Question

1. If at the end of week three of a project you discover you that SV is negative but SPI is 1.06. What does this mean?

2. What is the difference between percent complete and percent complete with gates Earned value (EV) measurement rules? What advantage does the latter have over the former?

3. Cost Variance (CV) and Cost Performance Index (CPI) can both be used to determine whether a project is on budget, under budget, or over budget at a particular point in time. What should a PM look for when reviewing CV and CPI information? What additional EVM analyses/calculations are supported by CPI?

Answer 1

Schedule variance (SV) is calculated as the difference between earned value (EV) and planned value (PV). How much value have we earned in the project based on our budget at completion (BAC) and what percentage of work has been completed and how much did we plan to have spent by this point in the project?

SV = EV – PV

If we have a negative schedule variance it means that we are behind schedule.

A positive SV indicates that we are trending ahead of schedule. A variance of zero indicates the project is exactly on schedule

SPI = EV ÷ PV

If the SPI is less than one, it indicates that the project is potentially behind schedule to-date whereas an SPI greater than one, indicates the project is running ahead of schedule. An SPI of one indicates the project is exactly on schedule.

Negative SV does not mean we are behind schedule in terms of target date at the moment. But it shows us there are some delay, and the schedule have high probablity of delay in future. Some activites are consuming the float of the schedule, more activities trends to be critical. We may have more problem with resource management.

Cost Variance can be calculated by subtracting the actual cost from earned value.

Cost Variance = Earned Value – Actual Cost

CV = EV – AC

From the above formula, we can conclude that:

• If Cost Variance is positive, this means you are under budget.
• If Cost Variance is negative, this means you are over budget.
• If Cost Variance is zero, this means you are on budget.