POSTER 14
Section 5 · Earned Value Management — The Engine
EVM Foundations: Measures, Variances & Indices
EVM fuses scope, schedule and cost into one objective read of performance. Three measures — PV, EV, AC — produce two variances ($) and two indices (ratios). The golden rule: EV starts every formula; subtract for a variance, divide for an index, and positive / > 1 is good.
Visual Map — The EVM S-Curve
EV below PV ⇒ behind schedule; EV below AC ⇒ over budget. The vertical gaps to EV are the variances.
The Three Measures
- PV — Planned Value
- budgeted cost of work scheduled (the baseline plan). Total PV = BAC, Budget at Completion.
- EV — Earned Value
- budgeted cost of work performed. EV = % complete × BAC.
- AC — Actual Cost
- actual cost of the work performed — what you really spent.
Variances ($) & Indices (ratios)
SV = EV − PV
+ ahead · − behind
CV = EV − AC
+ under · − over
SPI = EV ÷ PV
>1 ahead · <1 behind
CPI = EV ÷ AC
>1 under · <1 over
Worked Example
| Item | Value |
|---|---|
| BAC | $100k |
| PV (planned 50%) | $50k |
| EV (40% complete) | $40k |
| AC (spent) | $45k |
| SV = 40−50 | −$10k behind |
| CV = 40−45 | −$5k over |
| SPI = 40/50 | 0.80 |
| CPI = 40/45 | 0.89 |
Exam Concepts
- Variances in $, indices are ratios. EV is always first.
- Positive variance & index > 1 = favourable.
- EV = % complete × BAC.
- SV weakness: measured in $, it drifts to 0 at the end even if late — pair it with the schedule network or SPI.
- Cost pair uses AC; schedule pair uses PV.
Executive View
- One integrated number for scope + schedule + cost.
- Objective early-warning system — trends, not anecdotes.
- CPI is famously stable after ~20% complete — trust the trend.
- Reports up cleanly through program & portfolio.
Relationships
- Needs a sound scope, schedule & cost baseline first (Poster 6 baselines).
- Risk reserves sit inside/outside the baseline (Poster 12).
- Forecasting (EAC/ETC/VAC/TCPI) builds on these — Poster 15.
Industry Example
Capital Project
- A $100k line-upgrade is 40% built but has consumed $45k by the planned-50% point: SPI 0.80 & CPI 0.89 flag it behind and over early enough to act.
Memory Hooks
- "EV is the hero — it opens every formula."
- Variance = minus, Index = divide; + and >1 are good.
- Cost↔AC, Schedule↔PV (C-A, S-P).
60-sec Review
Define PV / EV / AC
Write SV, CV, SPI, CPI
EV = ? × BAC
Why SV in $ is weak
Sketch the S-curve
PMI Visual Wall · Poster 14 · EVM — Measures, Variances & Indices · original instructional design · A3 landscape