Learn Finance · Project & Cost Finance · Task A4. Turn "are we on track?" into four numbers you can act on — cost and schedule, from one method.

Drill every EVM formula as flashcards in PMP Reps → Finance · Cost & EVM.

What it is

Earned Value Management (EVM) combines scope, schedule, and cost into one set of numbers. It rests on three values at a point in time (the data date):

PV — Planned Value: the budgeted cost of the work that should be done by now (the baseline's S-curve).
EV — Earned Value: the budgeted cost of the work actually completed ("how much value have we earned?").
AC — Actual Cost: what you've actually spent on that work.

From those three come the four indices:

Metric	Formula	Reads
CV — cost variance	EV − AC	+under budget / −over
SV — schedule variance	EV − PV	+ahead / −behind (in money)
CPI — cost performance index	EV ÷ AC	>1 under budget
SPI — schedule performance index	EV ÷ PV	>1 ahead of schedule

Why it matters

"80% done" is a feeling; CPI is a fact. EVM replaces optimistic status with a measured rate of cost and schedule efficiency.
It catches trouble early. A CPI of 0.85 at the halfway point is a number you can escalate now, not a surprise at the end.
It's the input to forecasting (A5) — EAC and TCPI are built on CPI/SPI.

Where you do it in VanillaPM

Everything below is in Project → Control → Overview (apps/budget/evm.py). A step-by-step:

Set the data date. Pick the as-of date you're measuring at — every figure below is "as of" that point.
Three inputs line up automatically. PV (planned value) comes from the time-phased cost baseline (A2); EV (earned value) from WBS/task completion against that baseline; AC (actual cost) from the actuals (A3). You don't type these — they're read from the project.
Read the indices. derive_indices(pv, ev, ac, bac) computes CV = EV − AC, SV = EV − PV, CPI = EV ÷ AC, SPI = EV ÷ PV, each with a health flag (an index below 1.0 is over cost / behind schedule).
Read the three-curve chart. The dashboard plots PV, EV and AC over time — the gap between EV and AC is your cost variance; between EV and PV, your schedule variance. One glance tells you where the project stands.

Walked example — Meridian

At month 9 of the 18-month, $2M build:

	Value
PV (planned by now)	1,000,000
EV (work actually done, at budget)	850,000
AC (actually spent)	1,000,000

CV = EV − AC = 850 − 1000 = −$150,000 (over budget)
SV = EV − PV = 850 − 1000 = −$150,000 (behind schedule)
CPI = EV ÷ AC = 850 ÷ 1000 = 0.85 (85 cents of value per dollar spent)
SPI = EV ÷ PV = 850 ÷ 1000 = 0.85 (85% of planned work done)

Meridian is over budget and behind — and you know it at the halfway mark, with numbers to take to the sponsor.

The numbers

The intuition in one line: EV is the hinge. Compare EV to AC → cost; compare EV to PV → schedule. A variance is a dollar (EV−AC); an index is a ratio (EV÷AC). At CPI 0.85, every planned dollar is buying 85 cents of work — which is exactly why the forecast (A5) lands above BAC.

Controls & assurance

EV measured against the baseline (A2) — not against a moving target.
An honest EV rule (% complete, milestones) applied consistently — gaming EV breaks everything downstream.
AC that ties to the actuals ledger, at the same data date as EV.
Indices reported with the three-curve chart, so the trend (not just today's point) is visible.

Best practices & pitfalls

Do read cost and schedule separately — a project can be on budget but late (CPI 1.0, SPI 0.8) or vice versa.
Do watch the trend in CPI, not one reading.
Pitfall: confusing SV (money) with calendar time. SV is in dollars; for time, use earned schedule.
Pitfall: inflating EV to look healthy. EV is budgeted cost of completed work — claiming work that isn't done just hides the problem until the finish.

Practise question

Q1. PV = $600k, EV = $540k, AC = $450k. Compute CV, SV, CPI, SPI — and say in one sentence what's happening.

Answer: CV = 540 − 450 = +$90k; SV = 540 − 600 = −$60k; CPI = 540/450 = 1.2; SPI = 540/600 = 0.9. The project is under budget but behind schedule — efficient with money, slower than planned.

Terms used here

PV / EV / AC — planned value, earned value, actual cost at the data date.
CV / SV — cost / schedule variance (dollars).
CPI / SPI — cost / schedule performance index (ratios).
Data date — the "as of" point the measurement is taken.
Related: Forecast to completion — turning today's CPI/SPI into the projected finish.

What the sponsor / PMO expects

CPI and SPI reported each period against a stable baseline, with an honest EV rule. Those two ratios are the universal language of project status — a sponsor reads 0.85/0.85 and knows exactly where Meridian stands without a single adjective.

Measure performance with Earned Value