Earned Value Management (EVM): Formulas & Example [2026]

Two projects have each spent $90,000, but one is on track and the other is over budget — and the only way to tell them apart is to ask how much work that money bought. Earned value management answers that question: it combines scope, schedule, and cost into one set of numbers that shows whether the work completed matches the money spent. It is the backbone of project cost control and one of the most formula-heavy topics on the PMP. This guide explains earned value management by carrying one example through every step: the three core values, the variances and indexes, the formulas, forecasting, and how it is all tested on the PMP and CAPM exams.

What is earned value management?

Earned value management (EVM) is a technique for measuring project performance by integrating three dimensions that are usually tracked separately — scope, schedule, and cost — into one unified picture. Instead of asking whether you have spent what you planned, it asks whether the amount spent is matched by the amount of work completed.

That distinction is what EVM adds to a plain budget check: it puts a dollar value on completed work and compares it against both the plan and the actual spend — an early-warning system that flags cost and schedule trouble while there is still time to act.

To make it concrete, we will follow one example project through the whole guide: a software build with a total budget — the budget at completion (BAC) — of $200,000, planned over ten months. It is now the end of month five, and every section below reads this same project's numbers a different way.

The three core values: PV, EV, and AC

Every earned value calculation is built from three base values, all measured in the same currency at a given status date. For our project at the end of month five:

• Planned Value (PV) — the budgeted cost of the work scheduled to be done by now. The plan expected half the project complete at month five, so PV = $100,000.
• Earned Value (EV) — the budgeted cost of the work actually performed, calculated as percent complete × BAC. In reality only 45% of the work is done, so EV = 0.45 × $200,000 = $90,000.
• Actual Cost (AC) — the actual cost of the work performed, i.e. what has really been spent. The team has spent AC = $110,000.

Always anchor on EV. Planned value is the budgeted cost of scheduled work, actual cost is what was spent, and earned value is the budgeted cost of the work actually done. The three numbers already show the problem: our project has earned only $90,000 of value, less than the $100,000 it planned and less than the $110,000 it spent. Comparing EV against the other two is what produces every variance and index below.

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Cost variance and schedule variance

Variances tell you how far off plan the project is, in dollars, by comparing earned value to the other two base values. There are two, and their signs follow one simple rule: negative is bad.

• Cost Variance (CV) = EV − AC. For our project, CV = $90,000 − $110,000 = −$20,000. The work done is worth $20,000 less than what was spent, so the project is over budget.
• Schedule Variance (SV) = EV − PV. For our project, SV = $90,000 − $100,000 = −$10,000. The project has completed $10,000 less work than planned, so it is behind schedule.

One quirk trips people up — schedule variance is measured in money, not time. Our project being "$10,000 behind schedule" is a dollar measure of unfinished planned work, not a count of days lost.

Performance indexes: CPI and SPI

Where variances give an absolute gap in dollars, the indexes give efficiency as a ratio — ideal for comparing projects of different sizes and for forecasting. Both are read against 1.0: above 1 is good, below 1 is bad.

• Cost Performance Index (CPI) = EV ÷ AC. For our project, CPI = $90,000 ÷ $110,000 = 0.82. It is getting just 82 cents of work for every dollar spent — over budget.
• Schedule Performance Index (SPI) = EV ÷ PV. For our project, SPI = $90,000 ÷ $100,000 = 0.90. It is progressing at 90% of the planned pace — behind schedule.

Both indexes are below 1.0. The indexes drive the forecasts below; we cover their interpretation in depth in our guide to the cost performance index and schedule performance index.

The earned value formulas at a glance

With the concepts in hand, here is the complete formula set for reference — with our example's numbers in the last column:

BAC is the budget at completion — the total approved budget, $200,000 for our project.

Reading the numbers: the EVM S-curve

Plotted over time, the three values form the classic EVM chart. At our month-five status date, actual cost sits above planned value while earned value sits below it — and the two gaps are the cost and schedule variances:

Forecasting with earned value

EVM also forecasts the finish. Once you know how efficiently a project is running, you can forecast its final cost and the work still to come. Continuing our example, where CPI = 0.82:

• Estimate at Completion (EAC) = BAC ÷ CPI. = $200,000 ÷ 0.82 ≈ $244,000 — the forecast total cost if the present CPI continues.
• Estimate to Complete (ETC) = EAC − AC. = $244,000 − $110,000 = $134,000 — the forecast cost of the remaining work.
• Variance at Completion (VAC) = BAC − EAC. = $200,000 − $244,000 = −$44,000 — the forecast overrun.

So our project, left on its current trajectory, is heading for a $44,000 cost overrun. That figure is projected from measured performance rather than an assumption, so you can act on it. This "forecasting with present CPI" calculation is the most common of four EAC methods — the others are bottom-up EAC, EAC with future costs as planned, and EAC with present CPI and SPI — and there is also the to-complete performance index (TCPI). We cover all of them in our guide to estimate at completion and EVM forecasting.

