Earned Value Management (EVM)
A methodology combining scope, schedule, and cost data for performance measurement.
Detailed Explanation
EVM combines scope, schedule, and resource measurements to assess project performance and progress. Its three fundamental values are: Planned Value (PV) — budgeted cost of work scheduled, Earned Value (EV) — budgeted cost of work performed, and Actual Cost (AC) — actual cost of work performed.
Key metrics derived from these values include CPI (cost efficiency = EV/AC), SPI (schedule efficiency = EV/PV), and forecasting formulas for EAC, ETC, and VAC. Together they answer: are we on budget, on schedule, and what will the project cost at completion?
EVM is the gold standard for objective project performance measurement. It replaces subjective status reports with data-driven insights. The PMBOK Guide and many government contracts require EVM for projects above certain thresholds.
Key Points
- Three fundamental values: PV, EV, AC
- Key indices: CPI (cost), SPI (schedule)
- Forecasting: EAC, ETC, VAC, TCPI
- Integrates scope, schedule, and cost baselines
- Replaces subjective reporting with data-driven insights
- Required by many government and defense contracts
Practical Example
A EUR 1M project at month 6: PV = EUR 500K (planned), EV = EUR 450K (earned), AC = EUR 520K (spent). CPI = 450/520 = 0.87 (over budget). SPI = 450/500 = 0.90 (behind schedule). EAC = 1M/0.87 = EUR 1.15M forecast. The PM escalates: the project needs either more budget or scope reduction.
Tips for Learning and Applying
Set up EVM from project start — retrofitting is painful and inaccurate
Ensure objective earned value measurement rules (0/100, 50/50, or percent complete)
Report EVM metrics to stakeholders monthly with trend analysis
Use CPI and SPI together — neither alone tells the full story
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