EVM Calculator

What this calculator does

Earned value management is a way of answering two questions about a project that ordinary reporting answers badly: are we over budget, and are we behind schedule. This calculator implements it. You list your tasks with their budgets, what each should have completed by now, what each has actually completed, and what each has actually cost. It returns performance indexes for cost and schedule, and a forecast of the final bill.

The technique came out of government and defence project control and is set out in the project management standards. Its appeal is that it produces objective numbers rather than the optimistic verbal status reports that projects tend to generate, and it produces them early enough to be worth acting on.

Why "we have spent half the budget" tells you nothing

Most project reporting compares two numbers: what was budgeted and what has been spent. Consider what that actually tells you. A project has consumed 60 percent of its budget. Is that good, bad, or unremarkable?

There is no way to know, because the missing information is how much work has been done. If 80 percent of the project is complete, spending 60 percent of the budget is excellent. If 30 percent is complete, the project is in serious trouble. The same spending figure describes both situations, which is why budget-versus-spend reporting lets projects drift for months before anyone notices.

Earned value fixes this by insisting on a third number. Alongside what was planned and what was spent, it measures what has been achieved, and it measures it in money so that all three can be compared directly:

• Planned value. The budgeted cost of the work that should have been finished by now.
• Earned value. The budgeted cost of the work that actually has been finished. Not what it cost, but what it was supposed to cost.
• Actual cost. What has genuinely been spent to achieve that work.

The whole diagnostic logic follows from comparing them in pairs. Set earned value against actual cost and you learn whether the work is costing more than it should, which is a cost problem. Set earned value against planned value and you learn whether as much has been finished as intended, which is a schedule problem. Two comparisons, two distinct answers, from three numbers.

Building the three numbers from your task list

Choose the number of tasks and the calculator asks four things about each one.

1. Scheduled percentage. How much of this task the plan says should be finished by today.
2. Actual percentage. How much is genuinely finished.
3. Budget. The full approved budget for the task.
4. Cost. What has been spent on it so far.

From these it builds the totals. Planned value is each task's budget multiplied by its scheduled percentage, summed across the project. Earned value is each budget multiplied by its actual percentage. Actual cost is simply the costs added up, and the sum of all budgets is the budget at completion, the figure everything is measured against.

The quality of the whole exercise rests on that actual percentage, and it is where earned value most often goes wrong. Percentages reported by the people doing the work drift optimistic, and a task that has been "90 percent done" for three weeks is the oldest joke in project management. If you can, define completion objectively before you start, using milestones passed or units delivered rather than a feeling. Every number below inherits whatever goes in here.

A four-task project, measured

Take a project with a total budget of Rs 2,000,000 across four tasks.

• Foundations, budget Rs 500,000: scheduled 100 percent, actual 100 percent, cost Rs 520,000
• Structure, budget Rs 800,000: scheduled 75 percent, actual 60 percent, cost Rs 560,000
• Fit-out, budget Rs 400,000: scheduled 50 percent, actual 40 percent, cost Rs 190,000
• Landscaping, budget Rs 300,000: not started, cost Rs 0

The three totals come out as follows.

• Planned value: (500,000 × 1.00) + (800,000 × 0.75) + (400,000 × 0.50) = Rs 1,300,000
• Earned value: (500,000 × 1.00) + (800,000 × 0.60) + (400,000 × 0.40) = Rs 1,140,000
• Actual cost: 520,000 + 560,000 + 190,000 = Rs 1,270,000

Stated plainly: the project has consumed 63.5 percent of its money and delivered 57 percent of its work. That single comparison is the thing conventional reporting would have missed entirely, and everything below is a formal way of expressing it.

Reading the two indexes

The two performance indexes turn those totals into ratios that can be read at a glance and compared across projects of any size.

Cost performance index = Earned value ÷ Actual cost, here 1,140,000 ÷ 1,270,000 = 0.90.

The plainest reading of a cost performance index is the most useful one: for every rupee spent, the project is producing 90 paisa of value. Anything below 1 means work is costing more than budgeted. The cost variance of −11.40 percent says the same thing as a percentage.

Schedule performance index = Earned value ÷ Planned value, here 1,140,000 ÷ 1,300,000 = 0.88.

This says the project has completed about 88 percent of the work it should have by now. Below 1 means behind schedule, and the schedule variance of −12.31 percent expresses the same shortfall.

Reading them together is what makes them useful, because the combination points at the cause. Both below 1, as here, usually means the work is genuinely harder or slower than planned. A low schedule index with a healthy cost index often means the project is under-resourced rather than inefficient: what is being done is being done economically, there is just not enough of it happening. A healthy schedule index with a poor cost index suggests the pace is being bought with overtime or expensive resources. One caution on the schedule index: it is measured in money rather than time, so it tells you how much work is outstanding but not how many weeks late that makes you, which depends on which tasks are on the critical path.

The forecast is the point

The indexes describe where the project stands. The genuinely valuable output is what they imply about where it ends up, and this is where earned value earns its reputation.

The reasoning is straightforward. Work worth Rs 860,000 of budget remains, being the Rs 2,000,000 budget at completion less the Rs 1,140,000 already earned. If the project continues performing exactly as it has, each rupee of that remaining budget will cost more than a rupee, in the proportion the cost performance index describes. So divide the remaining work by the index:

• Estimate to complete: 860,000 ÷ 0.8976 = Rs 958,070
• Estimate at completion: 1,270,000 already spent + 958,070 still to come = Rs 2,228,070
• Projected overrun against the Rs 2,000,000 budget: Rs 228,070

That final figure is the one worth carrying into a meeting. Not "we are a bit over at the moment", but "on current performance this finishes about 228,000 above budget", derived from measured work rather than a guess, and available while there is still enough project left to do something about it.

The assumption underneath it deserves stating, because it is a real assumption: the forecast presumes performance carries on as it has. That is often a reasonable bet, since research on completed projects suggests cost performance tends to be fairly stable once a project is meaningfully underway. But it is a projection of the current trend, not a prophecy. If you have identified the cause of the overrun and genuinely fixed it, the forecast will be pessimistic. If nothing has changed except the intention to try harder, it will probably be about right.

Questions people ask

What exactly is earned value?

The budgeted cost of the work completed so far. If a task budgeted at 800,000 is 60 percent done, it has earned 480,000 of value regardless of what it has actually cost. It measures achievement in money.

What does a cost performance index of 0.90 mean?

That every rupee spent is producing 90 paisa of budgeted value, so the work is costing about 11 percent more than planned. Above 1 is under budget, below 1 is over.

Does a low schedule index tell me how late we are?

Not in weeks. It is measured in money, so it tells you how much less work has been finished than planned. Translating that into delay requires knowing which tasks are on the critical path.

How should I decide the actual percentage complete?

As objectively as possible, using milestones reached or units delivered rather than judgement. This is the input most likely to be optimistic, and every figure the calculator produces depends on it.

References

Earned value management compares planned value, earned value and actual cost to assess project performance. The schedule performance index is the ratio of earned value to planned value and the cost performance index the ratio of earned value to actual cost, with values below one indicating an unfavourable condition. Dividing the remaining budgeted work by the cost performance index gives the estimate to complete, which assumes work continues at the same rate, and adding the actual cost to date produces the estimate at completion.

1. Project Management Institute, Earned Value Management Systems (EVMS) Analysis. https://www.pmi.org/learning/library/earned-value-management-systems-analysis-8026
2. Project Management Institute, Earned Value: Controlling and Forecasting Performance. https://www.pmi.org/learning/library/earned-value-controlling-forecasting-performance-7653