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POSTER 14
Section 5 · Earned Value Management — The Engine

EVM Foundations: Measures, Variances & Indices

EVM fuses scope, schedule and cost into one objective read of performance. Three measures — PV, EV, AC — produce two variances ($) and two indices (ratios). The golden rule: EV starts every formula; subtract for a variance, divide for an index, and positive / > 1 is good.

Visual Map — The EVM S-Curve

Cumulative $ Time → data date (now) PV — planned value (BAC = total PV) EV — earned value AC — actual cost PV = 50k AC = 45k EV = 40k SV = EV − PV = −10k CV = EV − AC = −5k → behind schedule & over cost

EV below PV ⇒ behind schedule; EV below AC ⇒ over budget. The vertical gaps to EV are the variances.

The Three Measures

PV — Planned Value
budgeted cost of work scheduled (the baseline plan). Total PV = BAC, Budget at Completion.
EV — Earned Value
budgeted cost of work performed. EV = % complete × BAC.
AC — Actual Cost
actual cost of the work performed — what you really spent.

Variances ($) & Indices (ratios)

SV = EV − PV
+ ahead · − behind

CV = EV − AC
+ under · − over

SPI = EV ÷ PV
>1 ahead · <1 behind

CPI = EV ÷ AC
>1 under · <1 over

Worked Example

ItemValue
BAC$100k
PV (planned 50%)$50k
EV (40% complete)$40k
AC (spent)$45k
SV = 40−50−$10k behind
CV = 40−45−$5k over
SPI = 40/500.80
CPI = 40/450.89

Exam Concepts

  • Variances in $, indices are ratios. EV is always first.
  • Positive variance & index > 1 = favourable.
  • EV = % complete × BAC.
  • SV weakness: measured in $, it drifts to 0 at the end even if late — pair it with the schedule network or SPI.
  • Cost pair uses AC; schedule pair uses PV.

Executive View

  • One integrated number for scope + schedule + cost.
  • Objective early-warning system — trends, not anecdotes.
  • CPI is famously stable after ~20% complete — trust the trend.
  • Reports up cleanly through program & portfolio.

Relationships

  • Needs a sound scope, schedule & cost baseline first (Poster 6 baselines).
  • Risk reserves sit inside/outside the baseline (Poster 12).
  • Forecasting (EAC/ETC/VAC/TCPI) builds on these — Poster 15.

Industry Example

Capital Project
  • A $100k line-upgrade is 40% built but has consumed $45k by the planned-50% point: SPI 0.80 & CPI 0.89 flag it behind and over early enough to act.

Memory Hooks

  • "EV is the hero — it opens every formula."
  • Variance = minus, Index = divide; + and >1 are good.
  • Cost↔AC, Schedule↔PV (C-A, S-P).
60-sec Review Define PV / EV / AC Write SV, CV, SPI, CPI EV = ? × BAC Why SV in $ is weak Sketch the S-curve
PMI Visual Wall · Poster 14 · EVM — Measures, Variances & Indices · original instructional design · A3 landscape