Earned Value Management (EVM): Complete PMP Formula Guide with Worked Examples

Earned Value Management (EVM) is the single most heavily tested quantitative topic on the PMP exam. You can expect 5–8 EVM questions, and they range from straightforward formula recall to multi-step interpretation scenarios that require you to diagnose project health and recommend corrective action. Mastery of EVM is non-negotiable — it is the backbone of cost and schedule performance measurement in the PMBOK framework.

This guide covers every EVM formula you need for the exam, explains how to interpret each result, walks through real-world worked examples, and breaks down the common question patterns you will encounter. By the end, you will be able to calculate any EVM metric, explain what it means for project health, and determine which forecasting formula applies in any scenario.

The Three Pillars: EV, PV, and AC

Every EVM calculation rests on three fundamental data points. If you know these, you can derive everything else. Do not try to memorize formulas in isolation — understand how these three values interact.

Planned Value (PV)

Planned Value is the authorized budget assigned to the work scheduled to be completed by a specific date. It represents where you planned to be at that point in time. If your project budget is $1,000,000 over 12 months, and you planned to be 50% complete after 6 months, then PV at month 6 is $500,000. The PMP exam often phrases PV in terms of work scheduled: "At this point in the project, 40% of the work was scheduled to be complete, and the BAC is $200,000." That means PV = 0.40 × $200,000 = $80,000.

Earned Value (EV)

Earned Value is the authorized budget assigned to the work actually completed. This is the most important of the three. EV tells you how much value the project has produced, regardless of how much money has been spent or how much time has passed. If you have completed 30% of the work (per the planned budget), your EV is 0.30 × BAC. The exam will give you EV directly or provide the percentage of work completed, which you multiply by BAC.

Actual Cost (AC)

Actual Cost is the total cost actually incurred for the work completed. This is what you have spent so far. Unlike PV and EV, AC is not calculated — it is measured from the project's financial records.

Variance Analysis: CV and SV

Variance analysis tells you whether the project is ahead or behind schedule and under or over budget, in absolute dollar terms.

Cost Variance (CV)

Formula: CV = EV − AC

Interpretation: Positive CV means you have spent less than the value you earned — you are under budget. Negative CV means you have spent more than the value you earned — you are over budget. Zero means you are exactly on budget.

Worked example: Your project has a BAC of $500,000. At the status date, you have completed 60% of the work (EV = $300,000) and spent $340,000 (AC = $340,000). CV = $300,000 − $340,000 = −$40,000. The project is $40,000 over budget.

Schedule Variance (SV)

Formula: SV = EV − PV

Interpretation: Positive SV means you have earned more value than planned — you are ahead of schedule. Negative SV means you have earned less value than planned — you are behind schedule. SV measures schedule performance in dollar terms, not in days or weeks. This is a common point of confusion: SV tells you the monetary value of the schedule gap, not the time gap.

Worked example: Using the same project, suppose by month 6 you planned to have 70% of the work complete (PV = $350,000). You actually completed 60% (EV = $300,000). SV = $300,000 − $350,000 = −$50,000. The project is $50,000 behind schedule in earned value terms.

Performance Indices: CPI and SPI

While CV and SV give absolute dollar variances, CPI and SPI give relative efficiency ratios. These are the most important metrics for forecasting, and the PMP exam uses them in almost every EVM question.

Cost Performance Index (CPI)

Formula: CPI = EV ÷ AC

Interpretation: CPI > 1.0 means you are getting more value per dollar spent — efficient. CPI < 1.0 means you are spending more than the value you earn — inefficient. CPI = 1.0 means you are exactly on budget. CPI is the most trusted EVM metric because it tends to stabilize early in the project and remain relatively constant. PMI considers a CPI of 0.90 or below a serious concern.

Worked example: EV = $300,000, AC = $340,000. CPI = $300,000 ÷ $340,000 = 0.882. For every dollar spent, you are earning only $0.88 of value. This confirms the project is over budget.

