Earned value management can look like a wall of abbreviations. It is easier when you treat it as one project story told at a single status date. Four inputs describe the plan, the work, and the spending. The other calculations compare those inputs or use them to forecast what may happen next.
Start with the four inputs
BAC: Budget at Completion
BAC is the total approved budget for the project. It is the finish-line budget, not the amount you expected to spend by today.
PV: Planned Value
PV is the budgeted value of the work that should be complete by the status date. It answers: according to the approved plan, how much value should we have earned by now?
EV: Earned Value
EV is the budgeted value of the work actually completed by the status date. It uses planned budget rates to value completed work, so it is not the same as revenue and it is not the same as actual spending.
AC: Actual Cost
AC is what the completed work actually cost by the status date.
The most useful memory aid is simple: PV is what should be done, EV is what is done, and AC is what the done work cost. BAC is the total budget at the finish line.
Read the project before you forecast it
Schedule Variance: SV = EV - PV
SV compares completed work with scheduled work. A positive SV is favorable, zero is on schedule, and a negative SV is behind schedule. SV is expressed in budget value, not in days or weeks.
Cost Variance: CV = EV - AC
CV compares the value earned with the money spent to earn it. A positive CV is under budget, zero is on budget, and a negative CV is over budget. Notice the comparison: being on budget today means EV equals AC, not AC equals BAC.
Schedule Performance Index: SPI = EV / PV
SPI turns schedule performance into a ratio. Above 1.00 is ahead of plan, 1.00 is on plan, and below 1.00 is behind plan.
Cost Performance Index: CPI = EV / AC
CPI is the value earned for each budget unit spent. Above 1.00 is favorable, 1.00 is on budget, and below 1.00 is unfavorable. A CPI of 0.80 means the project is earning 80 cents of planned value for each dollar spent.
Two supporting ratios can help you check the story: percent complete = EV / BAC, while percent spent = AC / BAC. They are not substitutes for CPI and SPI, but seeing them side by side can expose a mismatch quickly.
Walk through one troubled project
Suppose BAC is $100,000. At the status date, PV is $60,000, EV is $50,000, and AC is $65,000.
- SV = $50,000 - $60,000 = -$10,000, so the project is behind schedule.
- CV = $50,000 - $65,000 = -$15,000, so the project is over budget.
- SPI = $50,000 / $60,000 = 0.83.
- CPI = $50,000 / $65,000 = 0.77.
- Percent complete = $50,000 / $100,000 = 50%.
- Percent spent = $65,000 / $100,000 = 65%.
The important observation is not merely that two numbers are negative. The project has completed half of its budgeted work while spending nearly two-thirds of its budget.
Forecast the finish, but state the assumption
EAC is the estimate at completion: the forecast total cost when the project finishes. More than one EAC formula exists because each formula answers a different assumption.
If the variance was a one-time event:
EAC = AC + (BAC - EV)
This assumes the remaining work will follow the original budget rate. In the example, EAC is $65,000 + $50,000 = $115,000.
If the current cost efficiency continues:
EAC = BAC / CPI
In the example, EAC is $100,000 / 0.77, or approximately $130,000.
If both cost and schedule pressure will affect the remaining work:
EAC = AC + (BAC - EV) / (CPI x SPI)
In the example, this produces approximately $143,000. This is the most cautious of the three forecasts here because both current indices are below 1.00.
ETC: Estimate to Complete = EAC - AC
ETC is the forecast cost of the remaining work. Using the cost-efficiency EAC of $130,000, ETC is $65,000.
VAC: Variance at Completion = BAC - EAC
VAC compares the original budget with the forecast total. Using that same EAC, VAC is -$30,000, a forecast overrun.
Ask what efficiency the remaining work requires
TCPI to BAC = (BAC - EV) / (BAC - AC)
TCPI is the to-complete performance index. It tells you the cost efficiency the remaining work must achieve to hit a target. In the example, the project must earn $50,000 of remaining value with only $35,000 of budget left. TCPI to BAC is 1.43. That is a sharp jump from the current CPI of 0.77, so the original budget target may be difficult without a credible change in performance.
If a revised EAC has been approved as the target, use TCPI to EAC = (BAC - EV) / (EAC - AC). The denominator changes because the authorized remaining funds have changed.
The quick interpretation rules
- Variances use zero as the target: positive is favorable, negative is unfavorable.
- Indices use 1.00 as the target: above 1.00 is favorable, below 1.00 is unfavorable.
- Schedule status compares EV with PV.
- Cost status compares EV with AC.
- Forecast answers depend on the assumption stated in the question or scenario.
- TCPI asks what the remaining work must do, not what the project has already done.
Now use the live calculator below. Start with the troubled project, move EV above and below PV, move AC above and below EV, and switch the EAC forecast assumption. Watch how one project can be ahead of schedule but over budget, or behind schedule but under budget.
Sources and exam note
The formulas and interpretations in this guide are supported by PMI's earned value performance guide, earned value project example, and TCPI explainer. Vital Few Prep is an independent study resource with no affiliation to the Project Management Institute. This guide uses original educational material and makes no promise about any particular exam form.