PM FPX 5333 Assessment 2 Earned Value Analysis Report

Applying an Earned Value Technique

EVM is a formal approach to managing projects that combines scope, schedule, and cost to allow the objective monitoring and assessment of project performance. The NEO project was a project that was provided by NearlyFree.com, which was a situation where there was a deviation in budget and schedule that warranted a formal EVM study. Zia et al. (2024) state that EVM transforms the way progress is measured by converting it into measurable data (EVM), and this enables enhanced management decision-making using evidence. In this section, the NEO project is analyzed using the above-mentioned EVM tools, and all the necessary Performance indicators are calculated.

EVM Metrics and Calculations

Available metrics for the NEO project as of now are the Budget at Completion (BAC), which is the total project budget approved,d and the Planned Value (PV), Earned Value (EV) and Actual Cost (AC), which are based on actual work completed to date. All further calculations based on EVM are done using the four listed above. (Bahrudin et al., 2025).

• Table 1

EVM Input Values — NearlyFree.com NEO Project

• Calculated EVM Metrics

The EVM indices were calculated using the four pieces of input data, and standard PMI formulas were used to calculate the index/variance figures. The indices show simultaneous schedule and cost performance issues. This is the toughest recovery scenario in project management according to Yalçın et al. (2024). SPI = EV/PV = $0.60 for every $1.00 of progress (measured by PV) the project has made (measured by the amount of job completed – EV). The CPI, defined as the ratio of EV to AC (Actual Cost), results in a value of 0.80, or for every $1.00 spent on the project, $0.80 of earned value is being created.

Table 2

Calculated EVM Metrics and Formulas

Value of EVM and How It Revealed Project Issues

EVM is the only system that can give the integrated, objective view of project performance that is impossible to achieve by either the cost tracking or schedule tracking approach. With EVM (Earned Value Management), a project team may realize that they’ve now spent $150,000, and project that they spent $200,000, so they are about on track with their budget. Elsaid et al. (2025) show that EVM can be used to consistently find issues in performance 6 – 12 weeks earlier than traditional variance reports. Early identification helps to implement intervention strategies before the overrun is unpinned. EVM revealed that actually $150,000 had been spent, but only $120,000 of the expenditure was considered “earned value . By conventional budget tracking, NEO did not know that $150,000 had been spent, but only $120,000 of that amount was “earned value.

In this case, the Schedule Performance Index (SPI) of 0.60 demonstrates that the NEO Project was only achieving 60% of the planned rate of work completion, indicating a structural scheduling failure, well beyond task slippage alone. This CPI of 0.80 may be a sign of recurrent cost inefficiencies in the project, rather than the fact that the project’s budget was exceeded. The SPI and CPI result in a statement that the project will not meet its schedule and expenditure targets; as Muller (2023) notes, it also signals a multiplicative failure of project performance—one that needs to be addressed urgently. The To Complete Performance Index (TCPI) of 1.06 also suggests that all future work needs to be completed at a higher level of efficiency than has been achieved to date.

The NEO project demonstrates that EVM should be used during the initial stages of a project, and not as a remedy to deal with performance problems. Setting a Performance Measurement Baseline (PMB) at project initiation enables weekly measurement of CPI and SPI to identify early problems so corrective action can be taken, if economically viable, when the project is still in its early stages. Poudel and Braun (2026) suggest that if the CPI is less than 0.90, the management should immediately review the situation in the next reporting cycle. In addition, the addition of EVM to monthly committee steering reporting and built-in escalation requirements will help to ensure the committee doesn’t get into the ‘hands-off’ reporting style like the NEO Project did to get to a SPI of 0.60 before being required to take corrective action.

Analyzing Project Success Based on Earned Value Calculations

NEO project CPI is 0.80, which indicates a low level of distress (20% cost efficiency deficit). NEO’s total cost would be $625,000 with this type of performance; however, NEO’s project budget is $500,000 (BAC). After 20% completion, Ateş and Eirgash (2025) found that CPI very rarely changes by more than 0.10, and NEO reported that it has reached 20%. In addition, the performance of the NEO project is even poorer in terms of its SPI (60% of work output completed compared to period elapsed to date). Hence, NEO is slower and more expensive than planned due to the nonexistence of any means of making corrections on its own, thus compounding CPI and SPI deficits.

• Project Recoverability Assessment

There are three preconditions to successfully execute a turnaround of this project with earned value management (EVM): scope reduction, resource re-allocation, and re-baselining (including stakeholder commitment). In terms of the remaining amount of work that needs to be accomplished in order to meet the original baseline at $500,000, one would need to complete that remaining amount of work at a rate 6% higher than the current cost performance index (CPI) to achieve the initial budget. A TCPI over 1.0 can be foreseen, but if the project scope needs to be changed extensively or more resources added, then the value of TCPI over 1.1 (i.e., 1.06) will need to be achieved. Galler et al. (2024) suggest that a TCPI greater than 1.10 is unlikely to be sustainable, and a TCPI of 1.06 is near that limit and would be difficult to reach without an acceptable restructuring of the recovery plan. Therefore, with the turnaround strategy detailed below, it is conceivable to have a successful EVM-based recovery on this project.

