The number nobody acted on
In October 2025, the planning lead on a 380 crore rupee NHAI highway package in Madhya Pradesh submitted her sixth monthly progress report. Page 4 carried the EVM table. CPI: 0.87. SPI: 0.91. The resident engineer stamped the report. No questions.
She had been computing those numbers by hand every month. Her project director reviewed the report, saw 0.87, and asked if it was "okay." She said she would check.
Neither of them knew what 0.87 actually meant for the project or what they were supposed to do about it.
This is not unusual. Earned Value Management is a mandatory reporting requirement on NHAI EPC and HAM packages. It appears in every monthly progress report. Most teams calculate it. Almost none use it as a management tool.
What CPI actually means in rupees
CPI stands for Cost Performance Index. The formula is straightforward:
CPI = Earned Value / Actual Cost
Earned Value (EV) is the budgeted cost of the work you have actually completed. If you were supposed to spend 40 crore to build a specific section and you have built it, your EV is 40 crore, regardless of what you actually spent.
Actual Cost (AC) is what you have spent so far on all completed work.
So CPI = 0.87 means: for every 100 rupees you have spent, you have delivered 87 rupees of planned value. You are spending more than you budgeted to complete the same scope.
On a 380 crore project with 95 crore spent by Month 6, CPI = 0.87 means your earned value is 82.65 crore. You have overspent by 12.35 crore relative to the planned cost of the work completed. That is your cost overrun to date, not projected.
The more useful number is the Estimate at Completion (EAC):
EAC = Total Budget / CPI = 380 / 0.87 = 436.8 crore
At current performance, this project will cost 436 crore instead of 380. That is a 56 crore overrun, and the project is only 25% through its schedule.
What SPI means for your programme
SPI is Schedule Performance Index:
SPI = Earned Value / Planned Value
Planned Value (PV) is the budgeted cost of the work you were supposed to have completed by now. If your programme said you would spend 90 crore of budget by Month 6 and your EV is only 82.65 crore, your SPI is 82.65 / 90 = 0.92.
SPI = 0.92 means you have completed 92% of the planned physical work. On a 36-month project, SPI = 0.92 at Month 6 translates to roughly 20 to 25 days of schedule slippage at current performance.
SPI can mask problems. A project running behind schedule can still show SPI = 1.0 if it has been front-loaded (early milestones were easy, harder work is coming). Always check SPI against the baseline programme, not just the number.
The management response when CPI drops below 1.0
A CPI below 1.0 is not automatically a crisis. On a large highway package, CPI in the first two months is often artificially low because mobilisation costs (plant, site setup, safety) are real costs that have not yet generated earned value. CPI typically stabilises between Month 3 and Month 6.
If CPI is still below 1.0 at Month 6, there are three places to look:
Where is the cost deviation coming from? Run EVM by cost code, not just at the project level. A CPI of 0.87 at the project level might be a CPI of 0.65 on bituminous work and 1.02 on earthworks. The bituminous CPI tells you something specific: your asphalt costs per tonne of production are higher than priced. That is a plant efficiency issue, a material price issue, or a quantity takeoff issue. You cannot fix a cost code problem by looking at the project CPI.
Are you measuring EV correctly? Many teams claim 80% progress when 75% is more accurate, to show better CPI to the authority. This creates a false picture and makes the eventual landing worse. EV should reflect actual physical completion against the BOQ, not the team's optimistic estimate.
What is driving the cost overrun? Three common causes on NHAI highway packages: subcontractor rates that were priced too low, plant running below optimal utilisation (a bitumen plant at 60% capacity produces the same fixed cost as one at 100%), and unrecovered variation (work done without a formal variation order, so the cost is real but the planned value is not in the baseline).
When CPI drops below 0.80, NHAI will notice. Most authorities have internal thresholds. A proactive written explanation of the deviation and the corrective action plan is better than waiting for a show-cause notice.
When SPI drops below 0.90
SPI below 0.90 on a government contract creates two problems simultaneously: an internal problem (you are behind programme) and a contractual problem (you may be in delay, which triggers penalty provisions or employer pressure).
The first step is separating contractor-caused delay from employer-caused delay. If your SPI is 0.88 and 60% of the delay is attributable to land acquisition shortfall, that 60% should be tracked as an EOT event under Clause 40 of the NHAI GCC, notified within 28 days of the delay becoming apparent. The SPI on the remaining scope, adjusted for employer-caused delay, is your actual performance indicator.
Never report a bad SPI without also reporting the delay events that contributed to it. The authority that sees SPI = 0.88 and a corresponding EOT notification is in a different position from the authority that sees SPI = 0.88 and no explanation.
EVM as a management tool, not a compliance form
The planning lead in Madhya Pradesh eventually found the answer: her CPI was 0.87 because her subcontractor for granular sub-base was running 22% over the priced rate, and the variation for unsuitable material disposal (which explained part of the overrun) had not been formally submitted. Once the variation was filed and the subcontractor rate was renegotiated, her CPI at Month 9 was 0.94.
She could have made those corrections at Month 4 if she had been reading her own EVM output. By Month 6, the overrun was already 12 crore.
EVM tells you where you are losing money and time before the final account tells you what you lost. That is its entire purpose. A project that runs EVM as a compliance exercise and a project that runs it as a management tool will produce the same numbers. Only one of them will act on those numbers.