Earned Value Management: Complete PMP Formula Guide

Why Earned Value Management Dominates the PMP Exam

Earned Value Management is the single most formula-heavy topic on the PMP exam. PMI considers EVM the gold standard for objectively measuring project performance because it integrates scope, schedule, and cost into a unified framework. Rather than asking "how much have we spent?" EVM asks "how much value have we produced for what we spent?" That distinction is at the heart of every EVM question you will face.

This guide walks through every EVM formula the PMP exam tests, with worked examples and tips to avoid the calculation traps PMI loves to set.

The Three Foundational EVM Values

Every EVM calculation starts with three base measurements. Get these wrong, and every downstream formula falls apart.

Planned Value (PV)

Planned Value is the authorized budget assigned to scheduled work. It answers: "What did we plan to accomplish by now, in dollar terms?" PV is determined by the performance measurement baseline — the time-phased budget. At the end of the project, total PV equals the Budget at Completion (BAC).

Earned Value (EV)

Earned Value is the measure of work actually performed, expressed in dollar terms. It answers: "What is the budgeted value of the work we have actually completed?" EV can never exceed BAC. The key insight for PMP questions is that EV is always measured against the original budget for completed work, not the actual cost.

Actual Cost (AC)

Actual Cost is the realized cost incurred for the work performed. It answers: "How much did we actually spend to get here?" There is no formula for AC — it comes from accounting records.

Variance Formulas: CV and SV

Variances tell you whether a project is over or under budget and ahead or behind schedule.

• Cost Variance (CV) = EV − AC. Positive means under budget; negative means over budget.
• Schedule Variance (SV) = EV − PV. Positive means ahead of schedule; negative means behind schedule.

A common PMP trap is reversing the subtraction order. Remember: EV always comes first. EV is the hero of every EVM formula.

Performance Indexes: CPI and SPI

While variances give you dollar amounts, indexes give you efficiency ratios that are easier to compare across projects and time periods.

• Cost Performance Index (CPI) = EV / AC. A CPI of 0.85 means you are getting 85 cents of value for every dollar spent.
• Schedule Performance Index (SPI) = EV / PV. An SPI of 1.10 means you are progressing 10% faster than planned.

For both indexes, 1.0 is on plan, greater than 1.0 is favorable, and less than 1.0 is unfavorable. The PMP exam frequently tests whether candidates can interpret these values in scenario-based questions.

Estimate at Completion (EAC) Formulas

EAC predicts the total cost of the project when it finishes. PMI tests four EAC formulas, each suited to a different scenario:

1. EAC = BAC / CPI — Use when current cost performance is expected to continue.
2. EAC = AC + (BAC − EV) — Use when current variances are atypical and future work will proceed at the original planned rate.
3. EAC = AC + Bottom-Up ETC — Use when the original estimate is fundamentally flawed and a new estimate is needed for remaining work.
4. EAC = AC + (BAC − EV) / (CPI × SPI) — Use when both cost and schedule performance influence remaining work.

Other Critical EVM Formulas

Estimate to Complete (ETC)

ETC = EAC − AC. This tells you how much more money is needed to finish the project from this point forward.

Variance at Completion (VAC)

VAC = BAC − EAC. Positive means the project will finish under the original budget; negative means it will exceed it.

To-Complete Performance Index (TCPI)

TCPI = (BAC − EV) / (BAC − AC) when measuring against the original budget, or (BAC − EV) / (EAC − AC) when measuring against a revised budget. TCPI tells you the cost efficiency you must achieve on remaining work to meet a budget target.

Worked Example

A project has a BAC of $100,000. At the end of month three, PV is $40,000, EV is $35,000, and AC is $42,000.

• CV = $35,000 − $42,000 = −$7,000 (over budget)
• SV = $35,000 − $40,000 = −$5,000 (behind schedule)
• CPI = $35,000 / $42,000 = 0.83
• SPI = $35,000 / $40,000 = 0.875
• EAC (using CPI) = $100,000 / 0.83 = $120,482
• ETC = $120,482 − $42,000 = $78,482
• VAC = $100,000 − $120,482 = −$20,482

Memory Tips for Exam Day

Memorizing EVM formulas is non-negotiable. Here are patterns that help:

• Variances subtract, indexes divide. Both use the same operands in the same order (EV first).
• Cost formulas use AC; schedule formulas use PV. That is the only difference between the cost and schedule versions.
• Negative variance = bad; index below 1.0 = bad.

For a printable EVM formula sheet and more practice problems, check out our PMP cheat sheets. To drill these formulas with timed practice questions, start your free trial today.