Earned Value Management: PV, EV, and AC Fundamentals
PMBOK v8 Definition
Planned Value (PV) is the authorized budget assigned to scheduled work. It represents the value of the work planned to be completed to a point in time, usually the data date or project completion.
Earned Value (EV) is the measure of work performed expressed in terms of the budget authorized for that work. It is the planned value of all the work completed (earned) to a point in time, usually the data date, without reference to actual costs.
These two metrics, along with Actual Cost (AC), form the three key dimensions of Earned Value Management (EVM), which integrates the scope baseline with the cost baseline and schedule baseline to form the performance measurement baseline.
Why It Matters for the Exam
EVM calculations appear in approximately 5-8 PMI exam questions, making this a high-yield topic. Questions test your ability to:
- Calculate and interpret PV, EV, and AC values
- Derive variance and performance indices from these values
- Distinguish between schedule and cost performance metrics
Key Points to Remember (for the exam)
- PV Definition: Authorized budget assigned to scheduled work (what you planned to spend by now)
- EV Definition: Value of work actually performed, expressed in budget terms (what you earned by doing the work)
- AC Definition: Actual cost incurred for work performed (what you actually spent)
- Schedule Variance (SV): EV - PV (difference between work completed and work planned)
- Schedule Performance Index (SPI): EV / PV (ratio measuring schedule efficiency)
- SPI Interpretation: Greater than 1.0 = Ahead of schedule; Exactly 1.0 = On schedule; Less than 1.0 = Behind schedule
- Critical Distinction: EV measures work completed in budget terms, NOT in actual costs
Typical PMI Exam Example
A project has a PV of $50,000 and an EV of $40,000 at the data date. The SPI is calculated as EV/PV = $40,000/$50,000 = 0.80. This means the project has completed only 80% of the work planned to be done, indicating the project is behind schedule.
PMI Exam Traps
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Trap: Confusing EV with actual costs spent
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Reality: EV is the budgeted value of work performed, not the money actually spent (AC)
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Trap: Interpreting SV as a monetary measure of schedule delay
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Reality: SV is expressed in monetary units but measures schedule performance relative to planned work
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Trap: Assuming SPI > 1.0 always means the project will finish early
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Reality: SPI > 1.0 means ahead of schedule at the data date; future performance may change
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Trap: Confusing PV with the total project budget (BAC)
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Reality: PV is the budget for work scheduled to a specific point in time, not the entire project budget
Important PMI Connections
| Related Concept | Relationship Type | Exam Attention Point |
|---|---|---|
| Actual Cost (AC) | Complementary metric | AC is actual cost incurred; EV is budgeted value of work done |
| Budget at Completion (BAC) | Input to EAC calculation | BAC is total planned budget; PV is portion scheduled to date |
| Estimate at Completion (EAC) | Derived from EVM data | EAC uses EV and AC to forecast final costs |
| Cost Performance Index (CPI) | Parallel efficiency metric | CPI = EV/AC; SPI = EV/PV (different efficiency measures) |
Quick Review Questions
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At the data date, PV = $100,000 and EV = $120,000. What is the SV and what does it indicate?
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A project has an SPI of 0.85. What does this value tell you about the project's schedule performance?
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If EV = $75,000 and PV = $75,000 at the data date, what is the SPI and what does it mean?
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A project manager reports EV = $200,000 and AC = $180,000. Can you determine schedule performance from these values alone? Why or why not?
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What is the difference between PV and BAC in terms of what they measure?
PMBOK v8 Reference
Section 5.2 - Data Analysis Techniques (Earned Value Analysis) Table 5-1 - Earned Value Calculations Summary