The three core numbers
- PV (Planned Value) — budget for the work scheduled to be done by now.
- EV (Earned Value) — budget for the work actually done so far.
- AC (Actual Cost) — what we've actually spent.
Variances
- SV = EV − PV. Negative = behind schedule (we've earned less value than planned).
- CV = EV − AC. Negative = over budget (we earned less than we spent).
Performance indices
- SPI = EV / PV. < 1 = behind schedule. = 1 = on track. > 1 = ahead.
- CPI = EV / AC. < 1 = over budget. = 1 = on cost. > 1 = under.
↳ the why
EVM's power: it integrates schedule and cost into one coherent picture. Without it, you can be on schedule (right tasks done) but over budget (cost more than expected). EVM surfaces both in one report. The downside: it requires careful baselining and ongoing tracking — overhead most agile teams don't want.
Forecasting at completion
EAC (Estimate at Completion) projects total cost. Simplest formula: EAC = BAC / CPI (budget at completion divided by current cost performance index). If you're running CPI = 0.8, you'll likely finish 25% over budget at the current rate.