EVM Calculation: Formulas and a Worked Example
Earned value management answers two questions with three numbers: are we getting the work we're paying for, and are we getting it on time?
The three inputs
- Planned value (PV), also called BCWS (budgeted cost of work scheduled): the budget for the work that should have been done by now.
- Earned value (EV), also called BCWP (budgeted cost of work performed): the budget for the work that actually has been done. EV = % complete × BAC (at the level of each work package, then summed).
- Actual cost (AC), also called ACWP (actual cost of work performed): what has actually been spent on the work done.
- Budget at completion (BAC): the total budget for the whole scope.
EVM formulas
| Measure | Formula | How to read it |
|---|---|---|
| Cost variance (CV) | EV − AC | Negative = over budget |
| Schedule variance (SV) | EV − PV | Negative = behind schedule |
| Cost performance index (CPI) | EV ÷ AC | Below 1.0 = over budget |
| Schedule performance index (SPI) | EV ÷ PV | Below 1.0 = behind schedule |
| Estimate at completion (EAC), typical | BAC ÷ CPI | Forecast final cost if current cost performance continues |
| EAC, atypical | AC + (BAC − EV) | Forecast if remaining work goes to budget |
| EAC, cost and schedule | AC + (BAC − EV) ÷ (CPI × SPI) | Forecast when schedule pressure also affects cost |
| Estimate to complete (ETC) | EAC − AC | What's still to be spent |
| Variance at completion (VAC) | BAC − EAC | Negative = forecast overrun |
| To-complete performance index (TCPI) | (BAC − EV) ÷ (BAC − AC) | Cost efficiency needed on remaining work to finish on budget |
Worked example: a construction package
A fit-out package has a budget at completion (BAC) of $1,000,000. At the end of month 4:
- Planned value (PV) to date: $450,000
- Work actually complete: 40%, so EV = 0.40 × $1,000,000 = $400,000
- Actual cost (AC) to date: $500,000
- CV = 400,000 − 500,000 = −$100,000 (over budget)
- SV = 400,000 − 450,000 = −$50,000 (behind schedule)
- CPI = 400,000 ÷ 500,000 = 0.80, so $0.80 of work earned for every $1 spent
- SPI = 400,000 ÷ 450,000 = 0.89, so work is progressing at about 89% of the planned rate
- EAC (typical) = 1,000,000 ÷ 0.80 = $1,250,000
- ETC = 1,250,000 − 500,000 = $750,000
- VAC = 1,000,000 − 1,250,000 = −$250,000
- TCPI = (1,000,000 − 400,000) ÷ (1,000,000 − 500,000) = 600,000 ÷ 500,000 = 1.20, so the remaining work would need to be 20% more cost-efficient than planned to finish on budget
How to measure percent complete for EV
EV is only as good as the percent-complete figure behind it. Common methods are:
- 0/100: no credit until the task is finished. Good for short tasks.
- 50/50 or 20/80: part credit at start, the rest at finish.
- Units complete: for countable work, such as metres of pipe, floors of drywall, or units fitted out.
- Weighted milestones: set percentages for defined steps within a work package.
- Physical percent complete: an assessed percentage. The most subjective, so it needs clear rules and evidence.
Common EVM mistakes
- Using money spent as progress. EV must reflect work done, not cost incurred.
- Optimistic percent complete, which hides problems until late in the project.
- Mismatched periods, such as costs accrued to a different date than progress.
- Reading SPI near the end. In cost-based EVM, SPI tends towards 1.0 as the project finishes even if it's late, because EV eventually equals PV. Earned schedule methods address this.
- Ignoring the critical path. A good SPI overall can hide a critical activity that's late.
Where SpatialSense fits
SpatialSense doesn't calculate earned value or any of the indices on this page; use your cost or project controls system for that. What it can provide is evidence for the percent-complete input. Timestamped 360° walks and scans show what was physically in place on the measurement date, and two dated captures side by side show what was added in the period. That lets the people reviewing a progress claim check it against the site before it goes into EV.
Frequently asked questions
How do you calculate earned value?
Earned value equals the percent of work actually complete multiplied by the budget at completion, usually calculated per work package and then summed.
What is the formula for CPI and SPI?
CPI = EV ÷ AC and SPI = EV ÷ PV. A value below 1.0 means over budget for CPI, or behind schedule for SPI.
How do you calculate EAC?
The most common formula is EAC = BAC ÷ CPI, which assumes current cost performance continues. Alternatives are AC + (BAC − EV) if the remaining work will go to budget, and AC + (BAC − EV) ÷ (CPI × SPI) if schedule pressure also affects cost.
What is the difference between PV, EV and AC?
PV is the budget for work scheduled to date, EV is the budget for work actually completed to date, and AC is the actual cost incurred for that work.
What is TCPI?
The to-complete performance index is the cost efficiency needed on the remaining work to finish on budget: (BAC − EV) ÷ (BAC − AC). Above 1.0 means you need to perform better than you have so far.
Can SpatialSense calculate EVM?
No. SpatialSense is a reality-capture platform and does not calculate earned value. It can provide dated visual evidence of what was built, to check the percent-complete figures used in your EVM calculation.
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