A comprehensive beginner's guide on Earned Value Management (EVM) to understand the basics & fundamentals. It includes definitions, example, pictures, and explanation in easy language.

1. 101 - Earned Value
Management
A BEGINNER’S GUIDE
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2. Agenda
Theory of Earned Value Management
Example & Explanation
Measuring Project Status
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3. Agenda
Theory of Earned Value Management
Example & Explanation
Measuring Project Status
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4. Definition
Earned Value Management (EVM) is a methodology that
combines Scope, Time, and Cost measurements to assess
project performance and progress.
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5. EVM – A Two Step Process
1. Plan
◦ Define Scope
◦ Estimate Time & Cost
◦ Determine equivalence between Scope, Time and Cost.
2. Monitor & Control
◦ Measure actual performance
◦ Compare actuals against planned
5
Planning
Process
Scope
SCT Triangle Representing Scope-Time-Cost Equivalence
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6. Agenda
Theory of Earned Value Management
Example & Explanation
Measuring Project Status
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7. A Project Example
Project Scope Build 80 Tables
Project Time Estimate (Duration) 5 Days
Cost Estimate Per Table $1000
Project Cost (Budget) $1000*80 = $80000
7
Planning
Process
Scope
80 Tables
Scope-Time-Cost Equivalence
Statement of Work – Build 80 tables in 5 days at a cost of $1000 per table.
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Detailed article available at - https://www.pmbypm.com/basics-earned-value-analysis/

8. Project Plan
8
Day 1 Day 2 Day 3 Day 4 Day 5
Tables Planned to be Built 10ll
13ll
l
17ll
ll
20ll
lll
20ll
lll
Estimated Cost for the Day 10000 13000 17000 20000 20000
Estimated Cumulative Cost 10000 23000 40000 60000 80000
I. Planned Scope
II. Planned Cost
Detailed Project Plan depicting equivalence of scope, time and cost
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*All costs in $

9. Measure Actual Performance
9
Day 1 Day 2 Day 3 Day 4 Day 5
Tables Planned to be Built 10ll
13ll
l
17ll
ll
20ll
lll
20ll
lll
Estimated Cost for the Day 10000 13000 17000 20000 20000
Estimated Cumulative Cost 10000 23000 40000 60000 80000
Actual Cost for the Day 8000 12000 16000
Actual Cumulative Cost 8000 20000 36000
I. Planned Scope
II. Planned Cost
III. Actual Cost
Actual performance of the project at the end of Day 3
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*All costs in $

10. Compare Actuals Against Planned
Can Actual Cost be compared against Planned Cost?
◦ No.
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11. Compare Actuals Against Planned
Can Actual Cost be compared against Planned Cost?
◦ No.
Why?
◦ First we have to find how much work has been completed at the end of
Day 3.
◦ 40 tables were planned to be built at a cost of $40000 at the end of Day
3.
◦ We need data on how many tables have been actually built at the end
of Day 3.
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12. Compare Actuals Against Planned
12
Day 1 Day 2 Day 3 Day 4 Day 5
Estimated Cumulative Cost 10000 23000 40000 60000 80000
Cumulative $ Value of Tables
Actually Built
8000 20000 35000
Actual Cumulative Cost 8000 20000 36000
Planned Value (PV)
II. Planned Cost
IV. Actual Cost
III. Completed Scope
Actual Cost (AC)
Earned Value (EV)
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*All costs in $

13. Planned Value (PV)
The authorized budget assigned to scheduled work.
OR
Monetary value of the work planned by the project
team.
Planned value at the end of Day 3 is $40000
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14. Earned Value (EV)
The measure of work performed expressed in terms
of the budget authorized for that work.
OR
Monetary value of the work accomplished by the
project team.
Earned value at the end of Day 3 is $35000
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15. Actual Cost (AC)
The realized cost incurred for the work performed
on an activity during a specific time period.
OR
Money Spent by the project team for the completed
work.
Actual cost at the end of Day 3 is $36000
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16. Agenda
Theory of Earned Value Management
Example & Explanation
Measuring Project Status
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17. Variance
Schedule Variance (SV) - A measure of schedule
performance expressed as the difference between
the earned value and the planned value.
Cost Variance (CV) - The amount of budget deficit or
surplus at a given point in time, expressed as the
difference between the earned value and the actual
cost.
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Formula: SV = EV – PV
Formula: CV = EV – AC
All EVM Formulas available at - https://pin.it/v7mccupfvw7csk

18. Efficiency
Schedule Performance Index (SPI) - A measure of
schedule efficiency expressed as the ratio of earned
value to planned value.
Cost Performance Index (CPI) - A measure of the cost
efficiency of budgeted resources expressed as the
ratio of earned value to actual cost.
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Formula: SPI = EV/PV
Formula: CPI = EV/AC
Download all PMP Formulas at - https://www.pmbypm.com/download-pmp-formulas-guide-2/

19. Important Points To Remember
EV is the first term in all the 4 formulas.
Negative variance means Project is behind.
Positive variance means Project is ahead.
Efficiency less than 1 means Project is behind.
Efficiency of greater than 1 means Project is ahead
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