Earned Value Management (EVM) for PMP: Formulas, Examples & Exam Tricks

Earned Value Management (EVM) integrates scope, schedule and cost into one performance picture. It is the single most formula-dense area of the PMP exam — and the easiest to score full marks on once the three base values are clear.

The Three Base Values

• Planned Value (PV): the budgeted cost of work scheduled to be done by now.
• Earned Value (EV): the budgeted cost of work actually completed by now. EV = % complete × BAC.
• Actual Cost (AC): the actual money spent for the work done by now.
• BAC: Budget at Completion — total planned budget.

Everything else derives from these.

Variances (Absolute)

• Cost Variance: CV = EV − AC
  • CV > 0: under budget. CV < 0: over budget.
• Schedule Variance: SV = EV − PV
  • SV > 0: ahead of schedule. SV < 0: behind schedule.

Performance Indices (Ratios)

• Cost Performance Index: CPI = EV / AC
  • CPI > 1: under budget (good). CPI < 1: over budget.
• Schedule Performance Index: SPI = EV / PV
  • SPI > 1: ahead of schedule. SPI < 1: behind.

Forecasting Formulas

• EAC (Estimate at Completion): projected total cost at completion.
• ETC (Estimate to Complete): ETC = EAC − AC.
• VAC (Variance at Completion): VAC = BAC − EAC.
• TCPI (To-Complete Performance Index): the efficiency needed to meet BAC: TCPI = (BAC − EV) / (BAC − AC).

Four EAC Formulas — Know When to Use Each

Situation	EAC formula
Current variances are atypical (won’t continue)	EAC = AC + (BAC − EV)
Current rate will continue	EAC = BAC / CPI
Schedule and cost both matter	EAC = AC + [(BAC − EV) / (CPI × SPI)]
Initial estimates were flawed, re-estimate	EAC = AC + bottom-up ETC

Worked Example

A project has BAC = 200,000. At a status date, 50% of the work is complete (EV = 100,000). PV was 120,000 and AC is 110,000.

• CV = 100,000 − 110,000 = −10,000 (over budget)
• SV = 100,000 − 120,000 = −20,000 (behind schedule)
• CPI = 100,000/110,000 = 0.91
• SPI = 100,000/120,000 = 0.83
• EAC (variances continue) = 200,000 / 0.91 = 219,780
• EAC (variances atypical) = 110,000 + (200,000 − 100,000) = 210,000
• VAC = 200,000 − 219,780 = −19,780 (over budget at completion)
• TCPI (to meet BAC) = (200,000 − 100,000)/(200,000 − 110,000) = 1.11 — you must improve to 111% efficiency.

How to Interpret Numbers Fast

• Negative variance = bad; positive = good.
• Index < 1 = bad; > 1 = good.
• EAC > BAC means the project will overrun; VAC is negative.

PMP Exam Tricks

• The question usually gives you three of PV/EV/AC and asks for a derived value. Write the base values first, then the formula.
• If the question says “current trend will continue,” use EAC = BAC/CPI.
• If it says “the remaining work will be done at the budgeted rate,” use EAC = AC + (BAC − EV).
• TCPI based on BAC tells you the efficiency to finish at the original budget; TCPI based on EAC the efficiency to finish at the revised forecast.

Common Mistakes

• Mixing EV and AC (EV is budgeted; AC is actual).
• Using AC instead of EV in the numerator of CPI.
• Forgetting that ETC = EAC − AC.
• Choosing the wrong EAC formula for the scenario described.

Memorise the three base values, the four EAC scenarios, and the “negative = bad, < 1 = bad” rule, and EVM becomes guaranteed points on the PMP exam.