Why EVM Is Always on the PMP Exam
Earned value management (EVM) appears on every PMP exam sitting. It is one of the few genuinely quantitative areas of the exam, which makes it predictable — the questions follow consistent patterns, use the same formulas, and test the same conceptual understanding. Candidates who master EVM in full can expect to answer those questions with confidence.
The challenge is not that EVM is mathematically complex. The formulas are straightforward arithmetic. The challenge is that candidates often memorise the formulas without understanding what each metric means in project context, which leaves them vulnerable to the situational questions that PMI layers on top of the numbers.
This guide covers all the core EVM formulas, what each one means, and how PMI tests them.
The Three Baseline Values
Every EVM calculation starts from three values. You need to know what each represents:
PV — Planned Value Also called the Budgeted Cost of Work Scheduled (BCWS). This is the authorised budget for the work that was scheduled to be completed by a specific point in time. It represents your plan.
EV — Earned Value Also called the Budgeted Cost of Work Performed (BCWP). This is the budget amount for the work actually completed as of the measurement date. It represents what you have actually accomplished, expressed in budget terms.
AC — Actual Cost Also called the Actual Cost of Work Performed (ACWP). This is what you have actually spent on the work completed as of the measurement date. It represents your real expenditure.
BAC — Budget at Completion The total authorised budget for the project.
Think of it this way: PV is what you planned to spend, EV is what you earned (what the completed work was budgeted to cost), and AC is what you actually spent.
Variance Formulas
Variances tell you whether you are ahead or behind. In EVM, positive variances are good (you have more than expected). This is the opposite of what many people intuitively expect.
Cost Variance (CV) CV = EV − AC
- Positive CV: You spent less than the completed work was budgeted to cost. You are under budget.
- Negative CV: You spent more than the completed work was budgeted to cost. You are over budget.
- CV = 0: You spent exactly what the completed work was budgeted to cost.
Schedule Variance (SV) SV = EV − PV
- Positive SV: You have accomplished more than planned by this point in time. You are ahead of schedule.
- Negative SV: You have accomplished less than planned by this point in time. You are behind schedule.
- SV = 0: You are exactly on schedule.
Note: Schedule variance is measured in monetary units (budget dollars), not in time. An SV of −$50,000 does not mean you are 50,000 hours behind — it means you have completed $50,000 less work than planned.
Performance Index Formulas
Performance indices express variances as ratios rather than absolute amounts. They are more useful for comparing performance across projects of different sizes and for forecasting.
Cost Performance Index (CPI) CPI = EV ÷ AC
- CPI > 1: You are getting more value per dollar spent than planned. You are under budget.
- CPI < 1: You are getting less value per dollar spent than planned. You are over budget.
- CPI = 1: Perfectly on budget.
A CPI of 0.85 means that for every $1.00 spent, you are completing $0.85 worth of planned work. You are spending 15% more than planned per unit of work.
Schedule Performance Index (SPI) SPI = EV ÷ PV
- SPI > 1: You are completing more work than planned per time period. You are ahead of schedule.
- SPI < 1: You are completing less work than planned per time period. You are behind schedule.
- SPI = 1: Perfectly on schedule.
Forecasting Formulas
Forecasting formulas use current performance data to predict future outcomes. These appear frequently in PMP questions.
Estimate at Completion (EAC) EAC is the expected total cost of the project based on current performance. There are three common versions, each based on a different assumption:
EAC = BAC ÷ CPI (most common version) Assumes current cost efficiency will continue for the remainder of the project. If you are currently spending at a CPI of 0.80, the model assumes that will continue.
EAC = AC + (BAC − EV) Assumes the cost overrun so far is a one-off event (an atypical variance) and future work will be completed at the original budget rate.
EAC = AC + [(BAC − EV) ÷ CPI] Assumes both past overruns were typical (they will continue) and adjusts remaining work for current CPI. This is often the most conservative estimate.
PMI exam questions will specify which assumption applies, or they will describe the project situation in a way that makes the appropriate formula clear. Memorise all three variants.
Estimate to Complete (ETC) ETC = EAC − AC
This is how much more you expect to spend to complete the project from today. It is simply the difference between your total expected cost and what you have spent so far.
Variance at Completion (VAC) VAC = BAC − EAC
This is the expected difference between the original budget and the expected total cost. A positive VAC means you expect to come in under budget. A negative VAC means you expect to exceed budget.
To-Complete Performance Index (TCPI) TCPI = (BAC − EV) ÷ (BAC − AC)
TCPI tells you the cost efficiency you need to achieve on the remaining work to complete the project within the original budget. A TCPI of 1.10 means you need to be 10% more efficient than planned for the remainder of the project. The higher the TCPI, the less realistic it is to complete within budget.
A Worked Example
A software project has the following values at the 6-month mark:
- BAC = $500,000
- PV = $200,000 (planned to have completed $200,000 of work by month 6)
- EV = $150,000 (actually completed $150,000 of work by month 6)
- AC = $175,000 (actually spent $175,000 by month 6)
Calculate the key metrics:
- CV = EV − AC = $150,000 − $175,000 = −$25,000 (over budget)
- SV = EV − PV = $150,000 − $200,000 = −$50,000 (behind schedule)
- CPI = EV ÷ AC = $150,000 ÷ $175,000 = 0.857 (spending $1.17 for every $1.00 of work)
- SPI = EV ÷ PV = $150,000 ÷ $200,000 = 0.75 (completing 75% of planned work per period)
- EAC = BAC ÷ CPI = $500,000 ÷ 0.857 = $583,431 (expected total cost if trend continues)
- VAC = BAC − EAC = $500,000 − $583,431 = −$83,431 (expected over-budget by ~$83k)
- TCPI = (BAC − EV) ÷ (BAC − AC) = ($500,000 − $150,000) ÷ ($500,000 − $175,000) = $350,000 ÷ $325,000 = 1.077 (need 7.7% better efficiency to finish on original budget)
How PMI Tests EVM
Straightforward calculation questions do appear on the PMP exam. You will be given values and asked to compute a metric. These are generally the easiest EVM questions.
More common are situational EVM questions. These present a project status description (sometimes without explicitly labelling the numbers as EV, PV, or AC) and ask you what the metrics mean for the project's health or what action the project manager should take.
For these questions, the critical skill is interpreting what a metric tells you about the project, not just calculating it. Practise translating numbers into decisions:
- A CPI of 0.75 means the project is significantly over budget and the cost trend is likely to continue. The project manager should investigate the root cause, not just flag the variance.
- A negative SV combined with a CPI > 1 means the project is behind schedule but under budget — typically indicating that less work has been done, not that work has been done expensively.
- A TCPI significantly above 1.0 (say, 1.20) suggests that completing the project within the original budget is unrealistic and that the EAC should be revised.
Practise EVM and cost management questions on Got PMP to build the pattern recognition you need for both the calculation and situational variants of these questions.
The Formula Sheet You Cannot Bring to the Exam
PMI does not provide a formula sheet during the PMP exam. You are expected to have memorised all EVM formulas. The good news is that there are fewer than 15 distinct formulas in the full EVM set, and most of them follow from three or four core relationships (EV − AC, EV − PV, EV ÷ AC, EV ÷ PV).
Build your formula recall through use, not rote memorisation. Work through 30–50 EVM practice questions, and you will find that the formulas become automatic because you understand what each one is measuring.