Earned Value Management Formulas with Examples from PMI

Earned Value Management (EVM) serves as a comprehensive methodology for monitoring and controlling project performance. This approach integrates scope, schedule, and cost data to provide quantitative insights into project health and progress. The foundation of EVM lies in the Earned Value (EV) metric, which represents the monetary value of work actually completed. All EVM calculations either subtract from or divide by this core value. By understanding that “value” represents tangible project deliverables, project managers can more effectively interpret these calculations and apply them strategically to drive project success.

For a comprehensive earned value management guide from PMI that provides detailed use cases and applications of earned value management in traditional project management, please refer to the official PMI documentation.

Earned Value Management Formulas Explained

Earned Value (EV)

Purpose: This is the actual work (value) that has been completed in the project by the team. It is calculated by multiplying the project’s budget by the % of work completed.

Formula: EV = BAC x % of Work Completed

*BAC = Budget at Completion, ie. The planned amount the project should cost.

Planned Value (PV)

Purpose: Planned Value (PV) is the planned work (value) in the project plan that was expected to be completed at a given time before the project started. Similar to EV, it is calculated using % of work planned multiplied by the project’s budget.

Formula: PV = BAC x % of Work Planned to Be Completed

*BAC = Budget at Completion, ie. The planned amount the project should cost.

Schedule Variance (SV)

Purpose: This is the difference between earned value and planned value. It gives you a measurement of how much a project is ahead/behind schedule.

Formula:

Cost Variance (CV)

Purpose: This is the difference between earned value and actual cost. It gives you a measurement of how much a project is under or over budget.

Formula:

Putting formulas into context by looking at a chart:

• If the EV line is below the PV, the project is behind schedule; if EV is above PV, the project is ahead of schedule.
• If the AC line is below the PV, the project is within budget; if the AC is above the PV, the project is over budget.

Below is an example of the EVM charts you would be likely to encounter in your PMP Exam — solid lines represent actual figures while dotted lines represent forecasted figures:

Judging from the chart above, we can infer that the project is within budget but behind schedule.

Schedule Performance Index (SPI)

Purpose: The Schedule Performance Index (SPI) is the schedule status expressed as a ratio of earned value to planned value.

Formula:

PMP Exam Tip: You will be given an SPI index figure, and you will need to determine if the project is behind or ahead of schedule. The best way to determine this is to remember high is good, low is bad, ie, if fewer than one project is behind schedule, and if more than 1 is ahead of schedule. The project is on schedule if SPI equals 1.

Cost Performance Index (CPI)

Formula: The Cost Performance Index (CPI) is the schedule status expressed as a ratio of earned value to actual cost.

Exam Tip: You will be given a CPI index figure, and you will need to determine if the project is under or over budget. The best way to determine this is to remember high is good, low is bad, ie, if less than one project is over budget, and if above 1 it is under budget. The project is on budget if CPI equals 1.

Estimates at Completion (EAC)

As a project progresses, there may be variations of the final actual cost versus what was originally planned. Estimates at Completion (EAC) is a way to forecast the planned cost based on the available data

Use Case #1: If the CPI remains the same till the end of the project, we divide the projected BAC by the CPI.

Formula:

Use Case #2: There was a delay due to an unforeseen issue that will not occur again.

Formula:

Use Case #3: When both cost and schedule will impact future cost.

Formula:

Use Case #4:  If the original estimate is based on wrong data/assumptions, or circumstances have changed.

Formula: EAC = AC + Bottom-Up Estimate

Variance at Completion (VAC)

Purpose: You use this formula when trying to determine the new estimate at completion and the original planned value.

Formula:

To-Complete Performance Index (TCIP)

Purpose: To forecast whether or not you can stick to your budget.

Formula:

Estimate to Completion (ETC)

Purpose: To determine how much more money it will cost to complete the project, you would simply subtract what you have already spent from the expected total budget.

Formula:

Earned Value Management Tutorial

For the advanced Earned Value Management, take the 15 Question Quiz by iZenbridge, which has excellent tutorials worth checking out.

