Earned Value Management (EVM)
What you'll be able to do
EVM compares what you planned (PV), what you earned (EV), and what you spent (AC). Indices >1 are good.
- Three values: PV (planned), EV (earned), AC (actual).
- Cost Variance = EV - AC. Schedule Variance = EV - PV.
- CPI = EV / AC. SPI = EV / PV. Both: >1 good, <1 bad.
Earned Value Management (EVM) is the most-tested numeric framework on the PMP exam. Three core values: Planned Value (PV) — budget for work planned by this date; Earned Value (EV) — budget for work actually completed by this date; Actual Cost (AC) — money actually spent so far.
From those three, four indicators: Cost Variance CV = EV - AC (positive = under budget); Schedule Variance SV = EV - PV (positive = ahead); Cost Performance Index CPI = EV / AC (>1 = under budget); Schedule Performance Index SPI = EV / PV (>1 = ahead). Memorise: a < 1 index or negative variance = trouble.
Estimate at Completion (EAC) projects total project cost. Several formulas, but the exam-typical: EAC = BAC / CPI, where BAC = Budget at Completion (total approved budget). This assumes the trend continues. The 'to-complete performance index' (TCPI) tells you what efficiency the team needs from here to hit the budget — useful for spotting unrecoverable overruns.
Key points
- Three values: PV (planned), EV (earned), AC (actual).
- Cost Variance = EV - AC. Schedule Variance = EV - PV.
- CPI = EV / AC. SPI = EV / PV. Both: >1 good, <1 bad.
- EAC = BAC / CPI (typical formula when trend continues).
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