Earned Value Management
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Performance Indices and Variance

Once Earned Value and Planned Value are known, they can then be used to determine schedule and cost variance, and calculate performance efficiency.

Variance Calculations:
  • 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:

Earned Value Variances

Performance Indices:
  • 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:

Earned Value Performance Review

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.

For further reading, try this free Earned Value Management eBook:

 
Successfully Presenting Earned Value is a free e-book which will help you learn to implement and present Earned Value schedules.  It offers both an explanation of Earned Value Management principles, and step-by-step instructions.  This e-book is offered at no charge.  After reviewing it, you may be interested in downloading our Milestones Professional software.  Milestones Professional was used to produce the presentation-ready Earned Value reports shown in the e-book and can be used to make schedules in many formats, including Gantt charts, Milestone charts, Summary charts, Resource Charts and more. 

All example schedules on this website were made with Milestones Professional Project Management Software.