Earned Value Measurement and Analysis
Core concepts
Earned value must be objective and tied to defined earning rules. Common techniques include the 0/100 method (credit at completion), 50/50 (half at start, half at completion), percent complete, and milestone or weighted-milestone methods. Fixed-formula and apportioned relationships (e.g., discrete work apportioned to a level-of-effort task) also apply. Level of effort (LOE) tasks earn value proportional to time elapsed and should be minimized because they mask performance. Analysis moves beyond CV/SV to variance-at-completion (VAC = BAC − EAC), to-complete performance index (TCPI), and trend analysis.
Traps to watch
The classic trap is choosing the wrong earning rule for the work type: long-duration tasks should use milestones or percent complete, not 50/50. Questions may test that LOE always shows SPI = 1.0 and CPI near 1.0, hiding real performance. Another trap: TCPI = (BAC − EV) ÷ (BAC − AC) when working to the original budget, but the denominator becomes (EAC − AC) when working to a revised EAC. Candidates must also recognize that percent complete should be based on EV ÷ BAC for the whole project, not on cost spent.
Rule of thumb
TCPI answers 'what efficiency must the remaining work achieve to hit the target?' A TCPI above 1.0 means the team must perform better than plan to meet the budget.
Worked example
BAC = $200,000, EV = $80,000, AC = $100,000. To finish within BAC: TCPI = (200,000 − 80,000) ÷ (200,000 − 100,000) = 120,000 ÷ 100,000 = 1.20. The remaining work must earn $1.20 of value per $1.00 spent.