Schedule Variance vs Schedule Performance Index

Schedule Variance vs Schedule Performance Index

Schedule Variance vs Schedule Performance Index is the 40th post in our PMP Concepts Learning Series.

Designed to help those that are preparing to take the PMP or CAPM Certification Exam, each post within this series presents a comparison of common concepts that appear on the PMP and CAPM exams.

 

Schedule Variance vs Schedule Performance Index

Schedule variance (SV) and schedule performance index (SPI) are two earned value calculations that provide a measurement of project progress against the project schedule baseline.

Earned value measurements may be helpful on some projects for communicating status or identifying potential issues. However, earned value is an analysis technique that responds to lagging indicators – meaning that it is using the past performance to dictate or predict future performance. That is not always accurate and as such, the PM must use their judgment and knowledge in interpreting the results and communicating to stakeholders.

Schedule Variance (SV)

Schedule variance (SV) is calculated as the difference between earned value (EV) and planned value (PV). How much value have we earned in the project based on our budget at completion (BAC) and what percentage of work has been completed and how much did we plan to have spent by this point in the project?

SV = EV – PV

[hint: EV always comes first in the earned value calculations of CV, CPI, SV, and SPI]

If you have a negative balance in your bank account, is that good or bad? It’s bad, right? Remember that holds true with schedule variance as well. If we have a negative schedule variance it means that we are behind schedule.

A positive SV indicates that we are trending ahead of schedule. A variance of zero indicates the project is exactly on schedule (does that really happen?)

Schedule Performance Index (SPI)

Schedule performance index (SPI) is a ratio of the earned value (EV) to the planned value (PV).

SPI = EV ÷ PV

If the SPI is less than one, it indicates that the project is potentially behind schedule to-date whereas an SPI greater than one, indicates the project is running ahead of schedule. An SPI of one indicates the project is exactly on schedule.

If you subtract the SPI from 1, you can see by what percentage you are ahead or behind schedule.

Example

You are managing the bathroom renovation project. The project has a budget of $1500 and is 40% complete. The project is a 3-month project and you planned to spend $500 per month (have $500 worth of work completed each month). You are evaluating status at the end of the first month.

BAC = $1,500
EV = $600
PV = $500

SV = EV – PV = 600 – 500 = 100 <– That’s good: we are ahead of schedule

SPI = EV ÷ PV = 1.2 <– Indicates we are 20% ahead of schedule

Summary

The earned value technique may be a helpful analysis tool, but it still requires the knowledge and judgment of the project manager and the project team to interpret the results.

Schedule variance = earned value minus planned value

Schedule performance index = earned value divided by planned value

See all posts in our PMP Concepts Learning Series

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