Earned value: measure progress in money, not hopes
Earned value compares three numbers: what you planned to have done, what you have actually done, and what it cost. It tells you early whether you are late, over budget, or both.
These are the eight planning threads the Krong course is built around. The highlighted ones are covered here. What are the planning threads?
The three inputs
- Planned value (PV): the budget for the work that should be done by now.
- Earned value (EV): the budget for the work that is actually done.
- Actual cost (AC): what you have spent so far.
The formulas
| Measure | Formula | It tells you |
|---|---|---|
| Schedule variance | EV minus PV | Ahead or behind, in money |
| Cost variance | EV minus AC | Under or over spend |
| SPI | EV divided by PV | Schedule efficiency |
| CPI | EV divided by AC | Cost efficiency |
| EAC | Budget divided by CPI | Forecast total cost |
Caldera Freight at Week 28
| Measure | USD |
|---|---|
| Budget at completion | 2,400,000 |
| Planned value (PV) | 1,169,333 |
| Earned value (EV) | 1,034,033 |
| Actual cost (AC) | 1,102,333 |
| Schedule variance | -135,300 |
| Cost variance | -68,300 |
| Forecast at completion (EAC) | 2,558,525 |
SPI is 0.88 and CPI is 0.94. The project is about 12 per cent behind schedule and 6 per cent over cost. If the trend holds, it will finish around USD 158,500 over budget. The contingency of USD 240,000 covers that, but it leaves little room for anything else.
One work package explains much of the gap. Model development and testing (1.3.2) should be complete: PV is USD 216,700. It has earned USD 184,200 and cost USD 210,000. That gives an SPI of 0.85 and a CPI of 0.88.
Why it is an integrated planning tool
Earned value only works when three things share one structure. The work breakdown defines what is being measured. The schedule says when each piece should be done. The budget says what each piece should cost. Break any of those links and the ratios mean nothing. It also feeds risk: a falling SPI on a critical task is an early warning, and it should change a risk score.
How Sen helps
You enter planned, earned and actual values per work package. Sen sums them, calculates SPI, CPI and the forecast, and shows them beside the contingency. The same numbers flow into the summary page, the board deck and the workbook, so every report agrees.
Questions people ask
What do SPI and CPI mean?
SPI is earned value divided by planned value. CPI is earned value divided by actual cost. Below 1 means behind schedule or over cost.
How do you forecast the final cost?
A common forecast is the budget divided by CPI, called the estimate at completion. It assumes you keep spending at the rate so far.
Do I need earned value on small projects?
It is most useful on projects with a budget and a baseline schedule. On a small project, even a simple percent-complete check against spend gives an early signal.
See it in a real plan
Open Sen and explore the Caldera Freight example. Every figure on this page comes from it. Copy it, change a task, and watch the plan move together.
Open Sen, free About the course