After this chapter, you should be able to
- Explain the scope, budget and status-date conditions required for integrated performance measurement.
- Calculate planned value, earned value and actual cost for a bounded control account.
- Calculate and interpret schedule and cost variances and performance indices.
- Distinguish cost-based schedule signals from critical-path and milestone analysis.
- Compare cost-efficiency, combined-efficiency and bottom-up estimates at completion.
- Diagnose data, scope, production, price and cut-off causes that can produce similar indicators.
- Write a control narrative linking numerical signal, confidence, forecast consequence, action, owner and review trigger.
The decision: what do the schedule and cost signals mean together?Source §Integrated performance · Decision-led opening
A control account can appear late, over cost, both or neither depending on the compatible scope, status date and value basis. Earned value creates disciplined comparisons, but the ratios remain signals. Management still needs production, network, risk and accounting evidence to explain cause and choose action.
Prerequisite checkSource §Learning sequence · Prior knowledge
Integrated control requires defined scope, an authorised time-phased budget, objective progress and actual cost under compatible cut-offs. If those foundations differ, correct the data basis before calculating ratios.
| Gate | Question |
|---|---|
| Scope | Do plan, achievement and cost describe the same authorised work? |
| Time | Do schedule and accounting records use compatible status and cut-off dates? |
| Budget | Is the budget authorised, time-phased and mapped to the control account? |
| Progress | Is achievement measured objectively under a declared rule? |
| Actual cost | Are incurred cost, accruals and exclusions stated consistently? |
Reject an incompatible comparison
Earned value uses accepted work to Friday, while actual cost excludes the final two reporting days. What is required before interpreting the cost index?
- Calculate anyway
- Align or explain the accounting cut-off and scope
- Replace actual cost with planned value
Reveal answer and feedback
Align or explain the accounting cut-off and scopeThe cost index is meaningful only when earned work and incurred cost are comparable under the stated cut-off.
Connect scope, time-phased budget and verified achievementSource §Integrated control model · Integration concept
Earned value assigns authorised budget value to defined scope, places that value in time and earns it only when the progress rule confirms achievement. Actual cost is then reconciled for the same work. The method integrates reference values; it does not replace field observation or the schedule network.
- Budget at completion
- The authorised total budget for the defined control-account scope.
- Planned value
- The authorised budget value of work scheduled by the status date.
- Earned value
- The authorised budget value of work objectively achieved by the status date.
- Actual cost
- The cost incurred for the achieved work under the stated accounting cut-off.
- Estimate to complete
- The current forecast cost required to finish the remaining authorised scope.
- Estimate at completion
- The current forecast total final cost for the defined scope.
| Measure | Teaching relation | Meaning |
|---|---|---|
| Planned value | Budget at completion × planned progress | Budgeted value scheduled by the cut-off |
| Earned value | Budget at completion × verified progress | Budgeted value objectively achieved |
| Actual cost | Recorded cost under the accounting cut-off | Cost incurred for the compared scope |
BAC is budget at completion and p_p is the planned-progress fraction at the status date.
p_v is the objectively verified-progress fraction for the same authorised scope and status date.
Define earned value
Which statement describes earned value?
- Actual cash paid
- Authorised budget value of objectively achieved work
- Forecast final cost
Reveal answer and feedback
Authorised budget value of objectively achieved workEarned value values achieved scope at the authorised budget basis so it can be compared with plan and actual cost.
Compare planned value, earned value and actual costSource §Integrated control model · Three-value comparison
Planned value provides the time-phased reference, earned value reports budgeted achievement and actual cost reports incurred cost. Comparing earned value with planned value produces a schedule signal in cost units; comparing earned value with actual cost produces a cost signal.
Calculate the base control-account values
A control account has an authorised budget of one thousand cost units. By the status date, sixty percent was planned, forty-eight percent is verified and actual cost is five hundred sixty.
- Planned value
1,000 × 0.60 = 600
Planned value is six hundred - Earned value
1,000 × 0.48 = 480
Earned value is four hundred eighty - Actual cost
AC = 560
Actual cost is five hundred sixty - Scope and cut-off check
One control account and one status basis
The three values are comparable in the teaching case
Result. Earned value is below both planned value and actual cost. Variances and indices quantify those two comparisons next.
| Measure | Value | Initial signal |
|---|---|---|
| Planned value | 600 | Budgeted work scheduled |
| Earned value | 480 | Budgeted work achieved |
| Actual cost | 560 | Cost incurred |
| Earned minus planned | −120 | Behind in budgeted-value terms |
| Earned minus actual | −80 | Unfavourable cost signal |
Choose the cost comparison
Which values are compared to assess the cost signal?
- Earned value and actual cost
- Planned value and budget at completion
- Actual cost and calendar days
Reveal answer and feedback
Earned value and actual costEarned value represents the budgeted value of achieved work; actual cost represents what that achieved work cost under the cut-off.
