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Intermediate · 2 min read

Earned value, in plain terms

PV, EV, AC and the ratios built on them — progress measured in value rather than dates.

Working definition

Earned value management runs on three quantities. Planned value: what the plan said would be accomplished by now, in dollars. Earned value: what has actually been accomplished, priced at the same budget. Actual cost: what it took to accomplish it. Every EVM metric — SPI, CPI, the variances — is arithmetic on those three, and every EVM failure is a corruption of one of them.

Key takeaways

  • Schedule variance (EV minus PV) and SPI (EV over PV) compare accomplishment to plan.
  • EV is only as honest as the percent-complete underneath it, and percent complete is where construction reporting gets creative: front-loaded budgets that earn value early, subjective assessments that drift optimistic, units claimed ahead of verification.
01

The quantities and the ratios

Schedule variance (EV minus PV) and SPI (EV over PV) compare accomplishment to plan. Cost variance (EV minus AC) and CPI (EV over AC) compare accomplishment to spend. The four together answer two questions — are we behind, and are we efficient — in units a finance audience already speaks. That currency-denominated clarity is why owners and boards like EVM.

02

Where it struggles on construction schedules

EV is only as honest as the percent-complete underneath it, and percent complete is where construction reporting gets creative: front-loaded budgets that earn value early, subjective assessments that drift optimistic, units claimed ahead of verification. And EVM shares SPI’s structural blindness — value-weighted progress says nothing about criticality, so a healthy EV curve can coexist with a deteriorating completion date.

The practical posture: use earned value as the cost-and-volume lens, use the CPM network as the time lens, and insist the two reconcile. When the EV curve says 60% and the schedule’s claimed progress implies something else, one of them is wrong — finding out which is precisely the kind of contradiction a review should surface, not smooth over.

Sources and scope

Follow the reference trail.

This guide is original educational commentary. Kairos reference records identify the source organizations, editions and scope behind this guidance. The original publishers retain their publications and rights.

10S-90: Cost Engineering TerminologyAACE International · checked 2026-08-01Earned Value Management definitionsU.S. Department of Defense · checked 2026-08-01DoD Earned Value Management System Interpretation GuideU.S. Department of Defense · checked 2026-08-01