How earned value is measured

One judgment call sits underneath every number above: how much earned value to credit an activity that is in progress — like the work that put our project at 45% complete. The three base values are objective only once you fix that rule, so teams agree on a measurement method up front rather than arguing over "percent complete" each cycle. The common methods:

• 0/100 rule: an activity earns nothing until it is fully complete, then its whole value at once. Conservative and hard to game — best for short activities.
• 50/50 rule: the activity earns 50% of its value when it starts and 50% when it finishes. A simple compromise that credits work in progress without debating exact percentages.
• Percent complete: the activity earns the estimated percentage actually done — the method our example used. The most intuitive and most common, but also the most subjective.
• Weighted milestones: the activity's value is split across defined milestones, earning each chunk as that milestone is reached. Good for long activities with clear checkpoints.

The method matters because it sets EV, and EV drives everything else. A team that credits progress too generously inflates earned value and hides a project that is behind. Fixing the rule in advance keeps the numbers reliable.

Benefits and limitations of EVM

EVM is powerful precisely because it turns cost and schedule into objective numbers — but that power depends on the quality of the data feeding it. Know both sides so you do not read more into the metrics than the data supports.

• Benefit — early warning: it surfaces cost and schedule problems early, as our example's $44,000 forecast overrun showed at just the halfway mark, while there is still time to correct.
• Benefit — objective and integrated: it replaces gut-feel status ("we're about 80% there") with a data-driven read that ties scope, schedule, and cost together.
• Benefit — comparable and predictive: the indexes are ratios, so they compare projects of any size and drive the forecasts a simple budget check cannot produce.
• Limitation — garbage in, garbage out: EVM needs a solid, baselined plan and honest progress reporting; inflated percent-complete figures or a weak baseline make the metrics wrong.
• Limitation — schedule variance fades near the end: because SV and SPI are measured in cost, they always drift back toward zero and 1.0 as a project finishes (every dollar of work eventually gets earned), so a late project can show a healthy-looking SPI at the finish line. This is why teams pair EVM with the critical path.

Used with those caveats in mind, EVM is the most complete performance-measurement method in a project manager's toolkit — which is exactly why it shows up so heavily on the exam.

Earned value management on the PMP® and CAPM® Exams

On the PMP exam, earned value management is one of the most reliably tested topics, and it is almost always calculation-based. You will be given some combination of PV, EV, AC, and BAC and asked for a variance, an index, or a forecast — so the formulas need to be memorized and the sign conventions second nature. The most common trap is comparing actual cost to planned value instead of to earned value, which produces a wrong reading of the budget.

The judgment layer tests interpretation: you are given a CPI and SPI and asked whether the project is on track — for example, what a CPI below 1 with an SPI above 1 means. The CAPM tests the same formulas a little more directly, often a single variance or index calculation, but its scenario format means you should still be ready to interpret the result. Because EVM appears so often, our PMP Complete Study Guide, the most complete on the market, drills every formula with worked examples until the calculations are automatic under time pressure.

PMP Practice Question: Earned Value Management

A project manager oversees an ERP implementation with a budget at completion of $600,000. At the status date, the planned value is $150,000 and the actual cost is $160,000. The latest performance report shows a cost performance index of 0.90, but the report's schedule figures were lost in a system migration. The sponsor asks whether the project is also behind schedule and, if so, by how much.

What should the project manager answer?

a) The schedule position cannot be determined until the report is restored, because schedule variance requires the earned value, which is not available.

b) The project is behind schedule by $6,000: the earned value is CPI × AC = $144,000, so SV = EV − PV = −$6,000, with an SPI of 0.96.

c) The project is ahead of schedule by $10,000, because spending ($160,000) already exceeds the planned value ($150,000), meaning more work has been done than was planned.

d) The project is behind schedule by $16,000, the gap between the actual cost and what that work should have cost according to the budget.

Correct answer: B.

Rationale: The missing number is recoverable from data in hand: CPI = EV ÷ AC, so EV = 0.90 × $160,000 = $144,000. From there, SV = EV − PV = 144,000 − 150,000 = −$6,000 and SPI = 144,000 ÷ 150,000 = 0.96: mildly behind schedule, and that is what the sponsor should hear. Choice a) waits for a file to answer a question the data already answers; the earned value is derivable, so declaring it unknowable is an unnecessary delay. Choice c) is the planned-value inversion: money spent is not work earned, so outspending the plan proves nothing about progress. Choice d) computes the cost variance (EV − AC = −$16,000) and mislabels it as schedule; the two variances share earned value but answer different questions. Only b) rebuilds EV from the index and then measures schedule against planned value. To drill this kind of EVM calculation and interpretation under exam conditions, work through our PMP practice exams or, at the entry level, our CAPM practice exams.

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