Earned Value Management

“Success is not measured by what you do compared to what

others do, It is measured by what you do with the ability
GOD gave you”
Earned Value Management (EVM)
• Methodology that Integrates scope,
cost and schedule baselines to form
the performance baseline, which helps
to assess and measure project
performance and progress for the
duration of the project

• The principles of EVM can be applied

to all projects in any industry. EVM
develops and monitors three key
dimensions for each work package and
control account
Elements of EVM
Planned Value
(PV)

Earned Value
(EV)

Actual Cost
(AC)
Planned Value (PV)
• Authorized budget assigned to
scheduled work for an activity or WBS
component, not including
management reserve

• Defines the physical work that should

have been accomplished at a given
point of time during the project

• The total of the PV is sometimes

referred to as the performance
measurement baseline (PMB) or
budget at completion (BAC)
Earned Value (EV)
• Earned Value (EV) is the
measure of work
performed expressed in
terms of the budget
authorized for that work

• It is the budget
associated with the
authorized work that has
been completed
Actual Cost (AC)
• Actual cost (AC) is the
realized cost incurred for
the work performed on an
activity during a specific
time period.

• It is the total cost incurred

in accomplishing the work
that the EV measured
EVM Variance & Indices

• Schedule Variance (SV)

• Cost Variance (CV)

• Schedule Performance Index (SPI)

• Cost Performance Index (CPI)

Schedule Variance (SV)
• Measure of schedule performance expressed as the
difference between the earned value and the planned value

• Indicates the amount by which the project is ahead or

behind the planned delivery date, at a given point in time

SV = EV – PV
(-) is Behind the schedule
(0) is on schedule
(+) is Ahead of schedule
Cost Variance (CV)
• Amount of budget deficit or surplus at a given point in time,
expressed as the difference between earned value and the
actual cost

• Indicates the relationship of physical performance to the

costs spent. Negative CV is often difficult for the project to
recover

CV = EV – AC
(-) is Over the Budget
(0) is on Budget
(+) is Under the Budget
Example Questions (SV & CV)
o If EV = Rs. 1000, AC = Rs. 2000 then CV is ?
a) -1000
b) 2
c) 1000
d) 0.5

o EV = Rs. 2000, PV = Rs. 1000 then SV is ?

a) -1000
b) 2
c) 1000
d) 0.5
Schedule Performance Index (SPI)
Measure of schedule efficiency expressed as
the ratio of earned value to planned value

SPI = EV/PV

<1 is Behind the schedule

= 1 is on schedule
>1 is Ahead of schedule
Cost Performance Index (CPI)
Measure of cost efficiency of budgeted
Resources expressed as a ratio of
earned value to actual cost

CPI = EV/AC

<1 is over the budget

= 1 is on budget
>1 is under the budget
 Example Questions (SPI & CPI)
o IF EV = Rs. 100, AC = Rs. 120 then CPI is ?
a) 0.01
b) 20
c) 0.83
d) -20

o If EV = Rs. 2000, PV = Rs. 2500 then SPI is ?

a) 0.8
b) 500
c) 1.25
d) -500
 Example Questions (Interpretation)
o If CV = Rs. -1000, SV = Rs. 1000 then project is ?
a) Over budget and behind schedule
b) Under budget and behind schedule
c) Under budget and ahead of schedule
d) Over budget and ahead of schedule

o If CPI = 1.3, SPI = 0.8 then project is ?

a) Over budget and behind schedule
b) Under budget and behind schedule
c) Under budget and ahead of schedule
d) Over budget and ahead of schedule