Accounting glossary term
Earned Value Management
Earned value management (EVM) is a project performance technique that integrates scope, schedule, and cost data into objective metrics. It compares planned work and actual work to forecast final cost and completion date.
What is Earned Value Management?
Earned value management (EVM) is a project performance technique that integrates scope, schedule, and cost data into objective metrics. It compares planned work and actual work to forecast final cost and completion date.
How It Works
- Establish the performance measurement baseline — scope, schedule, and budget.
- Track planned value (PV) — the budgeted cost of work scheduled.
- Track earned value (EV) — the budgeted cost of work completed.
- Track actual cost (AC) — the actual spend on completed work.
- Compute variances and indices (SV, CV, SPI, CPI) and forecast EAC and ETC.
Saudi Context
EVM is a standard requirement on most Vision 2030 infrastructure and giga-projects in Saudi Arabia, including those run by PIF subsidiaries. Contractors must report monthly EVM dashboards that align with the PMI standard and the client’s contract terms.
Example
A SAR 10M project at month six shows PV = SAR 5M, EV = SAR 4.5M, AC = SAR 5.2M. The project is behind schedule (SV = −500K) and over budget (CV = −700K), with a CPI of 0.87.
Related Terms
- Cost Performance Index