Required Skills & Knowledge of Earned Value Management
Earned value management integrates scope, cost, and schedule into one objective measure of project health. From three numbers — PV, EV, AC — come the variances and indices (SPI, CPI) that read both dimensions at a glance. The Foundations overview of the method. Built on AACE 81R-13.
What earned value management is
EVM is the heart of the Project Controls & EVM track. Its power is objectivity: instead of subjective "we're about 60% done," it ties progress to the actual value of completed work against a baseline. This lesson is the overview of the knowledge and skills the method demands — the depth comes later.
The three numbers
Everything in EVM is built from three values, measured at a point in time:
- PV — Planned value — the budgeted cost of the work scheduled to be done by now. What the plan said you'd have earned.
- EV — Earned value — the budgeted cost of the work actually completed by now. What you've genuinely accomplished, in budget terms.
- AC — Actual cost — the real cost incurred for the work completed by now. What it actually cost you.
Variances and indices
From PV, EV, and AC come the core performance measures. Knowing these cold is foundational EVM literacy:
SV = EV − PV · SPI = EV ÷ PV
CV = EV − AC · CPI = EV ÷ AC
The indices are the quick read: 1.0 means on plan; above 1.0 is good; below 1.0 is trouble. A CPI of 0.90 means you're getting 90 cents of value per dollar spent. An SPI of 0.80 means you're accomplishing work at 80% of the planned rate.
A snapshot at mid-project
Worked example| Planned value (PV) | $500k |
| Earned value (EV) | $450k |
| Actual cost (AC) | $500k |
| SPI = EV ÷ PV = 450 ÷ 500 | 0.90 |
| CPI = EV ÷ AC = 450 ÷ 500 | 0.90 |
With PV $500k, EV $450k, AC $500k: both indices are 0.90 — the project is running about 10% behind schedule and 10% over cost. One glance, both dimensions. (The Project Controls track adds forecasting — EAC — on top of these.)
The knowledge and skills
Beyond the formulas, the EVM practitioner needs a specific blend of knowledge and discipline:
| Area | What it involves |
|---|---|
| Baseline integration | Tying scope (WBS), cost, and schedule into one PMB |
| Progress measurement | Objective rules for how EV is claimed (no guessing) |
| Analysis & forecasting | Indices, variances, and estimate-at-completion (EAC) |
| Systems & discipline | Consistent data each period; EVM software |
| Communication | Translating indices into "what it means and what to do" |
Nine things to remember
- EVM integrates scope, cost, and schedule into one objective measure of health.
- It needs a sound integrated baseline — garbage baseline, garbage earned value.
- Three numbers: PV (planned), EV (earned), AC (actual cost).
- EV vs PV = schedule; EV vs AC = cost — both dimensions from three numbers.
- SPI = EV/PV, CPI = EV/AC — 1.0 is on plan, below 1.0 is trouble.
- CPI 0.90 = 90¢ of value per dollar spent — indices read at a glance.
- SPI is unreliable late — read it alongside the real critical path (EVM + CPM).
- Objective progress measurement is the key discipline — pre-agreed rules, not guesses.
- The skill set: baseline integration, progress rules, forecasting, systems, communication.
Glossary
- Actual cost (AC)
- Real cost incurred for the completed work.
- CPI
- Cost Performance Index = EV ÷ AC.
- EAC
- Estimate at completion — forecast total cost.
- Earned value (EV)
- Budgeted cost of work actually completed by now.
- Planned value (PV)
- Budgeted cost of work scheduled by now.
- PMB
- Performance measurement baseline — the integrated plan.
- SPI
- Schedule Performance Index = EV ÷ PV.
- Variance (SV/CV)
- EV − PV (schedule); EV − AC (cost).