PMP Earned Value Formulas Explained (With Worked Examples)
Earned value management (EVM) questions show up on the PMP exam, and they're some of the easiest points to win if you know the formulas and what the results mean. The current exam focuses more on reading the results than on long calculations, so understanding beats memorizing.
The three building blocks
Every EVM formula uses these three values:
Planned Value (PV): the budgeted cost of the work that should be done by now.
Earned Value (EV): the budgeted cost of the work that is actually done.
Actual Cost (AC): what you have actually spent on that work.
You also need the Budget at Completion (BAC): the total budget for the whole project.
Variances: are we ahead or behind?
Cost Variance: CV = EV - AC
Schedule Variance: SV = EV - PV
A negative number is bad news: over budget, or behind schedule. A positive number is good news.
Performance indexes: how efficient are we?
Cost Performance Index: CPI = EV / AC
Schedule Performance Index: SPI = EV / PV
Less than 1 is bad. More than 1 is good. Exactly 1 is on plan.
Forecasts: where will we end up?
Estimate at Completion (typical case): EAC = BAC / CPI
Estimate to Complete: ETC = EAC - AC
Variance at Completion: VAC = BAC - EAC
To-Complete Performance Index: TCPI = (BAC - EV) / (BAC - AC)
TCPI tells you how efficiently you must work from now on to finish within the original budget. A TCPI above 1 means you have to do better than you planned.
Worked example
A project has a budget (BAC) of $100,000. By today you planned to finish 50% of the work, but you've finished 40%, and you've spent $45,000.
PV = 50% x $100,000 = $50,000
EV = 40% x $100,000 = $40,000
AC = $45,000
CV = 40,000 - 45,000 = -$5,000 (over budget)
SV = 40,000 - 50,000 = -$10,000 (behind schedule)
CPI = 40,000 / 45,000 = 0.89
SPI = 40,000 / 50,000 = 0.80
EAC = 100,000 / 0.889 = $112,500
VAC = 100,000 - 112,500 = -$12,500
What it means: the project is behind schedule and over budget. At the current cost efficiency, it will finish about $12,500 over budget.
Three memory tricks
EV always comes first in variance and index formulas.
C goes with AC (cost), S goes with PV (schedule).
Negative or less than 1 = bad. Positive or more than 1 = good.
What the exam really wants
On a situational question, the number is only step one. If the CPI is 0.89, the best answer usually isn't "cut the budget." It's to find out why, review the cause with the team, and follow the right process to correct course.
Get all 18 formulas on one page, with plain-English notes on when to use each.
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