What Is Earned Value Management (EVM)?
Earned value measures cost and schedule performance together by comparing what was planned, what was earned and what was spent — through the CPI and SPI indices.
The three base figures
PV, planned value: the value of the work that should have been done by today. EV, earned value: the value of the work actually completed, at budget rates. AC, actual cost: what has actually been spent. Every index is derived from these three.
The indices
CPI = EV/AC is cost efficiency — below 1 means you are spending more than you are earning. SPI = EV/PV is schedule efficiency — below 1 means you are behind. For forecasting, EAC = BAC/CPI gives a simple estimate of the cost at completion if current performance continues.
Applying it in construction
Tie the actual progress percentages of your items to their contract values and you get EV almost straight out of your progress claims; AC comes from recording your spend against those same items — which is exactly what Etimadco gathers automatically from the execution and finance modules.
Worked example
After four months: PV = 2.0m, EV = 1.7m, AC = 1.9m → CPI = 0.89 and SPI = 0.85, so the project is behind and spending above its progress. EAC = 6m/0.89 ≈ 6.74m — an early warning worth a quarter of a million before the end of the job swallows it.
FAQ
Is EVM too complex for small contracting projects?
Its core is simple once the data exists: progress percentages, item values and recorded spend. Platforms hide the arithmetic and show the indices directly.
What does a CPI of 1.1 with an SPI of 0.8 mean together?
Excellent spending efficiency but slow progress — usually fewer resources than the work needs. It is an expensive economy once delay damages start to bite.
Put this to work with Earned Value Management (EVM)
Measure project performance with earned value: CPI, SPI and completion forecasts
Explore Earned Value Management (EVM)