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Earned Value Formulas Explained Simply: CPI, SPI, EAC, ETC, VAC
Earned value compares planned work, completed work and actual cost to show schedule and cost performance.
In simple words
Earned Value answers one simple question: are we getting the work we planned, for the money we planned? It compares three numbers: Planned Value (the work we planned to finish by today), Earned Value (the work we really finished) and Actual Cost (what it really cost). An index below 1 is bad news: CPI below 1 means over budget, SPI below 1 means behind schedule.
What the PMP exam wants
PV (planned value) = budgeted cost of work planned to date. EV (earned value) = budgeted cost of work actually done. AC (actual cost) = what the done work really cost. SV = EV − PV; CV = EV − AC. SPI = EV ÷ PV; CPI = EV ÷ AC. Below 1 is bad: SPI < 1 = behind schedule, CPI < 1 = over budget. Above 1 is good.
Forecasts: EAC (estimate at completion) = BAC ÷ CPI if current performance continues. ETC (estimate to complete) = EAC − AC. VAC = BAC − EAC. For the exam, know what the numbers mean; deep calculation is rare.
Real example
PV = $100k, EV = $80k, AC = $90k. SPI = 80 ÷ 100 = 0.80 (behind). CPI = 80 ÷ 90 ≈ 0.89 (over budget). With BAC = $500k, EAC = 500 ÷ 0.89 ≈ $562k.
The common trap
SPI is time, CPI is money. A project can be ahead of schedule (SPI > 1) and over budget (CPI < 1) at the same time.
Remember: EV comes first in every formula. Less than 1 = bad.
🗝 Words to notice in the question
“CPI”, “SPI”, “EV, PV, AC” → below 1 is bad
Try 2 practice questions
Choose an answer, or open “Show the answer.”
Question 1 A project has CPI = 0.85 and SPI = 1.10. What does this mean?
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Answer: C. CPI < 1 = spending more than planned for the work done. SPI > 1 = more work done than planned.
Question 2 PV = 200, EV = 160, AC = 180. What is the SPI?
Show the answer
Answer: A. SPI = EV ÷ PV = 160 ÷ 200 = 0.80, so behind schedule. (CPI = 160 ÷ 180 ≈ 0.89, over budget.)
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