Schedule Performance Index (SPI)

Formula: SPI = EV ÷ PV

Interpretation: SPI > 1.0 means you are ahead of schedule. SPI < 1.0 means you are behind schedule. SPI = 1.0 means you are exactly on schedule. Unlike SV, SPI is a dimensionless ratio that can be compared across projects of different sizes.

Worked example: EV = $300,000, PV = $350,000. SPI = $300,000 ÷ $350,000 = 0.857. You are progressing at 85.7% of the planned rate.

Metric	Formula	Good ("Healthy")	Bad ("Trouble")
CV	EV − AC	Positive ($)	Negative ($)
SV	EV − PV	Positive ($)	Negative ($)
CPI	EV ÷ AC	> 1.0	< 1.0
SPI	EV ÷ PV	> 1.0	< 1.0

Forecasting: EAC (Estimate at Completion)

The EAC tells you what the total project will cost when it finishes, given current performance. There are four EAC formulas, and knowing which one to apply is one of the most common PMP exam question patterns. The exam presents a scenario, and you must select the correct EAC based on the assumptions that best fit the situation.

EAC Formula 1: Original Estimate Flawed (Bottom-Up ETC)

Formula: EAC = AC + Bottom-up ETC

When to use: The original estimate is fundamentally flawed or no longer valid. You must re-estimate the remaining work from scratch. This is the most conservative approach and is used when the variance is caused by fundamentally wrong assumptions. On the exam, look for language like "the original estimate is no longer valid," "fundamental flaws in the original plan," or "a new estimate must be prepared."

Worked example: AC = $340,000. A bottom-up re-estimate of the remaining work shows it will cost $280,000 to complete. EAC = $340,000 + $280,000 = $620,000.

EAC Formula 2: Current Cost Performance Continues

Formula: EAC = BAC ÷ CPI

When to use: The current CPI is expected to continue for the remainder of the project. This is the most commonly used EAC formula. Use it when the variances are typical are expected to continue at the same rate. On the exam, look for "current variances are considered typical" or "variances will continue at the same rate."

Worked example: BAC = $500,000, CPI = 0.882. EAC = $500,000 ÷ 0.882 = $566,893. The project is expected to cost $566,893 at completion, roughly $66,893 over budget.

EAC Formula 3: Remaining Work at Planned Rate

Formula: EAC = AC + (BAC − EV)

When to use: The past performance deviation was an anomaly, and the remaining work will be completed at the originally planned efficiency. On the exam, look for "variances are considered atypical" or "the original estimate is still valid for remaining work."

Worked example: AC = $340,000, BAC = $500,000, EV = $300,000. EAC = $340,000 + ($500,000 − $300,000) = $340,000 + $200,000 = $540,000.

EAC Formula 4: Both Cost and Schedule Performance Must Be Considered

Formula: EAC = AC + [(BAC − EV) ÷ (CPI × SPI)]

When to use: The project is behind schedule and over budget, and both cost and schedule performance are expected to affect the remaining work. This is the most comprehensive formula and should be used when the schedule variance will impact future costs. On the exam, look for "both cost and schedule performance will continue" or "project is behind schedule and over budget."

Worked example: AC = $340,000, BAC = $500,000, EV = $300,000, CPI = 0.882, SPI = 0.857. EAC = $340,000 + [($500,000 − $300,000) ÷ (0.882 × 0.857)] = $340,000 + [$200,000 ÷ 0.756] = $340,000 + $264,550 = $604,550.

EAC Formula	When to Select It	Key Phrase on Exam
EAC = AC + Bottom-up ETC	Original estimate is invalid	"Bottom-up re-estimate needed"
EAC = BAC ÷ CPI	Current CPI will continue	"Typical variance"
EAC = AC + (BAC − EV)	Remaining work at planned rate	"Atypical variance"
EAC = AC + [(BAC − EV) ÷ (CPI × SPI)]	Both CPI and SPI affect future	"Both cost and schedule"

Other Key EVM Formulas: ETC, VAC, and TCPI

Estimate to Complete (ETC)

Formula: ETC = EAC − AC

Interpretation: ETC tells you how much more money the project needs from this point forward to finish. It is simply your forecasted total cost minus what you have already spent. If EAC = $566,893 and AC = $340,000, then ETC = $226,893. The exam may ask for ETC directly or use it as an intermediate step in a multi-part calculation.