• Stakeholder Assessment of Recoverability

The five personas (Felix the Frugal, Theo the Technologist, Savannah the Strategist, Ume the User Voice, and Omar the Organizer) each had a different view on whether the project could recover depending upon how much money had been invested in this project. All five claimed that it had not been possible at this time to determine what would happen with ROI as a result of unexpected expenses. All five personas also gave different degrees of approval for the project to be continued, depending on their views of what should happen in the world of a new kind of product.

Making Turnaround Decisions Based on Earned Value Calculations

It is not advisable to cancel the NEO Project completely, but rather to re-establish baselining on the NEO Project, based on the EVM analysis. With a TCPI of 1.06, it is not likely to be easy to recover to the original BAC, but that isn’t impossible. There’s also $150,000 in sunk cost, which comes down against abandoning, as far as most of NEO’s technical base has not been lost. On this project, the two conditions for re-baselining per PMI (2021) have been fulfilled: CPI > .75 and modification of the remaining scope to be more cost effective. A revised SOW, Schedule, and budget (as described herein) shall be used to create an updated PMB.

The major Scope Reduction is the implementation of Mobile Access features until Phase 2 of the Post Launch phase, as agreed by stakeholders in the project using a phased delivery approach that will be used throughout simulation. This amount of scope reduction will remove $40,000 to $55,000 of In-Scope Work from the existing project baseline to ensure the project will meet the new ETC. The scope reduction in recovery scenarios should only apply to Non-Critical Deliverables that are not going to impact the way the Core System works, meaning that both conditions for deferring the enhancement features are satisfied. The Core NEO System is in scope, including configuration of Learning Management System (LMS), Human Resources Information Systems (HRIS) Integration, User Acceptance Testing (UAT), and training.

Moreover, to ensure maximum exposure of costs and to directly tackle the CPI deficit, all the remaining Time and Material work-packages will be transformed into Fixed Price contracts. It is recommended to set a new EAC target of $575,000 (the original BAC of $500,000 with 15% negotiated scope reduction=$75,000 with a projected overrun of $125,000). According to Galler et al. (2024), that re-baseline EAC should be within the TCPI range of 1.00 to 1.05, and the proposed target of $575,000 achieves that goal. Weekly burn-rate reviews will occur to help maintain cost control, and EVM will be reported to the Steering Committee monthly.

The project schedule will be extended six weeks from its original completion date (to compensate for the increased amount of compression on the overall project schedule), to allow the schedule item to be restructured to align with the new project scope. The compression reduction will cause the SPI value required to recover the project from the original baseline to drop from 0.60 to a new baseline of 0.78 – this is a much more realistic value as there is still work to be done. Tareemi (2025) claims that if SPI (Schedule Performance Index) is less than 0.65, extending the schedule and reducing scope is one of the most effective ways of getting out of the mess. In trying to accelerate, the cost of the schedule – AC (Accrued Cost) – will generally increase, albeit with minimal to no effect on EV (Earned Value). The Steering Committee will suggest formally adopting this schedule extension as the new performance measurement baseline.

Monitoring and Applying EVM in the Recovery Phase

To identify cost and schedule drift earlier, EVM will be used weekly on each work package during the recovery stage. Updates regarding the project’s CPI and SPI will be given to the project steering committee in the bi-weekly meetings. A threshold escalation protocol will be triggered, causing additional review of the project on an emergency basis should either the CPI fall below 0.85, or the SPI fall below 0.75 when compared to the modified baseline. The EVM reporting for the recovery phase should also incorporate the current period and cumulative CPI index values to help identify improved trends vs continued poor performance (Chai et al. 2026). All the recovery phase live metrics are captured in the toolkit, which is included as an Excel EVM workbook with this report.

In the recovery phase, four interventions will be implemented that will positively influence the project’s CPI and SPI. The original CPI deterioration is to be avoided by using a fixed-price (milestone payment) contract with the HRIS integration work package. The integration work package had a low SPI score of 0.60, which is due to resource contention, and a dedicated technical resource is assigned to the work package on a full-time basis to resolve this. A scope change control gate will be created at the work package level to prevent adding further scope to the work package without also adding additional EV generated from this AC, when there is no EV generated from this AC. In a recovery scenario, the most effective level control mechanism to enhance the project-level CPI is the work package-level control mechanism, as stated by Carone (2025). Finally, the availability of SMEs for the content development work package will be ensured by reserving time for SMEs in the executive team’s calendar, which is the main cause for the slip in the schedule of Phase 3.

Conclusion

In a recent EVM Analysis, Nearly Free found that the NEO project is in serious condition, with its overall Cost Performance Index (CPI) rating at 0.80 and Schedule Performance Index (SPI) rating at 0.60. We recommend that you start a new baseline, but if you had to close down the NEO Project, the current To Complete Performance Index (TCPI) is 1.06, meaning you could recoup the project through an organized re-training of your original baselines. EVM is much more useful in recovering after a recovery than when it is measured against an initial baseline, when measured by historical project data. All of these, including evidence of any existing deferrals, weekly EVM reports, fixed-price contracts, and approved stakeholder changes, will support NEO’s core onboarding completion, based on its revised baseline.

For the 1st and 3rd assessment of this class visit: PM FPX 5333 Assessment 1 or PM FPX 5333 Assessment 3