Concept · under Budget, reserves and earned value
Earned value management on the PMP® exam
Earned value management (EVM) compares three numbers taken on one status date: what the plan said should be done by now, what is actually done, and what that work cost. Every variance and index in EVM is built from them, and earned value is the one that appears in all four formulas.
- Exam
- PMP
- Domain
- Process
- Domain weight
- 41%
- Packages
- 8
- Updated
- Oct 13, 2026
01Three values and the total they work toward
- PV, planned value
- The budget for the work the schedule says should be finished by the status date. It comes from the baseline, so nothing that happens on the project changes it.
- EV, earned value
- The budget of the work actually completed. Completed work is priced at its planned cost: a deliverable budgeted at $30,000 earns $30,000 when it is done, whatever it really cost.
- AC, actual cost
- What was really spent on the work performed up to the status date. It is the only one of the three that comes from invoices and timesheets instead of the baseline.
- BAC, budget at completion
- The total planned budget for all of the work. PV reaches BAC on the last planned day; EV reaches it only when everything is done.
02Turning progress into dollars
Earned value
EV=% complete × BAC
- % complete
- the share of the total work finished, measured the way the plan defines progress
- BAC
- budget at completion
Worked example
- % complete = 35%
- BAC = $240,000
- Multiply the share of work done by the total budget: 0.35 × 240,000.
- Ignore what was spent; EV never looks at actual cost.
EV = $84,000
Reading itEarned value is the budget the finished work was supposed to cost. It is the common term in every cost and schedule comparison that follows.
03One status date, four readings
| Measure | Formula | Working | What it says |
|---|---|---|---|
| Cost variance (CV) | EV − AC | 84,000 − 105,000 = −$21,000 | Negative: the finished work cost more than its budget |
| Schedule variance (SV) | EV − PV | 84,000 − 72,000 = +$12,000 | Positive: more work is done than the plan called for by now |
| Cost performance index (CPI) | EV / AC | 84,000 / 105,000 = 0.80 | About 80 cents of planned work for each dollar spent |
| Schedule performance index (SPI) | EV / PV | 84,000 / 72,000 ≈ 1.17 | Work is moving about 17% faster than planned |
Given: BAC $240,000, PV $72,000, EV $84,000, AC $105,000. Ahead of schedule and over budget at the same time is an ordinary result: the two indices answer separate questions, so read each one on its own before you combine them.
04The budget report that hides the problem
At work
Finance circulates the monthly numbers: $61,000 spent against $64,000 budgeted for the period to date. The steering committee reads it as slightly under budget and moves to the next agenda item.
On the exam
Spend against plan puts AC next to PV, and that pair measures nothing on its own. If only half of the planned work is finished, the $61,000 bought about $32,000 of it. Earned value analysis brings EV into every comparison: EV against AC for cost, EV against PV for schedule.
The ruleFind EV first; a cost or schedule reading without it is only half a reading.
05Put PV, EV and AC to work
The set mixes arithmetic with reading what a figure means for the project.
Work packages 8
WP 01A project manager reviews the consolidated earned value management (EVM) metrics and notes a Schedule Performance Index (SPI) of 0.85 and a Cost Performance Index (CPI) of 0.90. What is the most appropriate pragmatic interpretation and next step?
Debrief answer to open the notes
- AReserve funds do not fix performance; they only hide the variance.
- BCrashing adds cost, so it would push CPI lower, not improve it.
- CBoth indices are below 1.0, which means behind schedule and over budget.
- DCorrect: SPI 0.85 and CPI 0.90 mean behind schedule and over budget, so find causes such as handoff delays and underestimated costs before choosing a fix.
WP 02A project manager applied percent-complete to an LOE support task and reported 60% EV. The task has no discrete deliverables. What is the reporting error and required correction?
Debrief answer to open the notes
- AAdding an AC adjustment does not fix value claimed with the wrong method.
- BRebaselining to keep invalid EV hides the error.
- CCorrect: Level-of-effort work earns value with the passage of time (EV tracks PV), so the 60% physical-progress figure is removed and time-based earning is used.
- DA discrete milestone method needs milestones, which LOE support work does not have.
WP 03A project has a Schedule Performance Index (SPI) of 0.88 and a Cost Performance Index (CPI) of 1.05. What does this indicate about the project's status?
Debrief answer to open the notes
- ACPI 1.05 is above 1.0, so the project is under budget, not over.
