Earned Value Management (EVM)
Earned Value Management (EVM) is a methodology that integrates scope, schedule, and cost data to assess project performance and progress objectively.
Explanation
Earned Value Management compares the amount of work that was planned with what was actually accomplished and the actual cost incurred. It requires three key data points: Planned Value (PV), Earned Value (EV), and Actual Cost (AC). From these three measurements, variances and performance indices are calculated.
EVM enables the project manager to answer critical questions: Are we ahead of or behind schedule? Are we over or under budget? How much will the project cost at completion? By comparing EV to PV, schedule performance is measured. By comparing EV to AC, cost performance is measured.
Key EVM metrics include Schedule Variance (SV = EV - PV), Cost Variance (CV = EV - AC), Schedule Performance Index (SPI = EV / PV), Cost Performance Index (CPI = EV / AC), Estimate at Completion (EAC), Estimate to Complete (ETC), Variance at Completion (VAC), and To-Complete Performance Index (TCPI). EVM provides early warning signals of performance problems and supports data-driven decision making.
Key Points
- •Integrates scope, schedule, and cost measurement
- •Three foundational values: PV, EV, and AC
- •Calculates variances (SV, CV) and indices (SPI, CPI)
- •Enables forecasting of final project cost and schedule
Exam Tip
EVM is heavily tested on both PMP and CAPM exams. Memorize all formulas and know how to interpret positive/negative variances and indices above/below 1.0.
Frequently Asked Questions
Related Topics
Planned Value (PV)
Planned Value (PV) is the authorized budget assigned to scheduled work, representing the value of work planned to be completed by a given point in time.
Earned Value (EV)
Earned Value (EV) is the measure of work performed expressed in terms of the budget authorized for that work.
Actual Cost (AC)
Actual Cost (AC) is the realized cost incurred for the work performed on an activity during a specific time period.
Cost Performance Index (CPI)
Cost Performance Index (CPI) is an EVM efficiency metric that measures cost performance as the ratio of earned value to actual cost: CPI = EV / AC.
Schedule Performance Index (SPI)
Schedule Performance Index (SPI) is an EVM efficiency metric that measures schedule performance as the ratio of earned value to planned value: SPI = EV / PV.
Test your knowledge
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