The purpose of this article is to describe Schedule Variance vs Schedule Performance Index variance and schedule performance index as elaborated in PMBOK Guide 6th Edition.
What is schedule variance vs schedule performance index in PMP?
Schedule Variance (SV):
Schedule Variance is a measure of the schedule performance of a project. It is expressed as the difference between Earned Value (EV) and Planned Value (PV). A positive SV indicates the project is ahead of the planned schedule. A negative SV indicates the project is behind the planned schedule. It is the amount by which the project is ahead or behind the planned delivery dates, at a given point in time. The EVA SV is a useful metric in that it can indicate when a project is falling behind or is ahead of its baseline schedule. The EVA SV is best used in conjunction with Critical Path Method (CPM) scheduling and risk management. The formula to calculate the Schedule Variance is mentioned below.
SV= EV-PV {SV is positive, the project is ahead of schedule SV is neutral, the project is on schedule SV is negative, the project is behind schedule
Schedule Performance Index (SPI):
Schedule Performance Index is a measure of schedule efficiency. It measures how efficiently the project team is accomplishing the work. It is expressed as the ratio of EV to PV. An SPI value less than 1.0 indicates less work has been completed than planned. An SPI greater than 1.0 indicates that more work has been completed than planned. It is sometimes used in conjunction with the Cost Performance Index (CPI) to forecast the final project completion estimates. Since the SPI measures all project work, the performance on the critical path also needs to be analyzed to determine whether the project will finish ahead of or behind its planned finish date. The formula to calculate the Schedule Performance Index is mentioned below.
SPI=EVPV {SPI>1.0, project is ahead of schedule SPI=1.0, project is on schedule SPI<1.0, project is behind schedule
Planned Value (PV):
It is the authorized budget assigned to scheduled work. It is the authorized budget planned for the work to be accomplished for an activity or work breakdown structure (WBS) component, not including management reserve. This budget is allocated by phase over the life of the project, but at a given point in time, planned value defines the physical work that should have been accomplished. The total planned value for the project is also known as Budget At Completion (BAC).
Earned Value (EV):
It is a measure of work performed expressed in terms of the budget authorized for that work. It is the budget associated with the authorized work that has been completed. The EV measured cannot be greater than the authorized PV budget for a component. The EV is often used to calculate the percent complete of a project. Progress measurement criteria should be established for each WBS component to measure work in progress. Project managers monitor EV, both incrementally to determine current status and cumulatively to determine the long-term performance trends.
Schedule Variance vs Schedule Performance Index is two earned value calculations that provide a measurement of project progress against the project schedule baseline. Both are very useful measures in project management training course.
Schedule Variance vs Schedule Performance Index Example:
A project has been undertaken in order to paint a room. The room has 4 sidewalls. since The effort estimated to paint one side of the wall is 1 person-day. One human resource (A) is assigned to complete the project. The cost associated with painting one side wall is USD 100. So, As per the definition of planned value mentioned in the above paragraph, the total planned value of this project is USD400 (4 * 100). This is the Budget At Completion (BAC). At the end of day 2, the project manager asks A the status of the project. A mentions that the one side is painted completely, and the second wall is painted half. The project manager then calculates the schedule variance and schedule performance index as per the formulas mentioned above. The details of the calculation are provided below.
Planned Value (PV) at the end of day 2 = USD 200 (2 * 100)
Earned Value (EV) at the end of day 2 = USD 150 (USD 100 for painting 100% of the first wall, and USD 50 for painting 50% of the second wall)
Schedule Variance (SV) = EV – PV = 150 – 200 = – 50
Schedule Performance Index (SPI) = EV / PV = 150/200 = 0.75
It can be inferred that the project is behind schedule as SV is negative and SPI is less than 1.0. As per the planned value, at the end of day 2, the second wall should have been painted completely.
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Trends and Emerging Practices in Schedule Variance:
Hence, Earned Schedule (ES) is an extension of the theory and practice of Earned Value Management (EVM). ES theory replaces the schedule variance measures used on traditional EVM (Earned Value (EV) – Planned Value (PV)) with ES and Actual Time (AT). Using the alternate equation for calculating schedule variance ES – AT, if the amount of earned schedule is greater than 0, then the project is considered ahead of schedule. In other words, the project earned more than planned at a given point in time. The Schedule Performance Index (SPI) using ES metrics is ES/AT. This indicates the efficiency with which work is being accomplished. ES theory also provides formulas for forecasting the project completion date, using ES, AT, and Estimated Duration.
You can also view blogs related to PMP Sample Questions and Answers and PMP Exam Format for more information.
