Determining Schedule Performance using EVM

Using earned value management, schedule performance can be measured using two formulas: schedule variance (SV) and the schedule performance index (SPI). To apply these formulas, earned value and planned value must be determined. Earned value is the financial value of the work completed as of the reporting date. Planned value is the financial value of the work planned as of the reporting date.

Let’s take a look at these two formulas in more detail:

Schedule Variance (SV)

Using earned value, the schedule variance formula will provide an assessment of the work performed against the work that was planned. The schedule variance will indicate whether the project is ahead of schedule, on schedule, or behind schedule in completing the work of the project.

The schedule variance formula is SV = EV – PV. Schedule variance is equal to earned value minus the planned value. The planned value is the work that was planned to be performed by the status reporting date.

Let us apply the formula using an example. A project reports an earned value of $40K and the planned value is $45K.

SV = EV – PV

SV = $40K - $45K

SV = $(5K)

The result is negative five thousand dollars. A negative result is unfavorable and indicates the project is running behind schedule. A result of zero indicates the project is on schedule. A result greater than zero indicates that the project is ahead of schedule.

Schedule Performance Index (SPI)

The schedule performance index measures schedule efficiency and is used to help determine if the project completion date can be achieved. Once you have determined the schedule efficiency or the SPI, then you should be able to ask: if we continue at this rate, will we complete the project in time or not?

The schedule performance index formula is: SPI = EV / PV. The schedule performance index is the earned value divided by the planned value.

Let us apply this formula to the situation above:

SPI = EV / PV

SPI = $40K / $45K

CPI = 0.89

The result is 0.89 or 89 percent efficient. If the result is less than one, this is not favorable and if this performance continues, you will be late on the project. If the result is one, your project is on track to be finished on time. If the result is greater than one, this is a favorable variance and if this performance continues, you will finish earlier than planned.

Summary

If earned value and planned value can be determined as of the reporting date, then schedule variance and schedule efficiency can be calculated with these two formulas:

• Schedule variance = Earned value minus the planned value
• Schedule performance index = Earned value divided by the planned value

Earned value management can be used to provide an objective assessment of schedule performance.

Eddie Merla, PMP

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