PMP Earned Value Management: Formulas With a Worked Example

Where earned value sits in the 2026 PMP outline

Earned value is not a heading in PMI's 2026 Exam Content Outline (ECO, revised August 11, 2026, as checked on October 27, 2026). It lives inside two Process tasks. Task 6, finance, is about knowing where the money goes, spotting variances early and handling them through governance, and managing reserves. Task 9, project status, is about measuring progress and reporting it.

The ECO names those responsibilities but prints no formulas. The formulas below are standard earned value management (EVM) practice. The definitions and interpretation rules come from the U.S. Government Accountability Office's Cost Estimating and Assessment Guide (GAO-20-195G), which writes its formulas with the older names shown in the table below.

The three PMP earned value inputs: PV, EV, and AC

Everything starts from three numbers taken at the same status date, plus the budget.

EV is the anchor. It converts progress into budget dollars, so it can be compared with both the plan (PV) and the spending (AC).

A worked PMP earned value example, start to finish

All names and numbers here are invented. Fernbrook Clinics, a fictional health network, is replacing its appointment-reminder system. The budget at completion is $240,000. At the end of month three the status report shows:

• PV = $120,000 (half of the work was scheduled to be done)
• EV = $108,000 (45% of the work is actually done: 0.45 × $240,000)
• AC = $135,000 (spent so far)

GAO adds three quick ratios that help with a sanity check. Percent planned is PV ÷ BAC = 50%. Percent complete is EV ÷ BAC = 45%. Percent spent is AC ÷ BAC = 56.25%. Spending is running well ahead of progress, which matches the CPI.

Once you can produce this table without notes, practice on questions that ask what the numbers mean rather than only what they equal. One of the 20 free PMP practice questions does exactly that, and full PMP prep, planned for launch, is built to give a written explanation for each practice answer.

Three PMP EAC formulas and the assumption behind each

GAO describes every index-based estimate at completion as one generic shape: actual cost so far, plus the remaining budgeted work divided by an efficiency index. The index you choose is an assumption about the future. GAO also calls it a best practice to calculate more than one EAC so that managers see a range.

The remaining budgeted work is BAC − EV = $132,000 in every row. In the third row, CPI × SPI = 0.72, so $132,000 ÷ 0.72 = $183,333 (rounded), and $135,000 + $183,333 = $318,333.

In a question, the stem usually signals which assumption applies. "The overrun was caused by a one-time licensing error" points to the second row. "The team expects current performance to continue" points to the first.

The formulas and their assumptions suit short daily recall. Make your own cards, or use the 188 Process flashcards planned for full PMP prep once it launches.

TCPI: how efficient the remaining work would need to be

The to-complete performance index (TCPI) asks how hard the rest of the project would have to perform to hit a target. GAO defines it as the budgeted cost of work remaining divided by the money left for that target.

• To finish on the original budget: TCPI = (BAC − EV) ÷ (BAC − AC) = $132,000 ÷ $105,000 = 1.26 (rounded)
• To finish at the $300,000 EAC: TCPI = (BAC − EV) ÷ (EAC − AC) = $132,000 ÷ $165,000 = 0.80

The first number says the team would need $1.26 of planned work for every dollar spent from now on, while it has been delivering $0.80. GAO's rule of thumb, stated for a contractor's estimate at completion, is that a TCPI more than 5 percentage points above the CPI means the estimate is too optimistic. The same logic applies to the original budget here: the gap is about 46 points, so finishing at $240,000 is not a credible plan. The second number matches the current CPI, which is exactly what you would expect for an EAC built on that CPI.

A sign rule for reading PMP earned value answers

Memorize one rule and you can check every result in seconds.

1. Variances (CV, SV, VAC): positive is favorable, negative is unfavorable. GAO states it the same way: positive variances mean underrunning cost or doing more work than planned.
2. Indexes (CPI, SPI): above 1.0 is favorable, below 1.0 is unfavorable.
3. EV comes first in CV, SV, CPI, and SPI. If you find yourself subtracting EV from something, you have the formula backward.
4. TCPI reads the other way. Above 1.0 means the remaining work must be done more efficiently than budgeted, which is harder.

One caution GAO makes explicit: a negative schedule variance disappears by the end, because once all work is done EV equals PV. GAO also tells analysts to check whether schedule variances come from activities on the critical path, because those are the ones that delay the program. SPI is a single ratio across all the work, so an SPI near 1.0 cannot tell you that on its own. Use the PMP critical path guide to check schedule questions that turn on which activity slipped.

What a PMP question does with these numbers

PMI does not say how many PMP items involve a calculation, and many earned value questions give you the results and ask for the next action. Task 6 points to the expected behavior: investigate the variance and work with the governance process, rather than act alone.

For Fernbrook, a strong sequence looks like this:

1. Validate the data. GAO warns that an unfavorable CPI can come from inefficiency, higher material prices, technical problems, or simply a mistake in how earned value was recorded.
2. Find the cause in the work breakdown, then forecast a range of EACs, not a single number.
3. Report the forecast and the options to the sponsor or steering group within the project's escalation thresholds.
4. Use contingency reserve only for identified risks the plan covers. A new budget figure or a re-baseline goes through change control.

Answers that jump straight to overtime, quietly cutting scope, or asking for more money before any analysis tend to be distractors. GAO notes that adding people or overtime costs money and can lower efficiency.

When you can explain why a TCPI of 1.26 makes the original budget unrealistic, test the judgment side under time pressure. The PMP page describes the Hard Mode and No-Miss Run challenges planned for full PMP prep for that kind of focused set. Earned value is one part of the finance and status work in the PMP Process domain, and reserves are covered in the PMP risk management guide. For mixed practice across all three domains, start with the free PMP practice questions.