Progress and Performance Measurement: Earned Value and Forecasting
The earned value core
PV is the budgeted value of work scheduled; EV is the budgeted value of work actually performed; AC is what that work actually cost. From these: CV = EV − AC, SV = EV − PV, CPI = EV/AC, SPI = EV/PV. EV is always valued at the budgeted rate, never at the actual rate - the single most common trap in the domain.
Rules of credit and the baseline
Progress must be measured against a frozen performance measurement baseline. Methods include units completed, weighted milestones, fixed formulas (0/100, 50/50), equivalent units for long-duration activities, apportioned effort and level-of-effort. Select the rule of credit at control-account level, document it, and never change measurement methods mid-stream.
Forecasting
EAC depends on the assumption you make: atypical variance → EAC = AC + (BAC − EV); typical variance → AC + (BAC − EV)/CPI; cost-and-schedule driven → AC + (BAC − EV)/(CPI × SPI). TCPI = (BAC − EV)/(BAC − AC) states the efficiency needed on remaining work; values well above 1.0 flag an unachievable plan.
Traps
Reading a currency schedule variance as a time variance; assuming SPI recovers (it naturally drifts toward 1.0 near completion); forgetting management reserve sits outside the baseline while contingency sits inside; comparing cumulative EV against a single period's AC.
Worked example
BAC = 1,000; PV = 400; EV = 350; AC = 400. CV = −50, SV = −50, CPI = 0.875, SPI = 0.875, EAC = 400 + 650/0.875 ≈ 1,143, TCPI = 650/600 ≈ 1.08.