Earned Value Management (EVM) is a powerful methodology for measuring project performance objectively. It answers the question: "Are we getting value for the money and time we're spending?"
Core EVM Metrics
Planned Value (PV)
The budgeted cost of work scheduled to be completed by a given date.
Earned Value (EV)
The budgeted cost of work actually completed by a given date.
Actual Cost (AC)
The actual cost incurred for work completed by a given date.
Key Performance Indicators
Cost Performance Index (CPI)
CPI = EV ÷ AC
- CPI > 1.0: Under budget
- CPI = 1.0: On budget
- CPI < 1.0: Over budget
Schedule Performance Index (SPI)
SPI = EV ÷ PV
- SPI > 1.0: Ahead of schedule
- SPI = 1.0: On schedule
- SPI < 1.0: Behind schedule
EVM in Professional Services
For consulting firms, EVM helps:
- Detect problems early: Before they become crises
- Forecast outcomes: Predict final cost and completion date
- Client communication: Objective progress reporting
- Decision making: Data-driven project adjustments
- Performance comparison: Benchmark across projects
Simplified EVM for Consulting
Many firms use a simplified version:
- Track planned hours vs. actual hours by phase
- Compare budget burn rate to delivery progress
- Calculate estimate-at-completion (EAC) projections