[amp-optin id=1802]

Earned Value Management Example Questions from PMI

Question 1: You are managing an industrial architecture project. You’ve spent $26,410 so far to survey the site, draw up preliminary plans, and run engineering simulations. You are preparing to meet with your sponsor when you discover that there is a new local zoning law will cause you to have to spend an additional estimated $15,000 to revise your plans. You contact the sponsor and initiate a change request to update the cost baseline. What variable would you use to represent the $26,410 in an earned value calculation?

1. PV
2. BAC
3. AC
4. *EV

Question 2: You’re working on a project that has an EV of $7,362 and a PV (BCWS) of $8,232. What’s your SV?

1. –$870
2. $870
3. 0.89
4. Not enough information to tell

Question 3: You are working on a project with an SPI of .72 and a CPI of 1.1. Which of the following BEST describes your project?

1. Your project is ahead of schedule and under budget.
2. Your project is behind schedule and over budget.
3. Your project is behind schedule and under budget.
4. Your project is ahead of schedule and over budget.

Question 4: A project has a BAC of $4,522 and is 13% complete. What is the earned value (EV)?

1.  $3,934.14
2. There is not enough information to answer.
3. $587.86
4. $4,522

Question 5: You are managing a project laying underwater fibre optic cable. The total cost of the project is $52/meter to lay 4km of cable across a lake. It’s scheduled to take 8 weeks to complete, with an equal amount of cable laid in each week. It’s currently the end of week 5, and your team has laid 1,800 meters of cable so far. What is the SPI of your project?

1. 1.16
2. 1.08
3. .92
4. .72

Question 6: You are managing a project with a BAC of $93,000, EV (BCWP) of $51,840, PV (BCWS) of $64,800, and AC (ACWP) of $43,200. What is the CPI?

1. 1.5
2. 0.8
3. *1.2
4. $9,000

Answers to PMI Example Earned Value Management Questions

Answer 1: 4, since the money spent so far represents earned value.

Answer 2: The answer is 1 SV = EV – PV ie. 7,362 – 8,232 = -870

Answer 3: The answer is 3. Always remember when thinking about CPI and SPI, remember Lower = Loser

Answer 4: [shc_shortcode class=”shc_mybox”]Answer is 3, ie. EV is work done, so calculate 13% of the work completed in monetary terms. 1% = 55.22 * 13 = 587.86[/shc_shortcode]

Answer 5: Answer is 4, ie, SPI = EV/PV. First, calculate BAC (Budget at Completion) 52 * 4000 = 208,000. Next, calculate PV after 5 weeks, which is 2500 (1 week expected 500m laid) * BAC = 520,000,000. EV = 1800 * BAC =  374400000. PV/EV = .72

Answer 6: Answer is 3, ie. CPI = EV/AC ie.51840/43200 = 1.2

Conclusion

Mastering Earned Value Management formulas is essential for effective project management and PMP certification success. These calculations provide critical insights into project performance by combining scope, schedule, and cost data into actionable metrics. From basic measurements like EV and PV to complex forecasting tools like EAC and TCPI, each formula serves a specific purpose in tracking project health.

Remember the key principle: EV represents actual work completed, making it the foundation for all other calculations. Whether you’re preparing for the PMP exam or managing real projects, understanding these formulas enables data-driven decision-making. Practice with the provided examples to build confidence in applying these powerful project management tools effectively.

Frequently Asked Questions

What is the difference between Earned Value (EV) and Planned Value (PV)?

Earned Value represents actual work completed multiplied by budget, while Planned Value represents scheduled work that should have been completed by a specific date.

How do you interpret Cost Performance Index (CPI) and Schedule Performance Index (SPI)?

Values above 1.0 indicate good performance (under budget/ahead of schedule), while values below 1.0 indicate poor performance (over budget/behind schedule). Exactly 1.0 means on target.

What does a negative Schedule Variance (SV) mean for my project?

A negative Schedule Variance means your project is behind schedule. The earned value is less than the planned value, indicating slower progress than originally scheduled.

When should I use different Estimate at Completion (EAC) formulas?

Use EAC = BAC/CPI for consistent performance trends, EAC = AC + BAC – EV for one-time issues, and EAC = AC + bottom-up estimates for changed circumstances.

Suggested articles:

• How to Calculate Earned Value in Microsoft Project
• How to Calculate Schedule Performance Index with Examples
• How to Calculate Cost Performance Index with Examples