Earned Value Management (EVM) is the gold standard for measuring project performance in construction. Despite its power, many project managers avoid it because it seems complex. In reality, once you understand the three foundational metrics, EVM becomes an indispensable tool in your project controls toolkit.
The Three Pillars of EVM
EVM rests on three simple measurements: Planned Value (PV) -- how much work you planned to complete by now; Earned Value (EV) -- how much work you have actually completed (measured in dollars); and Actual Cost (AC) -- how much you have actually spent. From these three numbers, everything else flows.
Key Performance Indicators
- Cost Performance Index (CPI) = EV / AC -- Are you getting value for your money?
- Schedule Performance Index (SPI) = EV / PV -- Are you on schedule?
- Estimate at Completion (EAC) -- What will this project cost when it is done?
- Variance at Completion (VAC) -- How far off budget will you be?
Practical Implementation Tips
Start simple. Many organizations fail at EVM because they try to implement it at an overly granular level. Begin with major work packages (CSI Level 2 or 3) and refine from there. Use your schedule's percent-complete values to calculate EV, and pull actual costs from your accounting system weekly. Within a month, you will have meaningful trend data.
The most important thing about EVM is consistency. Even imperfect data, applied consistently, will reveal trends that pure gut instinct cannot. A CPI trending below 0.95 for three consecutive weeks is a reliable signal that corrective action is needed -- regardless of what the project team 'feels' about the project's health.
EVM does not make project management harder. It makes reality harder to ignore.
