Category: Contracts & management
Prepared by Eng. Ahmed Fathy, Projects Manager ·
Definition
Earned value compares three figures: planned value (PV) of work scheduled, earned value (EV) of work actually done at planned prices, and actual cost (AC). From them come the schedule performance index SPI = EV ÷ PV and the cost performance index CPI = EV ÷ AC.
Why it matters on a project
It shows early whether a project is late or over cost even when spending looks normal. An index below 1 means delay or overrun.
Measurement and pricing
Needs a cost-loaded programme (such as Primavera P6) and recorded percent complete for each activity.
Worked example
PV 1,000,000 SAR, EV 900,000 and AC 950,000: SPI = 900,000 ÷ 1,000,000 = 0.90 (behind), CPI = 900,000 ÷ 950,000 = 0.95 (over cost).
Common mistake
Measuring progress from money spent instead of work actually done, so a late project looks on track.
Frequently asked questions
Does earned value need special software?
It can be done in Excel, but Primavera P6 makes it easier with a cost-loaded programme.
How does it differ from an S-curve?
The S-curve shows planned and actual; earned value adds actual cost against the value of work done.
Related terms
- Baseline programmeThe programme approved at project start against which progress is measured.
- S-curveA cumulative progress or cost curve over time.
- Progress reportA periodic report of what was done, what slipped and why.
- Cash flowThe timing of money coming in and going out over the project.
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