Earned Value Is the Bridge Between Schedule and Budget
Most project tracking methods look at either schedule or budget in isolation. Earned Value Management (EVM) combines both, giving project managers a single integrated view of whether a project is ahead of or behind plan - in terms of both time and money. For architecture firms managing complex multi-phase projects, EVM provides early warning of problems before they become crises. The ARE tests this concept on both PjM and PcM divisions.
The Three Core EVM Metrics
Planned Value (PV) - also called BCWS
Planned Value is the budgeted cost of the work that was scheduled to be done by a particular date. It represents what the project plan says should have been spent. If a project has a $100,000 fee and should be 40% complete by week 8, the PV at week 8 is $40,000. PV is derived from the project schedule and budget combined.
Earned Value (EV) - also called BCWP
Earned Value is the budgeted cost of the work that was actually completed by the measurement date. It represents the value of what has been accomplished, measured in budget dollars - not actual spend. If that same project is only 30% complete at week 8, EV = $30,000 regardless of what was actually spent.
Actual Cost (AC) - also called ACWP
Actual Cost is the total amount actually spent on the project to date. If the team has spent $38,000 to reach 30% completion, AC = $38,000.
EVM Performance Metrics and Indices
| Metric | Formula | Meaning |
|---|---|---|
| Schedule Variance (SV) | EV – PV | Negative = behind schedule |
| Cost Variance (CV) | EV – AC | Negative = over budget |
| Schedule Performance Index (SPI) | EV ÷ PV | Less than 1.0 = behind schedule |
| Cost Performance Index (CPI) | EV ÷ AC | Less than 1.0 = over budget |
Worked Example
A project has a total budget of $200,000. At week 10, the plan calls for 50% completion (PV = $100,000). Actual completion is 45% (EV = $90,000). Actual costs to date are $105,000 (AC = $105,000).
- SV = EV – PV = $90,000 – $100,000 = –$10,000 (behind schedule)
- CV = EV – AC = $90,000 – $105,000 = –$15,000 (over budget)
- SPI = $90,000 ÷ $100,000 = 0.90 (performing at 90% of planned schedule rate)
- CPI = $90,000 ÷ $105,000 = 0.857 (spending $1.00 for every $0.857 of value earned)
This project is both behind schedule and over budget - an early warning that the project manager needs to take corrective action.
EVM on Architecture Projects
Architecture firms often adapt EVM to track hours and fees rather than construction cost. The "budget" is the project fee, the "planned value" is the fee earned through the expected phase completion by a given date, and "actual cost" is the direct labor plus expenses incurred. Even informal EVM tracking - comparing percent complete against percent fee spent - gives project managers meaningful data for conversations with clients about scope changes.
Key Exam Points
- EV = budgeted cost of work performed; AC = actual cost of work performed.
- Negative SV = behind schedule; negative CV = over budget.
- CPI less than 1.0 means you are spending more than the work is worth.
- EVM requires a performance measurement baseline (scope + schedule + budget combined).
Study PcM on AREprep
AREprep’s PcM flashcards cover every concept on this exam with spaced repetition, and the practice exams mirror the real question formats so the actual test feels familiar.