PM Guide · Updated March 2026
Earned Value Management
Formulas, Examples & Calculator
EVM answers two questions no other PM technique can answer simultaneously: are we ahead of or behind schedule, and are we over or under budget — right now, on the same scale? This guide explains all 10 EVM metrics with a single worked example throughout, so every formula connects to the same project.
10
EVM Metrics
8
Formulas
1
Worked Example
Free
EVM Calculator
01 — Overview
What is Earned Value Management?
Earned Value Management (EVM) is a project performance measurement technique that integrates scope, schedule and cost into a single, coherent reporting framework. It was developed by the US Department of Defense in the 1960s and is now part of the PMBOK framework — one of the most heavily tested topics on the PMP exam.
The central insight of EVM is deceptively simple: spending money is not the same as creating value. A project that has spent £200,000 of a £500,000 budget is not necessarily 40% complete — it might be 30% complete (over budget for the work done) or 50% complete (under budget). EVM measures the value of work actually completed — the Earned Value — and compares it to both the planned value and the actual cost.
The worked example used throughout this guide: A £500,000 software delivery project. At the status date (end of Month 4), the plan called for 40% of the work to be complete. The team has actually completed 35% of the work. Actual costs incurred to date are £210,000. We will use these three numbers to calculate every EVM metric in the guide.
📋 Our Project — The Three Starting Numbers
Total Budget
£500K
BAC
% Planned Complete
40%
at status date
% Actually Complete
35%
at status date
Actual Cost
£210K
AC
Planned Value
£200K
500K × 40%
Earned Value
£175K
500K × 35%
02 — Core Values
The Three Core Values — PV, EV and AC
Everything in EVM builds from three numbers. Get these right and every other metric follows automatically.
Planned Value
PV — Planned Value
Also called BCWS (Budgeted Cost of Work Scheduled)
PV = BAC × % Planned Complete
Our project: £500,000 × 40% = £200,000
The budgeted value of work that should have been done by the status date. This is the plan — the baseline against which progress is measured.
Earned Value
EV — Earned Value
Also called BCWP (Budgeted Cost of Work Performed)
EV = BAC × % Actually Complete
Our project: £500,000 × 35% = £175,000
The budgeted value of work that has actually been done. This is the central EVM metric — the "E" in EVM. It answers "how much value have we created so far?"
Actual Cost
AC — Actual Cost
Also called ACWP (Actual Cost of Work Performed)
AC = total cost incurred to date (from finance/accounting)
Our project: AC = £210,000 (from finance system)
The actual money spent to date — taken directly from the finance or accounting system. This is the only EVM metric that is not calculated; it is a fact pulled from your cost reporting. AC is the reality check: this is what we have spent regardless of how much value we have earned.
BAC (Budget at Completion) is the total approved project budget — including contingency reserve but not management reserve. In our example, BAC = £500,000. BAC is the denominator in many EVM formulas and the starting point for all forecast calculations. See the Project Budget template for how to set up your BAC.
03 — Variances
Cost Variance and Schedule Variance
Variances compare Earned Value to the other two core values. Positive variances are good. Negative variances are bad. This sign convention is one of the most frequently tested points on the PMP exam — and one of the most commonly confused in practice.
Cost Variance
CV — Cost Variance
Are we over or under budget?
CV = EV − AC
Our project: £175,000 − £210,000 = −£35,000
Negative CV = over budget. We earned £175K of value but spent £210K to get it — we spent £35,000 more than the work we completed was budgeted to cost.
Schedule Variance
SV — Schedule Variance
Are we ahead or behind schedule?
SV = EV − PV
Our project: £175,000 − £200,000 = −£25,000
Negative SV = behind schedule. We earned £175K of value but planned to earn £200K by now — we are the equivalent of £25,000 of work behind plan.
SV is expressed in money, not time. A Schedule Variance of −£25,000 does not mean we are 25,000 days late — it means we are behind schedule by the equivalent of £25,000 of planned work. To convert to time, you need to know the burn rate (£ per week or month) and work backwards. This is a common source of confusion on the PMP exam. SV approaches zero as the project nears completion — because all planned work eventually becomes earned work — which is why SV is less useful in the later stages of a project.
04 — Performance Indices
CPI and SPI — The Performance Indices
Indices express performance as a ratio rather than an absolute number, making them easier to compare across projects of different sizes and more useful for forecasting. Both use the same interpretation: above 1.0 is good, below 1.0 is a problem, exactly 1.0 is on plan.
