Start with the four base terms
Every earned value calculation is built from four numbers. Get these right and the rest is arithmetic.
- PV — Planned Value: budgeted cost of the work scheduled by now.
PV = BAC × planned % complete - EV — Earned Value: budgeted cost of the work actually done.
EV = BAC × actual % complete - AC — Actual Cost: what you have actually spent to do that work.
- BAC — Budget at Completion: the total approved budget for the project.
Every formula begins with EV. Variances subtract; indexes divide. Anything about cost pairs EV with AC; anything about schedule pairs EV with PV. That single sentence reproduces the whole table below.
All 11 formulas
| Metric | Formula | Meaning | Good result |
|---|---|---|---|
| Variances — subtract | |||
| CV Cost Variance | EV − AC | Are we under or over budget? | Positive = under budget |
| SV Schedule Variance | EV − PV | Are we ahead of or behind schedule? | Positive = ahead |
| Indexes — divide | |||
| CPI Cost Perf. Index | EV ÷ AC | Value earned per $1 spent | > 1.0 = under budget |
| SPI Schedule Perf. Index | EV ÷ PV | Progress vs plan | > 1.0 = ahead |
| Forecasts | |||
| EAC Estimate at Completion | BAC ÷ CPI (typical) | Expected total cost if current performance holds | ≤ BAC |
| EAC (atypical) | AC + (BAC − EV) | If the variance was a one-off | ≤ BAC |
| EAC (cost & schedule) | AC + (BAC − EV) ÷ (CPI × SPI) | When both slippages persist | ≤ BAC |
| ETC Estimate to Complete | EAC − AC | Cost still remaining | As planned |
| VAC Variance at Completion | BAC − EAC | Forecast budget surplus / overrun | Positive = surplus |
| TCPI (to hit BAC) | (BAC − EV) ÷ (BAC − AC) | Efficiency needed to finish on the original budget | ≤ 1.0 = achievable |
| TCPI (to hit EAC) | (BAC − EV) ÷ (EAC − AC) | Efficiency needed to finish at the new forecast | ≈ 1.0 |
Percent complete: % complete = EV ÷ BAC.
Reading the numbers in one breath
- Variances: negative is bad, positive is good.
CV < 0= over budget;SV < 0= behind schedule. - Indexes: below 1.0 is bad, above 1.0 is good.
CPI 0.9= you spend $1 to earn 90¢ of value. - Memory hook: if the term ends in Variance you subtract; if it ends in Index you divide. Cost → AC, Schedule → PV.
Worked example
A project has BAC = $100,000, scheduled to be 50% done by today. It is actually 40% complete, and you have spent AC = $60,000.
PV = 100,000 × 0.50 = $50,000EV = 100,000 × 0.40 = $40,000CV = EV − AC = 40,000 − 60,000 = −$20,000→ over budgetSV = EV − PV = 40,000 − 50,000 = −$10,000→ behind scheduleCPI = EV ÷ AC = 40,000 ÷ 60,000 = 0.67→ 67¢ earned per $1SPI = EV ÷ PV = 40,000 ÷ 50,000 = 0.80→ 80% of planned paceEAC = BAC ÷ CPI = 100,000 ÷ 0.67 ≈ $149,300→ forecast overrunVAC = BAC − EAC ≈ 100,000 − 149,300 = −$49,300
Verdict: this project is both over budget and behind schedule, and at the current rate will finish roughly 49% over budget unless performance improves.
Mistakes examiners test
- Mixing up the index direction. Below 1.0 is always bad — students often invert it under time pressure.
- Using AC where PV belongs. Schedule metrics (SV, SPI) use PV, never AC.
- Choosing the wrong EAC. Read whether the variance is described as typical (use
BAC ÷ CPI) or a one-off (useAC + (BAC − EV)). - Forgetting SV and SPI are in cost units. Earned value measures schedule in dollars of work, not in days.
Sources
- Project Management Institute — PMI.org.
- PMI, A Guide to the Project Management Body of Knowledge (PMBOK® Guide), earned value management.
- PMI, The Standard for Earned Value Management.
Summary for study reference only. "PMP", "PMBOK" and "PMI" are marks of the Project Management Institute, which does not endorse this material.