--- title: "Earned value management" subject: "ICT Project Management" chapter: 9 key: "semester_7/ict_project_management:evm" source: https://www.bctengineer.com/q/semester_7/ict_project_management/evm site: BCT Engineering --- # Earned value management ICT Project Management · Chapter 9: Project Cost Management - Asked in: year not given; year not given - Video: [Earned Value Management Made Easy: Learn EVM in 11 Minutes with a Road Trip](https://www.youtube.com/watch?v=vyT2YrgHHJo) — PM Aspirant - Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14 - Page: https://www.bctengineer.com/q/semester_7/ict_project_management/evm - Whole chapter: https://www.bctengineer.com/md/semester_7/ict_project_management/chapter-9 ## Question What do you mean by earned value management (EVM)? Define EVM and explain it with its contribution and role in the cost control process. ## Short answer Earned Value Management integrates scope, schedule, and cost by comparing planned value (PV), earned value (EV), and actual cost (AC). It calculates CPI and SPI to detect variances early, forecasts total cost with EAC, and supports objective cost control decisions and stakeholder reporting. ## Answer **Earned Value Management (EVM)** is a project performance measurement technique that integrates scope, schedule and cost to assess progress objectively. It compares the planned work, the work actually completed (its value) and the actual cost. #### Key terms - **Planned Value (PV)**: budgeted cost of work scheduled to date. - **Earned Value (EV)**: budgeted cost of work actually performed (% complete × BAC). - **Actual Cost (AC)**: actual cost incurred for the work done. - **BAC**: Budget at Completion, the total budget. #### Formulas | Measure | Formula | Meaning | |---|---|---| | Cost variance CV | EV − AC | Negative = over budget | | Schedule variance SV | EV − PV | Negative = behind schedule | | Cost performance index CPI | EV / AC | Below 1 = over budget | | Schedule performance index SPI | EV / PV | Below 1 = behind | | Estimate at completion EAC | BAC / CPI | Forecast total cost | | Estimate to complete ETC | EAC − AC | Remaining cost | | Variance at completion VAC | BAC − EAC | | | TCPI | (BAC − EV)/(BAC − AC) | Efficiency needed for rest | #### Worked example BAC = Rs 100,000; PV = 40,000; EV = 35,000; AC = 45,000. - CV = 35,000 − 45,000 = −10,000 (over budget) - SV = 35,000 − 40,000 = −5,000 (behind schedule) - CPI = 35,000/45,000 = 0.78 - SPI = 35,000/40,000 = 0.875 - EAC = 100,000/0.778 = 128,571 - ETC = 128,571 − 45,000 = 83,571 - VAC = 100,000 − 128,571 = −28,571 - TCPI = 65,000/55,000 = 1.18 **Answer: The project is over budget and behind schedule; forecast cost is about Rs 1,28,571.** #### Contribution and role in cost control - Gives early warning of cost and schedule problems through CPI and SPI. - Allows objective forecasting (EAC, ETC) and trend analysis. - Links cost control with scope and schedule; progress is measured against the baseline, not just spending. - Supports corrective action decisions and reporting to stakeholders (S-curve). - Standard for large and government contracts. ```text Cost | ___ PV | AC __/ | _/ EV (below PV and AC) +---------------------- time ``` EVM needs a good WBS, a baseline and accurate progress measurement. ## Check yourself The answer's key points as multiple-choice questions, with the correct option and why. 1. In EVM, what are CV and SV? A. CV = EV - AC; SV = EV - PV B. CV = PV - AC; SV = EV - AC C. CV = AC - EV; SV = PV - EV D. CV = EV/AC; SV = EV/PV Answer: A. CV = EV - AC and SV = EV - PV; negative means over budget or behind schedule. (Key point: Cost variance) 2. With BAC 100,000, PV 40,000, EV 35,000, AC 45,000, what is the CPI? A. About 0.78 B. 0.875 C. 1.18 D. 1.29 Answer: A. CPI = EV/AC = 35,000/45,000 = 0.78, so over budget. (Key point: Worked example) 3. How is the estimate at completion computed in the answer, and what is it in the example? A. BAC x CPI, about Rs 78,000 B. BAC/CPI, about Rs 1,28,571 C. AC + PV, about Rs 85,000 D. BAC/SPI, about Rs 1,14,000 Answer: B. EAC = 100,000/0.778 = 128,571. (Key point: EAC) 4. What is EVM's contribution to cost control? A. It only records spending B. It estimates activity durations only C. It replaces the WBS D. It measures progress against the baseline and gives early warning with CPI and SPI Answer: D. EVM integrates scope, schedule and cost, enabling objective forecasting and early warnings. (Key point: Role in cost control) ## Related in ICT Project Management - [Quality control process](https://www.bctengineer.com/question.md?key=semester_7%2Fict_project_management%3Aquality-control-process) — ICT Project Management, chapter 10 - [Project management process groups](https://www.bctengineer.com/question.md?key=semester_7%2Fict_project_management%3Apm-process-groups) — ICT Project Management, chapter 6 - [Procurement management process flow](https://www.bctengineer.com/question.md?key=semester_7%2Fict_project_management%3Aprocurement-process-flow) — ICT Project Management, chapter 13 - [Role of EEF and OPA](https://www.bctengineer.com/question.md?key=semester_7%2Fict_project_management%3Aeef-opa-procurement) — ICT Project Management, chapter 13 - [Integrated change control](https://www.bctengineer.com/question.md?key=semester_7%2Fict_project_management%3Aintegrated-change-control) — ICT Project Management, chapter 7 - [Test life cycle in quality control](https://www.bctengineer.com/question.md?key=semester_7%2Fict_project_management%3Atest-life-cycle) — ICT Project Management, chapter 10 ## Related in other subjects - [Cost control need; earned value; EVA approach](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Acost-control-necessary-eva-approach) — Project Engineering, chapter 4 - [Earned value analysis for performance control](https://www.bctengineer.com/question.md?key=semester_8%2Fconstruction_management%3Aeva-performance-control) — Construction Management, chapter 7, asked 6× - [Short note: Earned value analysis](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Aearned-value-analysis-note) — Project Engineering, chapter 4 - [Cost control; EVA 15 houses in 3 months](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Aeva-houses-15-in-3-months) — Project Engineering, chapter 4