- BSPI 0.88 is below 1.0, so the project is behind schedule, not ahead.
- CCorrect: SPI below 1.0 (0.88) means less work done than planned; CPI above 1.0 (1.05) means more value earned per dollar than planned.
- DOnly the cost index is favorable; the schedule index is below 1.0.
WP 04A project has a BAC of $300,000 and is 60% complete. The actual cost to date is $195,000. What is the Cost Variance (CV) for this project?
Debrief answer to open the notes
- ACorrect: EV = 60% x $300,000 = $180,000, and CV = EV - AC = 180,000 - 195,000 = -$15,000, an overrun.
- B-$30,000 does not follow from these figures; recheck EV as 60% of BAC.
- CThe size is right but the sign is wrong; spending more than was earned gives a negative CV.
- D$30,000 has both the wrong size and the wrong sign.
WP 05A project has the following earned value metrics: PV = $300,000, EV = $250,000, AC = $275,000. What is the Schedule Variance (SV) and what does it indicate?
Debrief answer to open the notes
- A-$50,000 is right, but a negative SV means behind schedule.
- BSV = EV - PV is negative here, and the interpretation is reversed too.
- CCorrect: SV = EV - PV = 250,000 - 300,000 = -$50,000; less work was done than planned, so the project is behind schedule.
- D-$25,000 is the cost variance (EV - AC), not SV.
WP 06Jim has incurred a total cost of $500 for tasks completed while setting up infrastructure for a new office building. What project management term best describes this situation?
Debrief answer to open the notes
- ATCPI is the efficiency needed on the remaining work to meet a target, not a cost incurred.
- BPV is the budgeted value of scheduled work, not money actually spent.
- CEAC forecasts total project cost; it does not record spending to date.
- DCorrect: Actual cost is the money really spent on work performed, here the $500 already incurred.
WP 07A construction company is working on a new housing development project. They planned to lay the foundation for a total of 60 houses this quarter. By the end of the quarter, they have completed the foundation for 54 houses due to unforeseen weather delays. What is the SPI and what does it mean?
Debrief answer to open the notes
- A1.1 inverts the ratio; 54 of 60 is below plan.
- BWeather delays and 54 of 60 completed mean behind schedule, not ahead.
- C0.9 is the right value, but below 1.0 means slower than planned.
- DCorrect: SPI = EV / PV = 54 / 60 = 0.9, so work is progressing at 90% of the planned rate.
WP 08Using the work package data below, recompute EV and AC. Which values reveal the dashboard mismatch source?
Task Auth Budget Planned Hrs Actual Hrs Rate % Complete Design 12000 240 210 50 85 Build 18000 360 400 45 70 Test 6000 120 90 55 40 Debrief answer to open the notes
- AEV 19,800 does not match the budget × % complete sums (10,200 + 12,600 + 2,400 = 25,200).
- BEV 23,400 and AC 29,500 both understate the work package figures; recompute each row.
- CAC 30,200 leaves out part of the hours × rate cost; the three rows sum to 10,500 + 18,000 + 4,950 = 33,450.
- DCorrect: EV = 12,000 × 0.85 + 18,000 × 0.70 + 6,000 × 0.40 = 25,200; AC = 210 × 50 + 400 × 45 + 90 × 55 = 33,450, which is the figure to reconcile the dashboard against.
Open a row to answer. Keys: 1–4 or A–D answer, N opens the next row.
06Earned value questions people ask
Which index matters more, CPI or SPI?
Neither on its own. Money already spent stays spent, so a CPI below 1.0 is hard to recover late in a project, while a schedule slip can sometimes be won back with compression, covered in schedule management.
Why does SPI drift back to 1.0 on a project that finishes late?
Because EV and PV both end at BAC once all the work is done, so their ratio ends at 1.0 however late the finish was. Dollar-based SPI loses its signal near the end of a project; by then the critical path and the forecast finish date tell you more.
Does earned value work on agile projects?
Yes, at release level. Planned value comes from the story points the release plan expected by a date, earned value from the points accepted as done, both converted to dollars through the release budget. CPI and SPI read the same way. The agile artifacts themselves are on story points, velocity and burn charts.
Where do EAC, ETC and TCPI fit?
They forecast the finish from these same numbers. Which estimate at completion to choose, and why the choice depends on the cause of the variance, is on PMP formulas. Reserves and the cost baseline these numbers are measured against are covered in budget, reserves and earned value.