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