Earned Value Management (EVM)

Created by Paul Rainbow, Modified on Sat, 13 Sep at 5:39 AM by Paul Rainbow

We will need to allow for these fields to be set at a Job, Sub Job, Estimate or Cost Item level depending on the requirements of the customer to the level of detail they want to get down to. But probably set this requirement of the level of detail on a job basis to indicate the level of detail required for EVM.

The main fields we would need to add are:
1. Planned % Complete Values as at a particular date

2. Actual % Completed as at a Date (Defaulting to Today's date)

The we can create these other indicates based on a report which can calculate the Key Performance Metrics like Cost Variance (CV), Schedule Variance (SV), Cost Performance Index (CPI), Schedule Performance Index (SPI)

Then add some Forecasting calculations for Estimate at Completion, Estimate to Complete, Variance at Completion and To-Complete Performance Index.

This is what I am basing my requirements on, let me know if this terms and calculations are what you are after.

Earned Value Management (EVM) is a project management technique that integrates scope, schedule, and cost to measure project performance and progress. It helps identify variances from the project plan and forecast future performance.

Key EVM Concepts:

Planned Value (PV) / Budgeted Cost of Work Scheduled (BCWS)

The estimated value of work planned to be completed by a specific date.

Formula: PV=Budget at Completion (BAC)×Planned % CompletePV=Budget at Completion (BAC)×Planned % Complete

Earned Value (EV) / Budgeted Cost of Work Performed (BCWP)

The value of work actually completed at a given point in time.

Formula: EV=BAC×Actual % CompleteEV=BAC×Actual % Complete

Actual Cost (AC) / Actual Cost of Work Performed (ACWP)

The actual cost incurred for the work completed.

Key Performance Metrics:

Cost Variance (CV)

Measures cost performance.

Formula: CV=EV−ACCV=EV−AC

Interpretation:

CV > 0 (Positive): Under budget

CV < 0 (Negative): Over budget

Schedule Variance (SV)

Measures schedule performance.

Formula: SV=EV−PVSV=EV−PV

Interpretation:

SV > 0 (Positive): Ahead of schedule

SV < 0 (Negative): Behind schedule

Cost Performance Index (CPI)

Efficiency of cost utilization.

Formula: CPI=EVACCPI=ACEV

Interpretation:

CPI > 1: Cost-efficient

CPI < 1: Cost overrun

Schedule Performance Index (SPI)

Efficiency of time utilization.

Formula: SPI=EVPVSPI=PVEV

Interpretation:

SPI > 1: Ahead of schedule

SPI < 1: Behind schedule

Forecasting with EVM:

Estimate at Completion (EAC)

Predicted total project cost based on current performance.

Common Formulas:

EAC=BACCPIEAC=CPIBAC (if current trends continue)

EAC=AC+(BAC−EV)EAC=AC+(BAC−EV) (if future work follows plan)

Estimate to Complete (ETC)

Expected cost to finish remaining work.

Formula: ETC=EAC−ACETC=EAC−AC

Variance at Completion (VAC)

Expected budget overrun or underrun.

Formula: VAC=BAC−EACVAC=BAC−EAC

To-Complete Performance Index (TCPI)

Required performance to meet financial goals.

Formula:

TCPI=BAC−EVBAC−ACTCPI=BAC−ACBAC−EV (to stay within BAC)

TCPI=BAC−EVEAC−ACTCPI=EAC−ACBAC−EV (to meet revised EAC)

Example Calculation:

Budget at Completion (BAC): $100,000

Planned % Complete (after 3 months): 30% → PV = $30,000

Actual % Complete: 25% → EV = $25,000

Actual Cost (AC): $35,000

Variances & Indices:

CV = EV - AC = $25K - $35K = -$10K (Over Budget)

SV = EV - PV = $25K - $30K = -$5K (Behind Schedule)

CPI = EV/AC = 25/35 ≈ 0.71 (Cost Overrun)

SPI = EV/PV ≈ 0.83 (Delayed)

Forecast:

EAC = BAC/CPI = $100K/0.71 ≈ $140,845

VAC = BAC - EAC ≈ -$40,845 (Expected Overrun)

Benefits of EVM:

✔ Tracks project health objectively.
✔ Early warning of cost/schedule issues.
✔ Supports data-driven decision-making.

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Internal Reference:

https://odooappsbyinteracct.freshdesk.com/a/tickets/700285