Andrew

Hi James

Thank you for your question. Earned value is based on simple values - such as:

Budgeted Cost of Work Scheduled (BCWS) - our budget (or baseline)
Budgeted Cost of Work Performed (BCWP) - the agreed resource rate applied to work carried out
Actual Cost of Work Performed (ACWP) - what we really paid for the work carried out.

With these figures we can work out :

Performance Index:
BCWP/ACWP = CPI or Cost Performance Index. Less than 1 the project is over spending

BCWP/BCWS = SPI or Schedule Performance Index. Less than 1 means the project is behind schedule.

Here are two Microsoft resources on Earned Value:

http://office.microsoft.com/en-au/project-help/about-earned-value-analysis-HP001034258.aspx

http://office.microsoft.com/en-au/project-help/applying-earned-value-analysis-to-your-project-HA001021179.aspx?CTT=3

I hope this is helpful - do let me know if you have any further questions.

Kind regards,
Andrew