Cost Control & Earned Value Management Notes

Last reviewed 16 Sept 2026 · 5 min read

Cost control

Cost control ensures that the project is completed within the approved budget by comparing actual costs with planned costs and taking corrective action.

Steps

Prepare a budget (cost baseline) from the estimate, broken down by WBS/cost codes and time.
Record actual costs (labour, materials, equipment, subcontracts, overheads) against cost codes.
Measure work done (progress).
Compare planned, earned and actual costs; compute variances.
Forecast final cost; analyse causes and take corrective actions.
Report to management; update the plan.

Common causes of cost overrun

Inaccurate estimates and incomplete design; scope changes (variations).
Delays — approvals, land acquisition, utility shifting, slow payments, disputes.
Price escalation of materials and wages.
Low productivity, rework and poor quality; equipment breakdown.
Poor site management and wastage; unforeseen ground conditions.

Earned value management (EVM)

EVM integrates scope, schedule and cost to measure performance objectively.

Basic quantities

Term	Also called	Meaning
Planned value (PV)	BCWS — budgeted cost of work scheduled	Budgeted cost of work planned to be completed by the status date
Earned value (EV)	BCWP — budgeted cost of work performed	Budgeted cost of work actually completed by the status date
Actual cost (AC)	ACWP — actual cost of work performed	Actual cost incurred for the work completed
Budget at completion (BAC)	—	Total budget of the project

FormulaVariances and indices

Cost variance $C V = E V - A C$ (negative → over budget) Schedule variance $S V = E V - P V$ (negative → behind schedule)

Cost performance index $C P I = \frac{E V}{A C}$ ( $< 1$ → over budget) Schedule performance index $S P I = \frac{E V}{P V}$ ( $< 1$ → behind schedule)

FormulaForecasts

Estimate at completion (typical — current cost performance continues):

E A C = \frac{B A C}{C P I}

Atypical (remaining work at budget rate): $E A C = A C + (B A C - E V)$ Considering both CPI and SPI: $E A C = A C + \frac{B A C - E V}{C P I \times S P I}$

Estimate to complete $E T C = E A C - A C$ Variance at completion $V A C = B A C - E A C$

To-complete performance index (to finish within BAC):

T C P I = \frac{B A C - E V}{B A C - A C}

(Using EAC in the denominator instead: $T C P I = \frac{B A C - E V}{E A C - A C}$ .)

Rough time forecast: estimated duration ≈ planned duration / SPI

Interpretation

CPI	SPI	Status
> 1	> 1	Under budget, ahead of schedule
> 1	< 1	Under budget, behind schedule
< 1	> 1	Over budget, ahead of schedule
< 1	< 1	Over budget, behind schedule

TCPI > 1 — the remaining work must be done more efficiently than planned to meet the budget.
On an S-curve plot, the PV curve is the baseline; if the EV curve is below PV → behind schedule; if AC is above EV → over budget.

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