Earned value has a reputation for jargon, and it earns it. BCWS, BCWP, ACWP, TCPI. Most boards glaze over by the second acronym. But underneath the vocabulary are three numbers any executive can read in under a minute, and together they say more about a project than a forty-page monthly report.
SPI: are we getting the work done?
The schedule performance index compares the value of work actually completed with the value of work planned to be completed by now. An SPI of 0.92 means the project has earned 92 cents of planned work for every dollar it should have. It is a useful early signal, with one trap: as a project nears completion, SPI drifts back toward 1.0 no matter how late it is, because eventually all planned work gets done. Late in a project, read SPI beside the critical path, never alone.
CPI: what is the work costing us?
The cost performance index compares the value of work completed with what it actually cost. A CPI of 0.95 means every dollar spent is producing 95 cents of planned value. CPI tends to stabilize early. If it has been below 1.0 for several months, it rarely recovers on its own, and the budget will not either.
EAC: where will we land?
The estimate at completion is the forecast final cost. There are several ways to calculate it, and the choice matters. A formula that assumes future work will go exactly to budget is the most optimistic. One that assumes current cost performance continues is more realistic. A bottom-up EAC built from the remaining scope is the most defensible. We show leadership more than one, side by side, and explain the gap.
Where earned value lies
- Progress measured by feel. If percent complete is an estimate rather than a measured quantity, every number downstream inherits the guess.
- A budget that was never loaded to the schedule. Earned value needs cost tied to activities. Without it, you are dividing one guess by another.
- Change orders that never reach the baseline. Approved changes must update the budget and the plan, or the indices drift for reasons nobody can trace.
The one-page format
Our executive reports put three things on one page: SPI and CPI trended over six periods, the EAC range against budget and contingency, and the three decisions leadership needs to make this month. That last line is what turns a report into a meeting that moves something.
Try the numbers on your own project in the Earned Value Pulse, or see how we build executive reporting leaders actually read.