Calculate variances and performance indicesSource §Integrated control model · Variance and indices
Variances retain the value unit of the control account. Indices express proportional performance. A negative schedule variance or index below one indicates less budgeted work achieved than planned; a negative cost variance or cost index below one indicates actual cost exceeds the budgeted value of achieved work.
| Measure | Relation | Base result |
|---|---|---|
| Schedule variance | SV = EV − PV | 480 − 600 = −120 |
| Cost variance | CV = EV − AC | 480 − 560 = −80 |
| Schedule performance index | SPI = EV / PV | 480 / 600 = 0.80 |
| Cost performance index | CPI = EV / AC | 480 / 560 = 0.86 |
SPI compares budgeted achievement with budgeted work planned at the status date. It is not a fraction of project time or a direct measure of days early or late.
CPI compares budgeted value achieved with actual cost incurred. Confirm accruals, scope and cut-off before interpretation.
Interpret the base indices
Use planned value six hundred, earned value four hundred eighty and actual cost five hundred sixty.
- Schedule variance
480 − 600 = −120
Unfavourable schedule signal in cost units - Schedule index
480 / 600 = 0.80
Eighty cents of budgeted work achieved per planned budget unit at the cut-off - Cost variance
480 − 560 = −80
Unfavourable cost signal - Cost index
480 / 560 = 0.857...
Approximately 0.86 budget units earned per actual cost unit
Result. Both indices are below one, producing a behind-and-over signal. The ratios do not identify the cause or completion path.
Interpret schedule performance
SPI is 0.80. Which conclusion is defensible?
- The project is exactly twenty percent late in calendar time
- Budgeted achievement is below budgeted work planned at the status date
- The critical path is known
Reveal answer and feedback
Budgeted achievement is below budgeted work planned at the status dateSPI is a budget-value ratio. Calendar delay and criticality require schedule-network evidence.
Compare conditional completion-cost forecastsSource §Forecasting · Forecast methods
An estimate at completion combines actual cost to date with a view of remaining cost. Formula forecasts extend a stated performance assumption; a bottom-up forecast re-estimates the remaining work. The control team compares methods and selects one only after explaining which future conditions are expected to persist.
| Method | Teaching relation | Embedded assumption |
|---|---|---|
| Cost efficiency continues | EAC = BAC / CPI | Current cost efficiency applies to total budget scope |
| Bottom-up | EAC = AC + ETC | Remaining scope has been freshly estimated |
| Cost and schedule efficiency continue | EAC = AC + (BAC − EV) / (CPI × SPI) | Both current efficiencies influence remaining cost |
This relation assumes current cost efficiency continues. It is unsuitable when future method, scope, price or productivity differs materially without adjustment.
ETC is a new estimate of the cost to complete remaining authorised scope. The method is useful when future conditions differ from historical efficiency or when detailed remaining estimates are available.
Compare two base-case forecasts
Budget at completion is one thousand, actual cost is five hundred sixty, CPI is approximately 0.857 and a fresh estimate to complete is six hundred.
- Cost-efficiency forecast
1,000 / 0.857142... = 1,166.7
Approximately one thousand one hundred sixty-seven cost units - Bottom-up forecast
560 + 600 = 1,160
One thousand one hundred sixty cost units - Difference
1,166.7 − 1,160 = 6.7
The two forecasts are close in this teaching case - Decision
Compare future method and estimate evidence
Select the method whose assumption is supportable
Result. Numerical closeness does not remove the need to state the forecast basis. A different remaining estimate or efficiency could produce a material range.
Choose a bottom-up forecast
The remaining work will use a new method and the team has a detailed current estimate. Which forecast is most directly supportable?
- Actual cost plus the new estimate to complete
- Budget divided by the old CPI without review
- Planned value plus actual cost
Reveal answer and feedback
Actual cost plus the new estimate to completeA bottom-up forecast can reflect changed future conditions when the remaining estimate is current and traceable.
Investigate causes behind similar indicatorsSource §Interpretation and action · Cause analysis
Quantity error, rework, low production, late information, scope movement, price change, procurement timing and accounting cut-off can produce similar indices. The team reconciles field evidence, schedule paths, budget mapping, change records and the cost ledger before recommending action.
| Observed signal | Possible cause | Evidence to reconcile |
|---|---|---|
| Low SPI | Accepted quantity behind plan | Progress record, production rate and network path |
| Low CPI | Rework or poor productivity | Quantity, labour, plant, defect and cost records |
| Low CPI | Price or accounting cut-off effect | Purchase records, accruals and price basis |
| Mixed indices | Work advanced at high cost | Sequence, overtime, resource and cost evidence |
| Sudden improvement | Scope or progress-rule change | Change control, budget remap and rule history |
- Name the control account, scope, status date and accounting cut-off.
- State planned value, earned value, actual cost and data confidence.
- Report both variances and indices without converting SPI into days.
