Earned value management (EVM)
Also: CPI, SPI
Quick definition: A method that integrates scope, schedule and cost by comparing the budgeted value of work planned, the budgeted value of work actually performed, and the actual cost, to measure performance and forecast outcomes.
Explanation
Beginner explanation
EVM answers two questions with numbers: are we ahead or behind, and are we over or under budget? It does this by valuing the work done so far at its budgeted cost and comparing that with the plan and with what was actually spent.
Technical explanation
Three measures drive EVM: planned value (PV, also BCWS) — the budget for work scheduled to date; earned value (EV, also BCWP) — the budget for work actually completed; and actual cost (AC, also ACWP). Standard indicators: schedule variance SV = EV − PV; cost variance CV = EV − AC; schedule performance index SPI = EV ÷ PV; cost performance index CPI = EV ÷ AC. Values below 1.0 for SPI or CPI indicate the project is behind schedule or over cost. Forecasts such as estimate at completion are derived from these indices.
Formal earned value management systems are specified by the SAE EIA-748 standard (edition E published February 2026) and are common on government and defence programmes; construction projects often apply a lighter version tied to the Work breakdown structure and Schedule baseline.
Practical example
A foundation package has PV of $5,961 to date. The work actually completed was budgeted at $2,981 (EV) and has cost $2,950 (AC). SPI = 0.50 shows the package is half as far along as planned, while CPI ≈ 1.01 shows the work done is on budget — the problem is time, not cost.
Why it matters
Percent-spent figures alone hide problems: a project can spend exactly to budget while delivering half the planned work. EVM separates schedule and cost performance early enough to act.
Standards and references
- SAE EIA-748E — Earned Value Management Systems. SAE International, 2026.Original VDC Stack.io wording, based on the standard
Supports: EIA-748 as the earned value management systems standard; edition E dated 2026-02-16 · Status: Dated 2026-02-16. - Earned Value Management Tutorial, Module 5: EVMS Concepts and Methods. US Department of Energy (tutorial by Booz Allen Hamilton).Widely accepted professional interpretation
Supports: Definitions of PV/BCWS, EV/BCWP, AC/ACWP and worked SV, CV, SPI, CPI examples
VDC Stack.io writes its own explanations and does not reproduce copyrighted standards text. Consult the cited standard for normative wording.
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VDC Stack.io. (2026). Earned value management (EVM). In VDC Stack.io Knowledge Dictionary. Retrieved from https://vdcstack.io/dictionary/earned-value-management/