05 | Introduction to Earned Value Management (EVM) | Construction Project Management

Summary

Hany Ismail introduces Earned Value Management (EVM) as a way to assess project progress and performance by bringing together scope, schedule, and cost. EVM helps project teams determine whether work is progressing as planned, whether spending is on budget, and whether corrective action may be needed.

Core EVM Terms

• Budget cost / total project budget: The estimated cost of the project, made up of costs assigned to its tasks. Costs may include direct expenses, such as labor and materials, and indirect expenses, such as rent and utilities.
• Earned Value (EV): The budgeted value of the work actually completed by a given date. It counts completed work, not work that was merely scheduled.
• Planned Value (PV): The budgeted value of the work scheduled to be completed by a given date.
• Actual Cost (AC): The amount actually spent on the completed work. It can differ from the work’s budgeted value and should be tracked through the project’s cost-control process.
• Planned percentage: PV divided by the project’s total budget.
• Completed/earned percentage: EV divided by the project’s total budget.

Performance Measures and Formulas

Measure Formula What it indicates Schedule Variance (SV) EV − PV Positive: ahead of schedule. Negative: behind schedule. Cost Variance (CV) EV − AC Positive: under budget. Negative: over budget. Schedule Performance Index (SPI) EV ÷ PV Greater than 1: ahead of schedule. Less than 1: behind schedule. Cost Performance Index (CPI) EV ÷ AC Greater than 1: under budget. Less than 1: over budget.

The instructor emphasizes that SPI concerns schedule performance, while CPI concerns cost performance. A project can perform well on one measure but poorly on the other.

Worked Illustrations

In the main example, the project budget is $100. By the status date, $40 of work has been earned, while $80 of work was planned.

• EV = $40; PV = $80
• SPI = 40 ÷ 80 = 0.5, indicating that the project is behind schedule.
• SV = 40 − 80 = −$40, also indicating a schedule delay.

Using an illustrative actual cost of $60:

• CPI = 40 ÷ 60 ≈ 0.667, indicating that the project is over budget.
• CV = 40 − 60 = −$20, indicating an unfavorable cost variance.

A separate illustration shows how actual spending can differ from task budgets: tasks budgeted at $10, $10, and $20 have actual costs of $15, $9.50, and $19, totaling $43.50.

Practical Takeaways

• Compare completed work with the baseline plan and the actual amount spent; no single figure gives the full picture.
• Use EVM results to identify deviations early and support informed decisions and corrective action.
• The instructor encourages engineers—not only project managers—to understand EVM terms so they can participate more effectively in meetings, emails, and discussions with clients, consultants, and colleagues.
• The lesson includes a matching exercise to review the terms and formulas. The instructor also notes that later course material will demonstrate earned and planned value in Primavera.

Speakers and Sources Featured

• Hany Ismail — presenter, identified as being from the Planning Engineer website.
• No other speakers or sources are featured in the subtitles.