- Identify the leading evidence-supported cause and alternative explanation.
- Reconcile the current network path and completion milestone.
- State the selected completion-cost forecast and embedded assumption.
- Name the action, owner, authority, due date and verification trigger.
Move from signal to cause
CPI is below one. What should the team do before recommending recovery?
- Assume labour productivity is the cause
- Reconcile scope, quantities, rework, prices, accruals and cut-off evidence
- Ignore actual cost
Reveal answer and feedback
Reconcile scope, quantities, rework, prices, accruals and cut-off evidenceThe same cost signal can have different causes and therefore different responses.
Explore one integrated control accountSource §Interactive learning · Simulation sequence
The explorer begins with the verified one-thousand-unit teaching benchmark. Predict the combined signal, vary planned and verified progress or actual cost, compare three completion forecasts and explain which schedule conclusion still requires critical-path analysis.
Integrated Performance and Earned Value Explorer
Test how compatible scope, progress, actual cost and forecast assumptions alter value comparisons, indices and conditional completion-cost forecasts.
- Learning sequence
- Review the base control account · Record a combined signal prediction · Change one progress or cost input · Calculate PV, EV and AC independently · Compare SPI and CPI · Select and explain a forecast method · Load the aligned case · Name the network evidence still required
- Assumptions
- One control account · One authorised budget · One status and accounting cut-off · Objective verified progress · No scope change or currency effect · Three illustrative forecast methods · No critical-path or probabilistic model
- States
- Base account · Changed input · Behind and over · Ahead and under · Mixed · Aligned · Forecast method changed · Prediction checked · Invalid input · Reset
- Validation
- Implemented against deterministic teaching cases; independent technical approval pending
Reconcile scope, time and cost signals before choosing a forecast
Predict first. Compare budgeted planned work, budgeted achieved work and actual cost, then state the assumption inside the forecast.
What combined signal will the indices show?
Base control account loaded. Predict the combined schedule and cost signal before checking.
The account has achieved less budgeted work than planned and spent more than the budgeted value of that achievement. Investigate quantities, productivity, rework, information, prices, scope and cut-off before selecting action.
| Measure | Value | Interpretation |
|---|---|---|
| Planned value | 600 | Budgeted value of work planned by the status date |
| Earned value | 480 | Budgeted value of verified work achieved |
| Actual cost | 560 | Cost recorded under the stated accounting cut-off |
| Cost-efficiency forecast | 1,166.7 | Assumes current cost efficiency continues |
| Bottom-up forecast | 1,160 | Actual cost plus a new estimate of remaining work |
| Combined-efficiency forecast | 1,318.3 | Assumes both current cost and schedule efficiency influence remaining cost |
Reflect before continuing
Which scope and cut-off evidence makes planned value, earned value and actual cost comparable? What network or field evidence is still needed before describing the completion-date consequence?
Issue a control narrative with the indicatorsSource §Management interpretation · Control communication
| Record | Required statement |
|---|---|
| Basis | Control account, authorised budget, status date and accounting cut-off |
| Achievement | Progress rule, verified scope, value and source |
| Cost | Actual, accrual, exclusions, currency and ledger status |
| Signal | PV, EV, AC, variances, indices and confidence |
| Schedule | Current path, milestone consequence and limitations of SPI |
| Forecast | Methods compared, selected estimate, assumption and range |
| Response | Cause evidence, action, owner, authority and review trigger |
Communicate an incomplete cut-off
Actual cost is missing a material accrual. How should the dashboard treat CPI?
- Present it as final
- Label it provisional and quantify or explain the missing-cost exposure
- Replace actual cost with earned value
Reveal answer and feedback
Label it provisional and quantify or explain the missing-cost exposureDecision-makers need the current signal and its data limitation together.
Lesson synthesisSource §Learning sequence · Synthesis
Key points
- Integrated performance requires compatible scope, authorised budget, status date, progress and actual-cost cut-off.
- Planned value is budgeted work scheduled; earned value is budgeted work achieved; actual cost is incurred cost.
- Schedule and cost variances compare earned value with planned value and actual cost respectively.
- SPI and CPI are signals; SPI does not identify calendar delay or critical-path consequence.
- Completion-cost forecasts embed assumptions that must be compared and explained.
- Similar indicators can arise from different production, scope, price, rework or accounting causes.
- A control narrative joins numerical signal with confidence, cause, forecast, action, owner and trigger.
Source references recorded by the supplied chapter
- Chartered Institute of Building — Accreditation and Education Framework.
- Royal Institution of Chartered Surveyors — Project Management sector pathway.
- Deakin University — Construction Management curriculum overview.
- Colorado State University — Construction Management undergraduate course descriptions and learning outcomes.
- All India Council for Technical Education — Model Curriculum for Undergraduate Degree in Civil Engineering.
- United States Government Accountability Office — Schedule Assessment Guide.