Earned Value Management
Earned Value Management (EVM) integrates scope, schedule and cost into a single set of numbers that answer the two questions every sponsor asks: are we over budget, and are we behind schedule — right now, not at the end.
Earned Value Management is a technique for measuring project performance objectively by comparing three values: Planned Value (PV, the budgeted cost of work scheduled), Earned Value (EV, the budgeted cost of work actually completed) and Actual Cost (AC, what that completed work actually cost). From these three numbers EVM derives variances and performance indices that reveal cost and schedule health, and forecasts that project the final cost and completion. Its power is objectivity: "we’re 60% done" becomes a measured number rather than an optimistic guess.
Earned Value Management at a glance
- Category
- Cost, Budget & Earned Value
- Type
- Concept
- Also known as
- EVM
- Appears in
- 1 section
- Related
- Payback Period, Internal Rate of Return, Earned Value
Also known as: EVM.
Why it matters
Traditional tracking compares budget to actual spend — but spending on plan tells you nothing if the work is not getting done. EVM adds the missing dimension: how much work has actually been earned. A project can be on budget yet badly behind, or under budget only because it is behind. EVM catches both, early, and turns them into forecasts (EAC, ETC) that let you act while there is still time to recover.
When to use it
Use EVM on projects large enough to justify tracking progress at the work-package level, especially where cost and schedule accountability is contractual — government, defence, construction, large IT. It requires a solid baseline and disciplined progress measurement, so it is heavy for small or fast-changing Agile work, where flow metrics often serve better.
How to use it
- Establish a performance measurement baseline: scope (WBS), schedule and a time-phased budget (this gives you PV).
- Define how you will measure progress objectively (e.g. 0/100, 50/50, or percent-complete rules).
- At each reporting point, measure EV (budgeted cost of completed work) and record AC.
- Compute variances (CV = EV − AC, SV = EV − PV) and indices (CPI = EV/AC, SPI = EV/PV).
- Forecast: EAC = BAC ÷ CPI, ETC = EAC − AC, VAC = BAC − EAC, and act on the trend.
Example
A €100,000 project (BAC) is at a point where €40,000 of work was planned (PV), €35,000 was actually completed (EV), costing €38,000 (AC). CV = 35,000 − 38,000 = −€3,000 (over budget). SV = 35,000 − 40,000 = −€5,000 (behind schedule). CPI = 0.92, SPI = 0.88. EAC = 100,000 ÷ 0.92 ≈ €108,700 — a projected €8,700 overrun if nothing changes.
Template
An EVM tracker records BAC, PV, EV and AC per period and auto-calculates CV, SV, CPI, SPI, EAC, ETC, VAC and TCPI — use the calculator below.
Tools
Formula & calculator
Try it yourself: Earned Value (EVM) Calculator computes this from your own figures.
FAQs
What do CPI and SPI mean?
What is the difference between EAC and ETC?
Why not just compare budget to actual spend?
Alternatives
- Simple budget vs actual tracking — easier but blind to schedule
- Agile burndown/burnup + velocity — progress by flow rather than cost
- Milestone tracking — coarse but low-overhead