The Problem EVA Solves
You're 60% through a project's timeline. You've spent 70% of the budget. Are you in trouble?
Most project managers can't answer that question confidently. They know what they've spent. They know what date it is. But they don't know if the work completed justifies either number.
That's the gap Earned Value Analysis fills. EVA connects three things that are usually tracked separately: scope (work done), schedule (time elapsed), and cost (money spent). When you combine them, you get early warning signals that traditional tracking misses.
The Three Baseline Numbers
EVA starts with three values:
Planned Value (PV) is how much work should be done by now, measured in cost. If your $100K project is 50% through its timeline, PV = $50K (assuming linear distribution).
Earned Value (EV) is how much work is actually done, measured in cost. If you've completed 40% of the scope, EV = $40K.
Actual Cost (AC) is how much you've actually spent to get that work done. Maybe you spent $55K to complete that 40%.
These three numbers power everything else.
The Metrics That Matter
Cost Performance Index (CPI)
CPI = EV / AC
CPI tells you how efficiently you're spending money.
- CPI = 1.0 means on budget. Every dollar spent produces a dollar of value.
- CPI > 1.0 means under budget. You're getting more value per dollar than planned.
- CPI < 1.0 means over budget. You're spending more per unit of work than planned.
In our example: CPI = $40K / $55K = 0.73. For every dollar spent, you're only getting 73 cents of value. That's a problem.
Schedule Performance Index (SPI)
SPI = EV / PV
SPI tells you how efficiently you're using time.
- SPI = 1.0 means on schedule.
- SPI > 1.0 means ahead of schedule.
- SPI < 1.0 means behind schedule.
In our example: SPI = $40K / $50K = 0.80. You've only completed 80% of the work you planned to have done by now.
Cost Variance (CV) and Schedule Variance (SV)
- CV = EV - AC = $40K - $55K = -$15K (over budget by $15K)
- SV = EV - PV = $40K - $50K = -$10K (behind schedule by $10K equivalent)
Negative numbers are bad. Zero is on track. Positive is ahead.
Forecasting: Where You'll Actually End Up
The real power of EVA is prediction.
Estimate at Completion (EAC)
EAC = BAC / CPI
BAC (Budget at Completion) is your total project budget. EAC tells you what the project will actually cost if current trends continue.
If BAC = $100K and CPI = 0.73: EAC = $100K / 0.73 = $137K. You're heading for a 37% cost overrun.
Estimate to Complete (ETC)
ETC = EAC - AC
How much more money you need to finish. ETC = $137K - $55K = $82K remaining.
Variance at Completion (VAC)
VAC = BAC - EAC
The total expected overrun or underrun. VAC = $100K - $137K = -$37K. You'll be $37K over budget.
To-Complete Performance Index (TCPI)
TCPI = (BAC - EV) / (BAC - AC)
The efficiency you'd need to achieve from this point forward to finish on budget.
TCPI = ($100K - $40K) / ($100K - $55K) = $60K / $45K = 1.33. You'd need to perform at 133% efficiency for the rest of the project, which is possible but unlikely without major changes.
When EVA Gives Bad Signals
EVA assumes that progress is measurable and that the baseline is realistic. It breaks down when:
- Progress is estimated loosely ("about 60% done" without objective criteria)
- The original budget was unrealistic to begin with
- Scope has changed but the baseline hasn't been reset
- Work is front-loaded or back-loaded and PV assumes linear distribution
The fix is straightforward: use objective completion criteria (deliverable-level tracking, not gut feel), update baselines when scope changes formally, and weight PV distribution to match the actual work plan.
How Milesto Handles EVA
Milesto computes all EVA metrics automatically from your project data. Progress rolls up from deliverables to tasks to milestones - computed by database triggers, not manual entry. When you mark a deliverable complete or log actual costs, CPI, SPI, EAC, ETC, VAC, and TCPI update instantly on the reports page.
Because progress is tracked at the deliverable level (the atomic unit of work), EVA calculations are based on real completion data, not estimates. The S-curve chart shows planned vs actual value over time, making trend shifts visible at a glance.
Key Takeaways
- CPI < 1.0 means you're over budget because every dollar buys less than a dollar of work
- SPI < 1.0 means you're behind schedule, with less work done than planned for this point in time
- EAC is your forecast: if trends hold, this is what you'll actually spend
- TCPI tells you how hard recovery will be, and anything above 1.2 is a red flag
- Track progress at the deliverable level because gut-feel percentages produce garbage EVA numbers
Want EVA metrics that compute themselves? Start free on Milesto.io, with automatic earned value from real project data.