Earned Value and Cost Control

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Earned Value Management (EVM) integrates scope, schedule, and cost to measure project performance and forecast outcomes. Once construction starts, the GMP estimate becomes the cost baseline (Budget at Completion), and EVM tells you whether you’re tracking to it.

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The Three Core EVM Values

Value	Acronym	Definition	How to Get It
Planned Value	PV	Budgeted cost for work scheduled by this date	% planned complete × BAC
Earned Value	EV	Budgeted cost for work actually accomplished	Actual % complete × BAC
Actual Cost	AC	What you actually spent to do the work done	Actual invoices, payroll, sub invoices paid

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The Six Key EVM Metrics

Cost Variance (CV)

CV = EV - AC

CV > 0 = under budget | CV < 0 = over budget

Schedule Variance (SV)

SV = EV - PV

SV > 0 = ahead of schedule | SV < 0 = behind schedule

Cost Performance Index (CPI)

CPI = EV / AC

CPI > 1.0 = under budget | CPI < 1.0 = over budget

Critical rule: CPI tends to stabilize after the project is ~20% complete. A CPI of 0.90 at 25% complete typically predicts a CPI near 0.90 at completion — it does not self-correct without intervention.

Schedule Performance Index (SPI)

SPI = EV / PV

SPI > 1.0 = ahead of schedule | SPI < 1.0 = behind schedule

Estimate at Completion (EAC)

The most important forward-looking metric — your current best forecast of total project cost.

EAC = BAC / CPI                         [assumes current CPI continues]
EAC = AC + (BAC - EV) / CPI_future      [if you believe CPI will improve]
EAC = AC + (BAC - EV) / (CPI × SPI)    [if schedule is also driving cost]

Estimate to Complete (ETC)

ETC = EAC - AC

To-Complete Performance Index (TCPI)

What CPI you must achieve on remaining work to finish within budget:

TCPI = (BAC - EV) / (BAC - AC)    [to finish within original BAC]
TCPI = (BAC - EV) / (EAC - AC)   [to finish within current EAC]

TCPI > 1.2 = very unlikely to recover without scope reduction or additional funding.

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Monthly Reporting Cycle

1. Update the cost-loaded schedule — confirm PV, actual % complete, and AC for the period
2. Calculate EVM metrics for the full project and by CSI division / work package
3. Investigate root causes — which division has the biggest variance? Is it productivity, material cost, scope change, or measurement?
4. Report to owner and take corrective action

Monthly cost report must include:

1. EVM summary table (PV, EV, AC, CPI, SPI, EAC)
2. Contingency tracking (original, approved draws, remaining balance)
3. Change order log summary (approved, pending, total GMP revision)
4. Forecast to complete narrative (what you plan to do differently)
5. Risk log update

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Worked Example: 35,000 SF Food & Bev Expansion — Month 4

Metric	Value
BAC (GMP cost-of-work baseline)	$18,200,000
PV (planned through Month 4)	$7,280,000 (40% planned)
EV (actual % complete × BAC)	$6,552,000 (36% complete)
AC (actual cost incurred)	$7,150,000
CV	-$598,000 (over budget)
SV	-$728,000 (behind schedule)
CPI	0.916
SPI	0.900
EAC	$19,869,000
ETC	$12,719,000

At current performance, the project will overrun cost-of-work baseline by ~$1.67M. Contingency must cover this gap or corrective action must reduce the overrun.

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Contingency Tracking Integrated With EVM

Month	EAC	BAC	Forecast Overrun	Contingency Remaining	Cushion
1	$18,200,000	$18,200,000	$0	$2,184,000	$2,184,000
2	$18,450,000	$18,200,000	$250,000	$2,050,000	$1,800,000
3	$18,700,000	$18,200,000	$500,000	$1,900,000	$1,400,000
4	$19,869,000	$18,200,000	$1,669,000	$1,600,000	-$69,000

By Month 4, forecast overrun exceeds remaining contingency — triggers immediate escalation to PM and owner before the money is gone.