Variance at Completion (VAC)

Formula: VAC = BAC − EAC

Interpretation: VAC tells you whether the final project will be over or under budget relative to the original budget. A positive VAC means you will finish under budget. A negative VAC means you will finish over budget. Using EAC = $566,893 and BAC = $500,000, VAC = $500,000 − $566,893 = −$66,893. The project will finish $66,893 over budget.

To-Complete Performance Index (TCPI)

TCPI is one of the most frequently tested EVM formulas because it requires critical thinking. TCPI tells you the required cost performance efficiency needed to complete the project within a given budget. There are two TCPI formulas.

TCPI (Using BAC): TCPI = (BAC − EV) ÷ (BAC − AC)

This tells you what CPI you must achieve on the remaining work to finish exactly at the original budget (BAC). If TCPI > 1.0, you need to perform better than planned to stay within budget. If TCPI > 2.0, the target is likely unachievable.

TCPI (Using EAC): TCPI = (BAC − EV) ÷ (EAC − AC)

This version uses the revised EAC as the target. It acknowledges that the original budget may no longer be realistic and asks what CPI is needed to meet the new target.

Worked example: BAC = $500,000, EV = $300,000, AC = $340,000. TCPI (BAC) = ($500,000 − $300,000) ÷ ($500,000 − $340,000) = $200,000 ÷ $160,000 = 1.25. You must perform at a CPI of 1.25 on all remaining work to finish at the original budget — a significant stretch given your current CPI of 0.882. This is a red flag that the budget is likely unattainable.

Formula	Definition	Interpretation
ETC = EAC − AC	Estimate to Complete	Remaining cost to finish
VAC = BAC − EAC	Variance at Completion	Positive = under budget at end
TCPI = (BAC − EV) ÷ (BAC − AC)	To-Complete Performance Index (BAC)	CPI needed to hit original budget
TCPI = (BAC − EV) ÷ (EAC − AC)	To-Complete Performance Index (EAC)	CPI needed to hit revised target

Interpreting EVM Results: The Big Picture

Memorizing formulas is only half the battle. The PMP exam expects you to interpret what the numbers mean and recommend appropriate actions. Here is how to think about the four health quadrants of EVM:

Scenario	CPI	SPI	Project Status	Recommended Action
Under budget, ahead of schedule	> 1.0	> 1.0	Excellent	Continue as is; no action needed
Under budget, behind schedule	> 1.0	< 1.0	Mixed — cost efficient but slow	Investigate schedule; consider fast-tracking or crashing
Over budget, ahead of schedule	< 1.0	> 1.0	Mixed — spending too much but progress is fast	Investigate cost overruns; review if the value of being ahead outweighs the extra cost
Over budget, behind schedule	< 1.0	< 1.0	Trouble — the worst scenario	Rebaseline; request additional resources; formal corrective action plan

The PMP exam will present a scenario with numbers and ask what the project manager should do. Your answer must align with this quadrant logic. If the project is over budget and behind schedule (CPI < 1.0, SPI < 1.0), the correct answer is not "do nothing" or "continue as planned" — it is to analyze root causes, develop a corrective action plan, and potentially rebaseline the project.

PMP Exam Question Patterns for EVM

Based on analysis of the current PMP exam (PMBOK 7 + ECO), EVM questions fall into these recurring patterns:

• Direct Calculation (20%): You are given three numbers and asked to compute CV, SV, CPI, or SPI. These are the easiest. Example: "EV = $50,000, AC = $45,000. What is the CPI?" Answer: 1.11.
• Multi-Step Calculation (30%): You need two or three steps. Example: "BAC = $200,000. After 6 months, 40% of work is done and $90,000 has been spent. Planned completion for month 6 is 50%. Calculate EAC assuming typical variances." Steps: PV = $100,000, EV = $80,000, CPI = 0.889, EAC = $200,000 ÷ 0.889 = $225,000.
• Interpretation (25%): You are given CPI, SPI, or both and asked to interpret project health. Example: "CPI = 0.95, SPI = 0.85. What does this mean?" Answer: The project is over budget and behind schedule.
• Which EAC to Use? (15%): A scenario is described and you must select the correct EAC formula. Example: "The project experienced a one-time supplier issue that has been resolved. Remaining work can be done at the planned rate." Answer: EAC = AC + (BAC − EV).
• TCPI Analysis (10%): You calculate TCPI and compare it to CPI to determine feasibility. Example: "CPI = 0.88, TCPI = 1.25. Is the budget feasible?" Answer: No, the required performance (1.25) is far above actual performance (0.88).

