Glossary
Earned Value Management (EVM)
A performance measurement technique that integrates scope, schedule, and cost to give an objective picture of where a project really stands.
Earned Value Management (EVM) is a method for measuring project performance by comparing what you planned to spend, what you actually spent, and what you actually got done — all in the same currency. The three core data points are Planned Value (PV), the budgeted cost of work scheduled; Earned Value (EV), the budgeted cost of work actually completed; and Actual Cost (AC), what you really spent to do that work. From these three numbers you can calculate whether you are ahead or behind schedule, and whether you are over or under budget, at any point in the project.
EVM is most useful on projects where there is a clear baseline against which performance can be measured — which means it works best when scope is well-defined and the schedule and budget have been properly baselined before work starts. It is widely used in defence, infrastructure, and major capital programmes. Funders and clients often require EVM reporting because it replaces subjective progress claims with objective, verifiable metrics. Forecasting to completion — the Estimate at Completion (EAC) — is one of EVM's most powerful outputs.
The biggest trap with EVM is gaming the earned value. If progress is self-reported by the same team responsible for delivery, there is pressure to inflate EV to make the numbers look better. Physical percent-complete rules — such as the 0/100 or 50/50 rule — help prevent this by tying earned value to objective milestones rather than subjective estimates. Another common mistake is running EVM without a realistic baseline: if the original plan was too optimistic, the metrics will show variances that reflect bad planning rather than bad execution, and the forecasts will be unreliable from day one.
Frequently asked
- What is earned value management?
- Earned value management (EVM) is a project performance measurement technique that integrates scope, schedule, and cost into a single framework. It compares Planned Value (PV — what work was scheduled to be done by now) with Earned Value (EV — the budgeted cost of the work actually completed) and Actual Cost (AC — what was actually spent). The gap between EV and PV gives Schedule Variance; the gap between EV and AC gives Cost Variance. These metrics provide an objective, early-warning picture of whether a project is ahead or behind on both time and cost.
- What is the difference between CPI and SPI in earned value?
- Cost Performance Index (CPI = EV ÷ AC) measures cost efficiency — a CPI of 0.9 means you are getting 90p of work done for every £1 spent. Schedule Performance Index (SPI = EV ÷ PV) measures schedule efficiency — an SPI of 0.85 means the project has completed 85% of the work that was planned. Both are dimensionless ratios: values below 1.0 signal underperformance, values above 1.0 signal over-performance. CPI is generally the more reliable predictor of final cost at completion.
- How do you calculate Estimate at Completion (EAC) in EVM?
- The most common formula is EAC = BAC ÷ CPI, where BAC is Budget at Completion and CPI is the cumulative Cost Performance Index. This assumes current cost efficiency continues for the rest of the project. Alternative formulas exist for different assumptions: EAC = AC + (BAC − EV) assumes future work runs at budget; EAC = AC + (BAC − EV) ÷ (CPI × SPI) weights both cost and schedule performance. The CPI-based formula is generally the most accurate predictor on programmes past the 20% completion point.
- What is the difference between earned value and planned value?
- Planned Value (PV) is the budgeted cost of the work that was scheduled to be complete by the measurement date — it comes from the baseline schedule. Earned Value (EV) is the budgeted cost of the work that has actually been completed by the same date — it reflects physical progress. The difference (EV − PV) is Schedule Variance: negative means behind schedule, positive means ahead. EV does not measure money spent; it measures the monetary value of work done at the planned rate, which is why it can be compared meaningfully against PV.
Putting these techniques into practice?
SOMA provides independent project controls consultancy for UK programmes. We can help you apply QRA, EVM, schedule risk analysis, and more.