PMP earned value: CPI, SPI, EAC and TCPI worked example

Choose EAC and TCPI from the forecast assumption

Use the same BAC $600,000, EV $216,000 and AC $270,000. If current CPI 0.80 continues, EAC is $750,000. If the past variance is nonrecurring and the remaining work can be done at its original budgeted rate, EAC = AC + BAC − EV = $654,000. If a fresh bottom-up estimate to complete is $390,000, EAC = AC + ETC = $660,000. These are different assumptions, not competing calculations of one universal answer.

For an approved $750,000 EAC target, TCPI = (BAC − EV)/(EAC − AC) = 384,000/480,000 = 0.80. For the original BAC target, it is 384,000/330,000 ≈ 1.164. State which target is authorized and credible. An EAC estimate does not itself approve a new baseline.

Worked example: CPI, SPI and the forecast assumption

Original status record: BAC = $600,000, PV = $240,000, EV = $216,000 and AC = $270,000, all at the same status date. CPI is 0.80 and SPI is 0.90. Cost variance is −$54,000 and schedule variance is −$24,000 in budget units. Those values indicate unfavorable cost efficiency and less budgeted work completed than planned; the schedule variance does not mean the project is 24,000 days late.

Assume current cost efficiency persists for all remaining work. EAC = BAC/CPI = $750,000, and VAC = BAC − EAC = −$150,000. If the manager instead tests the efficiency needed to meet the original budget, TCPI = (600,000 − 216,000)/(600,000 − 270,000) ≈ 1.164. That is a demanding improvement from the observed CPI of 0.80. Investigate the cause, validate remaining-work estimates, and present options through the project's authority and change process.

Translate every value into project meaning

Planned value describes budgeted work scheduled. Earned value describes budgeted work performed. Actual cost describes what the performed work cost. The comparison must use values from the same status date and scope boundary.

A variance or index identifies a performance condition. It does not by itself authorize a baseline change, dictate escalation, or explain root cause. The project manager still interprets context and follows the applicable control process.

Core interpretation sequence

• Confirm the status date and the scope represented by each value.
• Use EV minus PV for schedule variance and EV minus AC for cost variance.
• Use EV divided by PV for schedule performance and EV divided by AC for cost performance.
• Choose the forecast relationship that matches the stated assumption about future performance.
• Connect the result to analysis, communication, corrective action, or authorized change as the scenario requires.

Common failure modes

Frequent errors include reversing the numerator of an index, interpreting a positive cost variance as unfavorable, using schedule variance as a time-unit forecast, or changing the baseline merely because current performance is unfavorable.