Earned Value Management (EVM) is a project management technique for objectively measuring project performance and progress. EVM has the ability to combine measurements of scope, schedule, and cost in a single integrated system. It’s notable for its ability to provide accurate forecasts of project performance problems. Early EVM research showed that its use significantly impacts the areas of planning and control; and similarly, using the methodology improves both scope definition as well as the analysis of overall project performance.

Definition: Earned Value Management (EVM) is a project management technique used to measure the progress, performance, and health of a project. It integrates project scope, schedule, and cost objectives and provides a structured approach to monitoring and controlling project performance.

Earned Value Management (EVM) Equations

Acronym	Name	Equations
Variances
CV	Cost Variance	= BCWP – ACWP = EV – AC = (CV /BCWP) *100
CV%	Cost Variance %	= (EV – AC) / EV = (BCWP – ACWP) / BCWP
SV	Schedule Variance	= BCWP–BCWS = EV – PV = (SV /BCWS) *100
SV%	Schedule Variance %	= (EV – PV) / PV = (BCWP – BCWS) / BCWS
VAR	Variance at Completion	= BAC – EAC
Overall Status
	% Scheduled	= PVcum / BAC = BCWScum / BAC
	% Complete	= EVcum / BAC = BCWPcum / BAC
	% Budget Spent	= ACcum / BAC = ACWPcum / BAC
WR	Work Remaining	= BAC – EVcum = BAC – BCWPcum
Performance Index
CPI	Cost Performance Index	= EV / AC = BCWP / ACWP
SPI	Schedule Performance Index	= EV / PV = BCWP / BCWS
TCPIBAC	To Complete Performance Index	= WR / (BAC – ACWPcum) (Total Budget – EV ) / (Total Budget – AC)
TCPIEAC	To Complete Performance Index	= WR / (EAC – ACWPcum) = (Total Budget – BCWP ) / ( Total Budget – ACWP) = (BAC – BCWPCUM) / (EAC – ACWPCUM)
Estimate at Completion
EAC	Estimate at Completion	= BAC / CPIcum = ACWP + ETC = ACWP + (BAC – BCWP) / (CPI x SPI)
EACCPI	Estimate at Completion – Critical Performance Index	= ACcum + WR / CPIcum
EACComposite	Estimate at Completion – Composite	= ACcum + WR / (CPIcum ∙ SPIcum)
Critical Path Length Index
CPLI	Critical Path Length Index	= (CP Length(Time Now To Contract End)) + Total Float (To Contract End Baseline Finish)) /CP Length
Baseline Execution Index
BEI	Baseline Execution Index	= Tasks with Actual Finish Date / (# of Baseline Tasks Scheduled to Finish Prior to Status Date +Tasks Missing Baseline Start or Finish Date)
DoD TRIPWIRE METRICS
CPI	Cost Efficiency	= BCWP / ACWP; Favorable is > 1.0, Unfavorable is < 1.0
SPI	Schedule Efficiency	= BCWP / BCWS; Favorable is > 1.0, Unfavorable is < 1.0

EVM is Systems Engineering

EVM is an important tool used by Program Managers (PM) and Systems Engineers in the Technical Assessment Process to appraise the program’s technical progress against the Performance Measurement Baseline (PMB). Systems Engineering is responsible for characterizing the entire technical scope of effort in the Work Breakdown Structure (WBS) and the corresponding event-driven program implementation in the Integrated Master Schedule (IMS). The WBS and IMS form the basis of the PMB and the foundation of EVM.

The five (5) main EVM equation variables:

• BCWS = Budgeted Cost of Work Scheduled
• BCWP = Budgeted Cost of Work Performed
• ACWP = Actual Cost of Work Performed
• BAC = Budget at Completion
• EAC = Estimate at Completion

Topics that Program Managers and EVM Personnel should understand from these EVMS equations include:

• ANSI/EIA 748 Earned Value Management Standard
• Contractor Performance Report (CPR)
• Contract Funds Status Report (CFSR)
• EVMS Solicitation Requirements
• EVMS Compliance and Validation
• Integrated Baseline Review (IBR)
• Integrated Master Schedule (IMS)

AcqLinks and References:

• Defense Acquisition Guidebook (DAG)
• DoD Earned Value Management Interpretation Guide – Jan 2018
• EVM Contract Requirements Checklist
• DAU EVM Gold Card – Jun 2020
• DOE EVMS Gold Card – Feb 2019
• Website: Cost Performance Index Equation Formulas Calculator
• Website: DoD EVMS Home Page

Updated: 3/9/2024

Rank: G1