> 1.0
Good
Getting more value per £1 spent (CPI) or producing more work than planned (SPI)
= 1.0
On Plan
Exactly on budget (CPI) or exactly on schedule (SPI) at this point in time
< 1.0
Problem
Spending more than earned (CPI) or producing less than planned (SPI)
Cost Performance Index
CPI — Cost Performance Index
How efficiently are we spending budget?
CPI = EV ÷ AC
Our project: £175,000 ÷ £210,000 = 0.83
CPI of 0.83 = for every £1 spent, we are producing £0.83 of earned value. We are getting 83 pence of value for every pound spent — 17% less efficient than planned.
Schedule Performance Index
SPI — Schedule Performance Index
How efficiently are we using time?
SPI = EV ÷ PV
Our project: £175,000 ÷ £200,000 = 0.875
SPI of 0.875 = we are producing 87.5% of the planned work. For every planned £1 of work, we are completing £0.875 — we are 12.5% behind our planned pace of delivery.
CPI is the most predictive EVM metric. Research on completed projects consistently shows that CPI established by the 20% completion point rarely improves by more than ±10% for the rest of the project. A CPI of 0.83 at 35% complete strongly implies a final cost overrun of approximately 17–20%. This is why early CPI trends are so significant — and why waiting until 60% complete to raise a budget concern is usually too late to recover without scope reduction.
05 — Forecasts
EAC, ETC and VAC — Forecasting the Final Position
Forecast metrics use current performance data to project the final cost of the project. The PMP exam tests which EAC formula to use in different scenarios — this is one of the most frequently appearing EVM question types.
EAC — Estimate at Completion
EAC is the forecast of total project cost at completion. There are three main formulas — which one to use depends on your assumption about future performance:
EAC Formula 1 — Most Common
EAC using CPI
Assumes current cost efficiency continues
EAC = BAC ÷ CPI
Our project: £500,000 ÷ 0.83 = £602,410
If we maintain our current CPI of 0.83 for the rest of the project, we will finish at £602,410 — approximately £102,410 over budget. Use this when there is no reason to expect performance to improve.
EAC Formula 2
EAC using new ETC estimate
Uses a fresh bottom-up estimate for remaining work
EAC = AC + ETC
Our project: £210,000 + new ETC estimate
Add actual cost to date to a new bottom-up estimate of remaining work. Use this when past performance is not a reliable predictor — e.g. after a significant scope change, a team restructure, or resolution of a major issue that was driving the overrun.
EAC Formula 3
EAC — remaining work at original rate
Assumes remaining work will be completed at the original budget rate
EAC = AC + (BAC − EV)
Our project: £210,000 + (£500,000 − £175,000) = £210,000 + £325,000 = £535,000
The overrun to date is treated as a one-off — remaining work will be delivered on budget. Use this when the variance is caused by a specific, resolved problem and the team will perform to plan going forward. This is the most optimistic of the three EAC formulas.
ETC, VAC and TCPI
Estimate to Complete
ETC
How much more will it cost to finish?
ETC = EAC − AC
Our project: £602,410 − £210,000 = £392,410
The forecast cost of completing the remaining work. £392,410 still needs to be spent to finish the project at the current CPI — compare to the remaining budget of £290,000.
Variance at Completion
VAC
How far over/under budget will we finish?
VAC = BAC − EAC
Our project: £500,000 − £602,410 = −£102,410
Negative VAC = forecast overrun. At current performance we will finish £102,410 over the approved budget. This is the number to put in front of the sponsor.
TCPI (To Complete Performance Index): The CPI required for the rest of the project to finish within BAC — or within a revised EAC. TCPI (to BAC) = (BAC − EV) ÷ (BAC − AC) = (£500K − £175K) ÷ (£500K − £210K) = £325K ÷ £290K = 1.12. A TCPI of 1.12 means the team must perform 12% more efficiently for the rest of the project to come in on the original budget. If this is unrealistic, the sponsor needs to approve a higher EAC. TCPI is tested on the PMP exam as a "feasibility of recovery" metric.
06 — Cheat Sheet
All EVM Formulas in One Place
EVM Formula Reference — Our Project Results
PV
Planned Value
BAC × %Plan
£200,000
EV
Earned Value
BAC × %Done
£175,000
AC
Actual Cost
From finance
£210,000
CV
Cost Variance
EV − AC
−£35,000
SV
Schedule Variance
EV − PV
−£25,000
CPI
Cost Perf. Index
EV ÷ AC
0.83
SPI
Schedule Perf. Index
EV ÷ PV
0.875
EAC
Est. at Completion
BAC ÷ CPI
£602,410
ETC
Est. to Complete
EAC − AC
£392,410
VAC
Variance at Compl.
