Performance Indices and Variance

• Schedule Variance (SV) = Earned Value – Planned Value. The difference between what was planned to be completed and what has actually been completed as of the current date.
   
  
• Cost Variance (CV) = Earned Value – Actual Costs. The difference between the work that has been accomplished (in dollars) and how much was spent to accomplish it.

In the graph below, the project shown has a negative Schedule Variance, because it has “earned” less value than was planned, as of the current date. However, it has a positive Cost Variance, because the Earned Value is greater than the Actual Costs accrued:

• Schedule Performance Index (SPI) = Earned Value / Planned Value. Schedule variance related as a ratio instead of a dollar amount. A ratio less than 1.0 indicates that work is being completed slower than planned.
   
• Cost Performance Index (CPI) = Earned Value / Actual Costs. Cost variance related as a ratio instead of a dollar amount. A ratio less than 1.0 indicates that the value of the work that has been accomplished is less than the amount of money spent.

In the schedule below, Project A has a CPI greater than 1.00. This shows us that the project has been earning value faster than it has been accruing costs:

However, Project A also has a SPI value that is less than 1.00. Although Actual Costs are low, Task 1 is behind schedule, so the project has not earned as much value as was planned.