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Earned Value Management in Practice

10 min
4/6

Key Takeaways

  • EVM needs three baselines: PMB, WBS budgets, and completion measurement.
  • Weekly SPI/CPI/EAC provides objective health in simple numbers.
  • Traffic lights (green/yellow/red) trigger management responses.
  • TCPI >1.1 means budget unlikely without scope reduction.

Practical EVM implementation for residential renovation projects.

1

EVM Setup

Requires: Performance Measurement Baseline (budget spread over timeline), WBS with budget assignments, consistent completion measurement method.

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2

Weekly Analysis

Calculate PV, EV, AC weekly. Derive SPI, CPI, EAC. Traffic light: green (≥0.95), yellow (0.85-0.95), red (<0.85).

EVM Formulas
SPI = EV/PV (schedule) CPI = EV/AC (cost) EAC = Budget/CPI (projected final) TCPI = (BAC-EV)/(BAC-AC) (required efficiency)
3

Interpreting Results

SPI<1 + CPI≥1: behind schedule, on budget—focus on schedule recovery. SPI≥1 + CPI<1: on time, over budget—investigate costs. Both <1: comprehensive review needed. TCPI>1.1: original budget unlikely without scope reduction.

Case Study: Midpoint EVM Analysis

Week 7 of 14, $90K budget.

  1. 1PV = $90K × 55% = $49,500.
  2. 2EV = $90K × 50% = $45,000 (50% complete).
  3. 3AC = $48,000.
  4. 4SPI = 0.909 (yellow). CPI = 0.938 (yellow).
  5. 5EAC = $90K/0.938 = $95,948.
  6. 6Action: recovery meeting, confirm contingency covers $5,948 projected overrun.
Outcome

Dual issue detected at midpoint with recovery options available.

Key Takeaways

  • ✓EVM needs three baselines: PMB, WBS budgets, and completion measurement.
  • ✓Weekly SPI/CPI/EAC provides objective health in simple numbers.
  • ✓Traffic lights (green/yellow/red) trigger management responses.
  • ✓TCPI >1.1 means budget unlikely without scope reduction.

Sources

Common Mistakes to Avoid

Ignoring EVM warning signs until the budget is significantly overrun

Consequence: By the time CPI drops below 0.90, recovery typically requires scope reduction or additional capital injection

Correction: Review EVM metrics weekly; initiate corrective action when CPI drops below 0.95 or SPI drops below 0.90

Test Your Knowledge

1.What does a Cost Performance Index (CPI) of 0.85 mean?

2.What EVM metric predicts the final project cost?

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