BAC − EAC
−£102,410
TCPI
To-Complete Perf. Index
(BAC−EV) ÷ (BAC−AC)
1.12 — 12% efficiency gain needed to finish on budget
Free EVM Calculator: Enter BAC, % planned complete, % actually complete and actual cost — all 10 metrics calculate automatically. Use the free EVM Calculator to run your own project numbers, or download the EVM Tracker template to track EVM metrics by reporting period with trend charts.
07 — Common Mistakes
Five EVM Mistakes That Distort Your Results
Using spend rate as a proxy for % complete
Saying a task is 40% complete because 40% of its budget has been spent is not EVM — it is a circular calculation. Earned Value must be based on an independent assessment of how much work has actually been completed, not on how much money has been spent.
Fix: Use defined completion milestones (0/50/100 rule, 20/80 rule, or % complete based on deliverables accepted) to measure physical progress independently of cost.
Not updating % complete at the work package level
Updating % complete at the task summary level — "the development phase is 60% complete" — without tracking it at individual work package level loses the granularity that makes EVM useful. Rolled-up percentages often mask individual packages that are significantly behind.
Fix: Update % complete at the work package level in the WBS. Aggregate upward — do not estimate at the phase level and work down.
Confusing the sign convention
Negative CV and SV are bad. Many teams instinctively think a positive number is over budget ("we are £35,000 positive of plan") — the opposite of EVM convention. CV = EV − AC, so negative means you spent more than you earned.
Fix: Memorise the rule — negative variance = problem. The memory hook: "Negative is Never good."
Applying the wrong EAC formula
EAC = BAC ÷ CPI is appropriate when the current performance trend is expected to continue. Using it when a specific, resolved problem caused the variance — and performance will genuinely return to plan — produces an overly pessimistic forecast.
Fix: Choose the EAC formula based on your genuine assessment of future performance, not the one that gives the most comfortable answer.
Ignoring TCPI when CPI is poor
A TCPI significantly above 1.0 is an early warning that the project cannot recover to budget without intervention. A TCPI of 1.15+ almost never materialises in practice — it implies the team must be 15% more productive than they have ever been. Ignoring this leads to serial optimistic EAC revisions.
Fix: Calculate TCPI whenever CPI falls below 0.9. If TCPI exceeds 1.1, present a revised EAC to the sponsor rather than planning for an implausible recovery.
08 — FAQ
Earned Value Management — FAQ
Earned Value Management (EVM) is a project performance measurement technique that integrates scope, schedule and cost to give an objective picture of project progress. Rather than comparing planned spend to actual spend, EVM measures the value of work actually completed — the Earned Value — and compares it to both the plan and the actual cost. It simultaneously answers two questions: are we ahead of or behind schedule? Are we over or under budget? EVM is part of the PMBOK framework and one of the most heavily tested topics on the PMP exam.
CPI (Cost Performance Index) measures cost efficiency — EV ÷ AC. It tells you how much earned value you are getting for every £1 of actual spend. Above 1.0 means under budget; below 1.0 means over budget. SPI (Schedule Performance Index) measures schedule efficiency — EV ÷ PV. It tells you how much earned value you are producing compared to what was planned. Above 1.0 means ahead of schedule; below 1.0 means behind. Both use the same rule: above 1.0 is good, below 1.0 is a problem.
EAC (Estimate at Completion) is the forecast of total project cost at completion. Three main formulas: (1) EAC = BAC ÷ CPI — assumes current cost efficiency continues. Use this as the default when there is no specific reason to expect performance to change. (2) EAC = AC + ETC — uses a new bottom-up estimate for remaining work. Use after a significant scope change or when past performance is not representative. (3) EAC = AC + (BAC − EV) — assumes the overrun to date was a one-off and remaining work will be at planned rates. The PMP exam tests which formula to apply in specific scenarios — EAC = BAC ÷ CPI is the most commonly tested.
A CPI of 0.85 means you are getting £0.85 of earned value for every £1 spent — you are 15% over budget for the work completed. If this CPI continues, EAC = BAC ÷ 0.85, approximately 18% over the original budget. On a £500,000 project, sustained CPI of 0.85 implies a final cost of ~£588,000. Research shows that CPI established by 20% completion rarely improves by more than ±10% for the rest of the project. This is why early CPI trends are so significant — a CPI that starts poor rarely recovers without explicit intervention.