Earned Value Analysis – Simple Way to Understand Your Project Health

Managing project is not just about doing task. It is also about knowing where we stand. Are we behind? Are we using too much money? Sometimes, you feel like things go okay, but data says something different.

That’s why many project managers use a tool called earned value analysis. It gives you a full view of cost and time — in numbers, not feeling. If you want to manage project like pro, this method is good to learn.

What is Earned Value Analysis?

Earned value analysis is method to measure project progress by looking at time, cost, and work completed. It helps to compare what was planned, what is done, and how much it cost till now.

Instead of just looking at percent complete, this method gives real info. It shows if we are going too slow, or spending too fast, or both. It use some basic numbers — and no need to be math expert. Just understand the meaning.

Important Numbers in Earned Value Analysis

To start with earned value, we first need to know these values:

📌 Planned Value (PV)

This is the amount of work we planned to do by now, in money. It is also called Budgeted Cost of Work Scheduled.

Say you plan to finish 60% of work this month, and your budget is $80,000. Then PV is $48,000.

📌 Earned Value (EV)

This shows how much work we have actually done — not how much we spent, but how much value we earned based on plan.

If only 50% is finished from the $80,000 budget, then EV = $40,000.

📌 Actual Cost (AC)

This is the real money we already spent on the project up to now.

If we spent $52,000 already, then AC = $52,000.

What We Can Learn from These Numbers

With PV, EV, and AC, we can now start doing the earned value analysis.

🧮 Cost Variance (CV)

CV = EV – AC
This tells if we’re spending too much or saving.

• Positive number = under budget

• Negative = over budget

Example:
CV = $40,000 – $52,000 = –$12,000
It means we spent $12,000 more than we earned.

🧮 Schedule Variance (SV)

SV = EV – PV
This checks if we are doing enough work as per plan.

• Positive = ahead of schedule

• Negative = behind

Example:
SV = $40,000 – $48,000 = –$8,000
So, we are $8,000 behind on work.

🧮 Cost Performance Index (CPI)

CPI = EV / AC
This shows how well we use our budget.

• If CPI = 1 → on budget

• If CPI < 1 → over budget

• If CPI > 1 → saving money

Example:
CPI = $40,000 / $52,000 ≈ 0.77
That means project is costing more than it should.
CPI of 0.90 means you’re spending 10% more than planned.

🧮 Schedule Performance Index (SPI)

SPI = EV / PV
This shows speed of project.

• SPI < 1 → project is slow

• SPI > 1 → project is fast

Example:
SPI = $40,000 / $48,000 ≈ 0.83
So, team is doing work slower than expected.

Forecasting the Future with Earned Value Analysis

Earned value analysis is not only about today. It also helps us see tomorrow. These next terms help with forecasting:

🔮 Budget at Completion (BAC)

This is the total budget for the full project. Example: $80,000.

🔮 Estimate to Complete (ETC)

This is how much more we need to spend from today to finish the project.

ETC = (BAC – EV) / CPI

Example:
BAC = $80,000
EV = $40,000
CPI = 0.77
ETC = ($80,000 – $40,000) / 0.77 = $51,948

🔮 Estimate at Completion (EAC)

EAC = AC + ETC
This is what we think the total cost will be in the end.

EAC = $52,000 + $51,948 = $103,948
That’s way over the original budget.

🔮 Variance at Completion (VAC)

VAC = BAC – EAC
It tells how much over or under budget we will be.

VAC = $80,000 – $103,948 = –$23,948
So, the project will probably cost $23,948 more than planned.

🔮 To Complete Performance Index (TCPI)

TCPI = (BAC – EV) / (BAC – AC)
This shows how efficient we must be from now to still hit the budget.

• If TCPI > 1 → need to improve

• If TCPI < 1 → we are okay

Why Earned Value Analysis is So Useful

Many project managers like to use earned value analysis because it gives real, hard facts. You can show these numbers to boss or client and explain situation clearly.

It helps in:

• Catching problem early

• Fixing budget issues

• Planning team work better

• Making smarter decisions

Also, this method works in construction, IT, marketing — almost any type of project.

You can use tools like Microsoft Project, Primavera, or even Excel to calculate these values. Some modern AI project management tools also include earned value functions inside them.

Meaning Behind the Numbers

Here's quick idea how to "read" the earned value numbers:

Conclusion

Earned value analysis may look confusing first time, but it becomes easy once you try. It helps you see full picture: time, cost, and performance. You don’t just say “project is okay” — you know if it is okay.

This method gives power to project manager. No guessing, only facts. If you want to control your project, not just follow it, then start using earned value analysis today.

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A practical guide to earned value analysis for project managers. Learn key terms like EV, CPI, SPI, EAC, and understand how to track project cost and time performance using this smart method.