Earned Value Management Applications

Examples of calculating variances, indices, and forecasting completion costs.

Example 1: Basic EVM Calculation (Variances and Indices)

Determining project health using SV, CV, SPI, and CPI.

A construction project has a total original baseline budget of \100,000.Attheendofmonth3,theprojectmanagerreviewsthestatus.Accordingtothebaselineschedule,. At the end of month 3, the project manager reviews the status. According to the baseline schedule, 40%oftheworkshouldhavebeencompletedbytoday.However,aphysicalsiteinspectionrevealsthatonlyof the work should have been completed by today. However, a physical site inspection reveals that only35%oftheworkhasactuallybeencompleted.Theaccountingdepartmentreportsthatof the work has actually been completed. The accounting department reports that$40,000$ has been paid out so far.

Calculate the Schedule Variance (SV), Cost Variance (CV), Schedule Performance Index (SPI), and Cost Performance Index (CPI).

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Example 2: Forecasting Completion Costs (EAC and ETC)

Calculating the Estimate at Completion and Estimate to Complete for an underperforming project.

A \500,000baselinebudgethighwayproject(BudgetatCompletion,BAC=baseline budget highway project (Budget at Completion, BAC =$500,000)hasreacheditsmidwaymilestone.Theprojectmanager′sEVMreportshowsanEarnedValue(EV)of) has reached its midway milestone. The project manager's EVM report shows an Earned Value (EV) of $200,000,buttheActualCosts(AC)incurredtoachievethatvalueare, but the Actual Costs (AC) incurred to achieve that value are $250,000$.

Assuming the current cost performance inefficiencies will continue unchanged for the remainder of the project, calculate the Estimate at Completion (EAC) and the Estimate to Complete (ETC).

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Example 3: EVM for an Over-Performing Project

Calculating variances and forecasts for a project that is ahead of schedule and under budget.

A software development project has a total budget of \120,000(BAC).Atthecurrentmilestone,theprojectwasscheduledtohaveearned(BAC). At the current milestone, the project was scheduled to have earned$60,000invalue(PV).However,theteamhascompletedworkvaluedatin value (PV). However, the team has completed work valued at$75,000(EV),andtheiractualrecordedcoststodateareonly(EV), and their actual recorded costs to date are only$65,000$ (AC).

Calculate the Cost Variance (CV), Schedule Variance (SV), and the new Estimate at Completion (EAC) assuming this positive performance rate continues.

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Example 4: To-Complete Performance Index (TCPI)

Calculating the required efficiency level needed to meet the original budget goal after poor initial performance.

A project has a BAC of \80,000.Currently,theEarnedValue(EV)is. Currently, the Earned Value (EV) is $30,000andtheActualCost(AC)isand the Actual Cost (AC) is$40,000.Theprojectmanageristoldthatnomorefundswillbeapproved,meaningtheteam∗must∗finishtheprojectwithintheoriginal. The project manager is told that no more funds will be approved, meaning the team *must* finish the project within the original $80,000$ budget.

Calculate the To-Complete Performance Index (TCPI) based on the original BAC.

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Key Takeaways
  • The core indices provide a snapshot of health: SPI and CPI less than 1.01.0 indicate the project is falling behind or burning cash too fast.
  • Estimating final project costs (EAC) uses the current CPI to extrapolate future spending efficiency mathematically.
  • Estimate to Complete (ETC) determines exactly how much new capital is required to finish the project from the current status date forward.
  • The To-Complete Performance Index (TCPI) is a goal-seeking metric, showing management exactly how efficient the team must be to recover from past losses and hit the original budget.
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