Earned Value Management (EVM) Formula Calculations

1. Introduction

This guide provides a step-by-step breakdown of how to apply Earned Value Management (EVM) formulas using a real-world scenario. The goal is to understand not just how to compute the values, but also what they mean for project performance.

2. Project Scenario

Project: Installing new fences for a building.

• Budget at Completion (BAC): $100
• Total project duration: 5 days
• Current status: End of day 3
• Work completed: 75%
• Money spent: $70

We will now calculate key EVM metrics to determine how well the project is performing in terms of budget and schedule.

3. Key EVM Formulas and Calculations

Formula	Description	Calculation	Result
Budget at Completion (BAC)	Total approved budget for the project.	Given directly.	$100
Planned Value (PV)	How much work should have been completed at this point.	(Current Day / Total Days) × BAC = (3/5) × 100	$60
Earned Value (EV)	The value of work actually completed.	(% Completed) × BAC = (75%) × 100	$75
Actual Cost (AC)	Amount spent so far on the project.	Given directly.	$70
Cost Variance (CV)	Difference between earned value and actual cost.	CV = EV - AC = 75 - 70	+ $5 (Under Budget)
Cost Performance Index (CPI)	Budget efficiency of the project.	CPI = EV / AC = 75 / 70	1.07 (Good, under budget)
Schedule Variance (SV)	Difference between planned and actual work done.	SV = EV - PV = 75 - 60	+ $15 (Ahead of Schedule)
Schedule Performance Index (SPI)	Schedule efficiency of the project.	SPI = EV / PV = 75 / 60	1.25 (Ahead of Schedule)
Estimate at Completion (EAC)	Forecasted cost at project completion.	EAC = BAC / CPI = 100 / 1.07	$93.46 (Under Budget)
Estimate to Complete (ETC)	How much more money is needed to finish the project.	ETC = EAC - AC = 93.46 - 70	$23.46
Variance at Completion (VAC)	Difference between planned and forecasted budget.	VAC = BAC - EAC = 100 - 93.46	+ $6.54 (Surplus)
To-Complete Performance Index (TCPI)	Efficiency required to complete within budget.	TCPI = (BAC - EV) / (BAC - AC) = (100 - 75) / (100 - 70)	0.83 (Low effort required)

4. Interpretation of Results

• Cost Performance (CPI = 1.07): The project is running 7% under budget.
• Schedule Performance (SPI = 1.25): The project is 25% ahead of schedule.
• Final Cost (EAC = $93.46): The project is expected to complete under budget.
• Remaining Cost (ETC = $23.46): The project needs $23.46 more to complete.
• Final Surplus (VAC = $6.54): Upon completion, $6.54 will remain unused.
• Effort Required (TCPI = 0.83): The team only needs to work at 83% effort to finish on budget.

5. Summary

• EVM formulas help track budget and schedule performance.
• Positive cost and schedule variances indicate a well-managed project.
• Performance indices (CPI & SPI) show efficiency trends.
• Forecasted values (EAC & ETC) help plan remaining work.
• Understanding EVM is crucial for making data-driven project decisions.

By using these formulas, project managers can anticipate risks, manage resources efficiently, and ensure successful project completion.