Understanding Earned Value Analysis (EVA) is crucial for PMP candidates, as it provides insight into a project’s performance in terms of budget and schedule. The above graph visually represents EVA metrics like Planned Value (PV), Earned Value (EV), and Actual Cost (AC), which are essential for calculating Schedule Performance Index (SPI) and Cost Performance Index (CPI). PMP exam questions often require candidates to interpret these values and assess project health, calculate SPI and CPI, and determine schedule and cost variances.

Components of an EVM graph

• BAC (Budget at Completion): The total planned budget for the project.
• AC (Actual Cost or ACWP – Actual Cost of Work Performed): The actual cost incurred up to the tracking date.
• PV (Planned Value or BCWS – Budgeted Cost of Work Scheduled): The value of work planned to be completed by the tracking date.
• EV (Earned Value or BCWP – Budgeted Cost of Work Performed): The value of work actually completed by the tracking date.
• EAC (Estimate at Completion): The current estimated cost for the project at completion, which can be different from BAC if cost overruns are occurring.

Metrics Calculated from the graph

• SV (Schedule Variance): The difference between EV (Earned Value) and PV (Planned Value), indicating if the project is ahead or behind schedule. Positive SV means the project is ahead; negative SV means it’s behind.
• CV (Cost Variance): The difference between EV and AC (Actual Cost), showing if the project is over or under budget. Positive CV indicates the project is under budget, while negative CV indicates it’s over budget.
• SPI (Schedule Performance Index): The ratio of EV to PV, measuring schedule efficiency. SPI values above 1.0 mean the project is progressing faster than planned; values below 1.0 indicate a delay.
• CPI (Cost Performance Index): The ratio of EV to AC, indicating cost efficiency. A CPI above 1.0 means the project is spending less than planned, while a CPI below 1.0 indicates cost overruns.
• Scheduled Delay: The difference between PV and the tracking date, showing how far behind schedule the project might be. It provides a timeline reference to assess any delays in achieving planned milestones.
• Cost Overrun: The difference between EAC (Estimate at Completion) and BAC (Budget at Completion), highlighting any anticipated overspend by the end of the project.
• EAC (Estimate at Completion): A forecasted total project cost based on current performance, calculated as BAC/CPI or other relevant EAC formulas depending on the project situation.
• ETC (Estimate to Complete): The expected cost needed to finish all remaining work, calculated as EAC – AC, providing an estimate of future spending needed to complete the project.
• VAC (Variance at Completion): The difference between BAC and EAC, estimating whether the project will finish under or over budget. A positive VAC indicates expected savings, while a negative VAC suggests overspending.
• TCPI (To-Complete Performance Index): The cost performance required to meet a specified budget, typically calculated as (BAC – EV) / (BAC – AC) for projects within budget, or (BAC – EV) / (EAC – AC) if over budget. Values above 1.0 imply a challenging cost performance to meet targets.

PMP Exam Question: What is the SPI and CPI of the EVM graph?

To calculate the Schedule Performance Index (SPI) and the Cost Performance Index (CPI), we use the following formulas in Earned Value Management (EVM):

• SPI (Schedule Performance Index):

• CPI (Cost Performance Index):

Here’s what each index represents:

• SPI indicates how efficiently the project is meeting its planned schedule. An SPI > 1 means the project is ahead of schedule, SPI < 1 means it’s behind.
• CPI shows the cost efficiency of the project. A CPI > 1 indicates the project is under budget, CPI < 1 means it is over budget.

Steps to Calculate SPI and CPI

From the graph:

1. Locate the values for EV (Earned Value), PV (Planned Value), and AC (Actual Cost) at the tracking date.
2. Plug these values into the formulas.

Calculations:

1. SPI:

2. CPI:

Conclusion

Understanding how to apply these indices practically can be valuable for questions involving forecasts. For example, the Estimate at Completion (EAC) can be calculated using CPI to predict final costs, while SPI can be used to adjust schedules or inform project stakeholders of likely delays. These tools not only reinforce project control but can also help you approach the exam with confidence, ready to analyze and make predictions based on project performance metrics. EVM questions on the exam often test your ability to interpret data quickly, so practice with different scenarios and be comfortable with the formulas!

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