calculating-earned-value-ev

Earned value is the most effective and accurate technique for measuring a project’s performance. Calculating earned value (EV) in project management for measuring progress and performance can be done in many ways. Every project is different, and each project may measure progress differently. 

Luckily, there are many formulas involved in EVM analysis for various calculations to fit any project size or scope. These include:

  • Earned Value (EV): % complete x BAC. That is percent complete from progress measurement multiplied by the budget at completion. Additionally, one can use the sum of planned value (PV) of all completed tasks to date.
  • Planned Value (PV): The authorized budget assigned to scheduled work– usually at the control account level.
  • Cost Variance (CV): EV – AC. AC stands for actual cost.
  • Schedule Variance (SV): Calculated as EV – PV.
  • Schedule Performance Index (SPI): Calculated as EV/PV.
  • Cost Performance Index (CPI): Calculated as EV/AC.
  • Variance at Completion (VAC): BAC – EAC. This is Budget at Completion minus EAC Estimate at completion.
  • Estimate to Completion (ETC): Calculated as EAC – AC; or by creating a new bottom-up estimate of all work remaining.
  • Estimate at Completion (EAC): This value can be calculated many ways, including:
    • AC + Bottom-up ETC. Here AC is actual costs to date and Bottom-up ETC are new estimates for costs remaining.
    • BAC / Cumulative CPI. This formula is used to forecast based on project efficiency so far.
    • AC + (BAC – EV). Used to calculate actual costs so far, plus the remaining value of work to be completed.
    • AC + (BAC – EV/(Cumulative CPI * Cumulative SPI)). Used to find actual to-date, plus the remaining budget adjusted for project efficiency rates so far.
    • Using simulation software to predict when a project will complete and how much it will cost based on performance so far and predictions about whether performance may improve, drop, or stay on-trend.
  • To Complete Performance Index (TCPI): TCPI is used to calculate the cost performance that must be achieved to hit the cost target. When using EAC the formula is: (BAC – EV) / (EAC – AC).

Earned value communicates a project’s scope, schedule, and cost status data to its stakeholders. Using EVM offers increased visibility into the progress, performance and overall health of the project.

To learn more about earned value management (EVM) for project management, check out our EVM Guide or our Progress Management and Performance Measurement Guide