Common EVM Mistakes and How to Avoid Them

Even experienced project managers make these mistakes on the exam. Watch out for them:

• Confusing EV and PV: EV is work actually completed. PV is work scheduled to be completed. Always check the wording. If a question says "the project was scheduled to be 60% complete" — that is PV. If it says "60% of the work is complete" — that is EV.
• Forgetting that SV is in dollars: A common trap: "The project is 2 weeks behind schedule." EVM does not measure schedule in weeks — it measures it in dollars. The exam may present a question where the correct answer is a dollar amount for SV, not a time estimate.
• Using the wrong EAC formula: Read the scenario carefully. The word "typical" means use BAC ÷ CPI. The word "atypical" means use AC + (BAC − EV). The phrase "both cost and schedule" means use the combined formula.
• Misreading TCPI denominators: The BAC version uses (BAC − AC) in the denominator. The EAC version uses (EAC − AC). Mixing these up gives wildly wrong results.
• Ignoring the "status date": If the question says "at month 6" but gives data for month 4, the PV is based on month 4, not month 6. Always anchor to the correct status date.

Full Worked Example — From Start to Finish

Let's walk through a complete EVM analysis from scratch. This is the kind of multi-step problem you may encounter on the exam.

Scenario: Your project has a BAC of $1,200,000 and a planned duration of 12 months. At month 9, you have completed 60% of the work. You have spent $780,000. The monthly planned spend was $100,000 per month (so $900,000 was planned for month 9).

Step 1 — Identify the three pillars:
PV = $900,000 (planned at month 9)
EV = 0.60 × $1,200,000 = $720,000 (work actually done)
AC = $780,000 (money actually spent)

Step 2 — Calculate variances:
CV = $720,000 − $780,000 = −$60,000 (over budget)
SV = $720,000 − $900,000 = −$180,000 (behind schedule)

Step 3 — Calculate indices:
CPI = $720,000 ÷ $780,000 = 0.923 (inefficient — every dollar buys $0.92 of value)
SPI = $720,000 ÷ $900,000 = 0.80 (far behind schedule)

Step 4 — Forecast EAC (assuming typical variance):
EAC = $1,200,000 ÷ 0.923 = $1,300,108

Step 5 — Calculate VAC and TCPI:
VAC = $1,200,000 − $1,300,108 = −$100,108 (will finish over budget by ~$100K)
TCPI (BAC) = ($1,200,000 − $720,000) ÷ ($1,200,000 − $780,000) = $480,000 ÷ $420,000 = 1.143

Interpretation: The project is over budget (CPI = 0.923) and significantly behind schedule (SPI = 0.80). To finish at the original budget, you would need to achieve a CPI of 1.143 on remaining work — a substantial improvement over the current 0.923. The project is in the "trouble" quadrant (over budget, behind schedule), and the PM should develop a corrective action plan, conduct root cause analysis, and consider formal rebaselining or a change request for additional budget.

Final Exam Day Checklist

Before you walk into the exam center (or open your online proctoring session), make sure you can:

• Write all EVM formulas from memory (CV, SV, CPI, SPI, all 4 EAC variants, ETC, VAC, TCPI)
• Distinguish between "typical" and "atypical" variance scenarios
• Interpret whether CPI/SPI > 1 or < 1 is good or bad
• Compare TCPI to CPI to evaluate budget feasibility
• Diagnose which quadrant the project is in and recommend the appropriate action

EVM is the most formula-dense topic on the exam, but it is also the most predictable. Master these formulas and interpretation patterns, and you will earn those critical points with confidence.

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