Earned Value Management (EVM) – formulas and indicators

Project management is not just about planning tasks and deadlines, but primarily about controlling progress and budget. One of the most effective tools for this purpose is Earned Value Management (EVM) – a method that combines data concerning scope, cost, and time, allowing for an assessment of the actual condition of the project.

Link to the calculator: EVM

What is Earned Value Management?

EVM is a technique for measuring project progress in a quantitative and objective manner. It allows for the assessment of project performance in the context of:

what was planned,
what has been accomplished,
how much has been spent.

Key Metrics and EVM Formulas

Here are the most important concepts and formulas used in EVM:

🎯 BAC – Budget at Completion

Definition:
The total budget of the project (the planned cost at project completion).

📅 PV – Planned Value

Formula:
PV = % of planned time × BAC

Description:
Planned value – how much work should have been completed at a given stage of the project according to the plan.

✅ EV – Earned Value

Formula:
EV = % of completed work × BAC

Description:
Earned value – the value of work actually completed to date.

💸 AC – Actual Cost

Formula:
AC = Actual costs incurred

Description:
Actual cost – the total expenses incurred for the completion of the tasks performed.

📉 CV – Cost Variance

Formula:
CV = EV - AC

Description:
Cost variance – the difference between earned value and actual cost.

CV > 0 – savings
CV < 0 – budget overruns

📈 CPI – Cost Performance Index

Formula:
CPI = EV / AC

Description:
Cost performance index – how much value has been obtained from each dollar spent.

CPI > 1 – project is being executed efficiently
CPI < 1 – costs are too high

🕒 SV – Schedule Variance

Formula:
SV = EV - PV

Description:
Schedule variance – the difference between the completed and planned work.

SV > 0 – ahead of schedule
SV < 0 – delay

⏱ SPI – Schedule Performance Index

Formula:
SPI = EV / PV

Description:
Schedule performance index – the rate of project execution compared to the plan.

SPI > 1 – project is being executed faster than planned
SPI < 1 – project is delayed

💰 EAC – Estimate at Completion

Formula:
EAC = BAC / CPI

Description:
Estimated total cost of project completion at the current level of performance.

🔧 ETC – Estimate to Complete

Formula:
ETC = EAC - AC

Description:
Estimated cost to complete the remaining work on the project.

📊 VAC – Variance at Completion

Formula:
VAC = BAC - EAC

Description:
Variance at completion – the difference between the budget and the projected cost.

VAC > 0 – potential savings
VAC < 0 – risk of budget overruns

📌 TCPI – To-Complete Performance Index

Formula:
TCPI = (BAC - EV) / (BAC - AC)

Description:
Performance index required to complete the project within budget.

TCPI > 1 – better performance is needed
TCPI < 1 – lower performance is sufficient to meet the goal

Why Use EVM?

With EVM you can:

accurately assess where you are with the project,
detect budget and time risks early,
make better decisions based on real data,
forecast the final cost and time of project completion.

Summary

Earned Value Management is not just a control tool – it is a warning system that allows projects to be managed more consciously and professionally. It is worth implementing even in smaller projects to maintain full control over costs and progress.

Earned Value Management (EVM) – what is it and how does it help in project management?