the CPI is expected to be the same for the remainder of the project,	EAC = BAC/CPI
	If future work will be accomplished at the planned rate	EAC = AC + BAC – EV
	If both the CPI and SPI influence the remaining work	,EAC = AC + [(BAC – EV)/(CPI x SPI)]
To Complete Performance Index (TCPI)	The efficiency that must be maintained in order to complete on plan.	TCPI = (BAC – EV)/(BAC – AC)	< 1: easier to complete 0: same to complete >1: harder to complete
	The efficiency that must be maintained in order to complete the current EAC	TCPI = (BAC – EV)/(EAC – AC)