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Performance
Indices and Variance |
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Once Earned Value and Planned
Value are known, they can then be used to determine schedule and
cost variance, and calculate performance efficiency.
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Variance Calculations: |
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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.
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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.
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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: |
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Performance Indices: |
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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.
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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.
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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: |
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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. |
