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Earned value management integrates scope, schedule, and cost into a single set of measures, and it is the most reliably calculable material on the exam. The formulas are few, and the questions test whether you can apply them under time pressure and interpret the result correctly.

The three base measures

• Planned value (PV) — the authorized budget assigned to the work scheduled to be completed by a point in time. What you planned to have spent for the work you planned to have done.
• Earned value (EV) — the budgeted value of the work actually completed. What that completed work was worth in baseline terms. Note carefully: EV is measured in budget currency, not in actual cost.
• Actual cost (AC) — what was actually spent on the work completed.

Budget at completion (BAC) is the total cost baseline. If the project is 40% complete against a BAC of 500,000, then EV = 0.40 × 500,000 = 200,000, whatever was spent.

Variances

• Schedule variance: SV = EV - PV. Negative means behind schedule.
• Cost variance: CV = EV - AC. Negative means over budget.

Both follow the same shape: earned value minus the thing you are comparing it to, and negative is bad. That single sentence prevents most sign errors.

Indices

• Schedule performance index: SPI = EV / PV. Below 1.0 is behind schedule.
• Cost performance index: CPI = EV / AC. Below 1.0 means you are getting less than a unit of value per unit spent.

Indices are ratios and therefore comparable across projects of different size, which is why governance reports use them. CPI is the more reliable of the two: research on completed projects consistently finds that CPI stabilizes early and rarely improves afterward, which is why it is the default assumption in forecasting.

SPI has a known weakness. As a project approaches completion, all remaining work is eventually earned, so SPI drifts toward 1.0 even for a late project. A project finishing three months late will report SPI = 1.0 on its final day. For schedule status near the end, read the critical path, not the index. Where schedule performance must be tracked in time units rather than currency, earned schedule techniques exist for exactly this reason.

Forecasting

Estimate at completion (EAC) forecasts the total cost. Which formula applies depends on an assumption you must extract from the question:

• Current variance is typical and will continue: EAC = BAC / CPI. The default and the most commonly correct.
• The variance was a one-off; future work will run to plan: EAC = AC + (BAC - EV).
• Future work will be affected by both cost and schedule performance: EAC = AC + [(BAC - EV) / (CPI × SPI)]. Used where recovering the schedule will itself cost money.
• The original estimate is invalid: EAC = AC + bottom-up ETC, where the remaining work is re-estimated from scratch.

Estimate to complete (ETC) is the expected cost of the remaining work: ETC = EAC - AC. Variance at completion: VAC = BAC - EAC; negative means a forecast overrun.

The to-complete performance index (TCPI) gives the efficiency the remaining work must achieve to hit a target. Against the original budget: TCPI = (BAC - EV) / (BAC - AC). Against a revised forecast: TCPI = (BAC - EV) / (EAC - AC). Interpretation is the examinable part — a TCPI meaningfully above 1.0 when current CPI is below 1.0 means the target requires performance the project has never demonstrated, which is a signal to change the plan rather than to promise harder.

Working a question

A worked example: BAC = 800,000; at the review point PV = 400,000, EV = 350,000, AC = 380,000.

• SV = 350,000 - 400,000 = -50,000 — behind schedule.
• CV = 350,000 - 380,000 = -30,000 — over budget.
• SPI = 350,000 / 400,000 = 0.875; CPI = 350,000 / 380,000 ≈ 0.921.
• EAC = 800,000 / 0.921 ≈ 868,600 if performance continues.
• ETC ≈ 868,600 - 380,000 = 488,600; VAC ≈ 800,000 - 868,600 = -68,600.

Read the story the numbers tell: this project is late and overspending, and on current performance will overrun by roughly 69,000. That interpretation, rather than the arithmetic, is usually what the question asks for.

Conditions and limitations

Earned value requires a scope baseline, a time-phased cost baseline, and an objective rule for measuring completion. That last condition is where it fails in practice: if progress is claimed by opinion, EV is fiction. Use rules that resist optimism — fixed formula credit such as 0/100 or 50/50 for short work packages, or physical measurement where output is countable.

In adaptive delivery, the equivalent signals are throughput, cycle time, and burnup against a scope line, and hybrid projects frequently report earned value at the control account level while the teams inside work from flow metrics. Whichever measure is in use, the discipline is the same: measure completed work objectively, forecast from demonstrated performance rather than from intention, and act on the forecast while the remaining budget still gives you options.

Reading the four combinations

Most interpretation questions reduce to one of four states, and it is worth being able to name each instantly.

• CPI > 1 and SPI > 1 — ahead and under budget. Check that progress claims are genuine before celebrating, since inflated completion percentages produce exactly this signature.
• CPI > 1 and SPI < 1 — under budget but late, which frequently means work has not been started rather than that it was cheap. Look for unstaffed activities.
• CPI < 1 and SPI > 1 — ahead of schedule but overspending, typically because the schedule was bought with overtime or extra resources.
• CPI < 1 and SPI < 1 — late and over budget, the state that most needs a re-forecast and a conversation with the sponsor rather than a recovery promise.

One further caution the exam likes: earned value tells you the size and direction of a variance, not its cause. The correct next step after computing an unfavorable index is nearly always to analyze the variance and identify the driver, not to jump to a corrective action chosen before the cause is known.