Earned Value Management (EVM)

Earned Value Management (EVM) is the umbrella technique that ties together a project's scope, schedule and cost so progress can be measured objectively rather than by gut feel. It rests on three base quantities measured at a point in time: Planned Value (PV), the budgeted cost of the work scheduled; Earned Value (EV), the budgeted cost of the work actually completed; and Actual Cost (AC), what that completed work actually cost.

From these three numbers EVM derives variances and indices. Schedule Variance (SV = EV - PV) and Cost Variance (CV = EV - AC) show whether you are ahead or behind, over or under budget, in currency terms. The Schedule Performance Index (SPI = EV / PV) and Cost Performance Index (CPI = EV / AC) express the same health as ratios, where 1.0 is on plan.

Because every metric is anchored to the same budget baseline (the Budget at Completion, or BAC), EVM gives a consistent, early-warning view of performance and supports forecasting the final cost (Estimate at Completion) long before the work is done. It follows PMI and ISO 21508 conventions and is the foundation the SPI, CPI, schedule-efficiency and EAC metrics all build on.