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The project schedule is a critical project tool. It communicates many things: which tasks must be done and when, the resources assigned to perform tasks, due dates, the milestones the team has achieved and is yet to achieve, and so on.
A project that’s behind schedule can cause a series of events detrimental to project success:
This is why project managers, regardless of the project management framework they adopt, use an assortment of techniques and tools - Gantt charts, PERT charts, the prioritization matrix, etc., -- to keep things on schedule.
And then, there’s this indicator called the schedule performance index (SPI), which measures the project’s actual performance against the schedule.
The schedule performance index is a subset of earned value management (EVM), a popular but controversial technique for measuring project performance. EVM shows how the work accomplished to date measures against the baselines established during the project planning stage.
Both schedule variance (SV), also an EVM calculation, and SPI measure whether a project is behind, on, or ahead of schedule. SV gauges how much the actual work is deviating from the planned schedule, while SPI is the ratio of the performed work to the scheduled work.
It quantifies scheduling efficiency and shows, in percentage terms, the project’s status vis-a-vis the timeline.
Find more info on the schedule variance calculation, plus examples, in our SV article here.
Cost performance index (CPI) is also an earned value metric. While SPI measures scheduling efficiency, CPI measures the project’s cost efficiency. It’s the ratio of the work completed to date to the total amount spent to complete the work.
The CPI formula is:
If the CPI calculation is:
To calculate earned value:
Budget at completion is the total project budget.
As for the AC, get all the costs associated with the work performed, including labor, machinery, travel, software licenses, etc.
Another earned value formula worth mentioning is the cost schedule index. It measures the project’s overall efficiency and indicates how likely a project that’s deviating from baselines is to recover.
It’s calculated as:
The farther the CSI is from 1.0, the more unlikely a project that is late and/or over budget is to recover.
To illustrate the relationship between earned value and planned value, which are necessary for calculating SPI, take a look at this graph:
To calculate your project’s SPI performance, the formula is:
If the SPI calculation yields a value that is:
We already know how to calculate the earned value. To find the planned value, multiply the percentage of the scheduled work to the project’s budget.
So if your project is scheduled for, say, two weeks and it’s now exactly a week since you started, according to the schedule, your project should already be 50% complete.
Let’s consider some examples.
Project #1 has a $5,000 budget and is scheduled for 30 days. To date, 50% of the work is complete, which is in line with the project’s schedule.
Based on the figures on the sheet, the earned value is:
The planned value to date is:
Substituting EV and PV in the SPI formula, we get:
Since SPI is equal to 1, the project is on schedule. You’re getting an hour’s worth of work for every hour you put into the project.
Now, if you’re thinking, sure, it’s on schedule, but it’s over budget, you are correct. But SPI isn’t designed to measure cost efficiency. That’s CPI’s job -- hence, the “cost” in cost performance index.
To calculate CPI:
Since CPI is less than 1, the project is over budget. For every $1 you spend on the project, you get $0.83 back.
Next, we have a 15-day project on a $10,000 budget. Three-fourths of the project is scheduled for completion today, but the project team went above and beyond expectations by completing 80% of the work instead of 75%.
The project’s earned value is:
As for planned value:
Now, computing for SPI, we have:
Since SPI is greater than 1, our project is ahead of schedule. For every hour you put in, you get back 1.06 hours’ worth of work.
But what about the CPI? To get the CPI:
In terms of cost efficiency, the project is on budget. You get a dollar’s worth of work for every dollar you spend on it.
Although useful to measure project performance, SPI has limitations. It’s important to keep the following considerations in mind when working with SPI.
SPI cannot distinguish critical from noncritical tasks -- meaning, noncritical tasks that are ahead of schedule may obscure critical tasks behind schedule. Therefore, SPI may indicate a project is moving at a good pace when it actually isn’t.
Also, at the end of every project, the SPI is always marked as 1, regardless of the actual completion date. So even if you deliver the project six months after the due date, SPI will say it’s on schedule.
SPI relies heavily on the accuracy of the data you feed it. If the data you’re working off of is problematic, e.g., incomplete work breakdown or delayed costs reporting, then SPI won’t be much help. Garbage in, garbage out.
To get an accurate view of the project’s schedule performance, SPI values are best analyzed alongside other project management techniques, particularly the critical path method (CPM). This way, if SPI is indicating one thing and CPM another, dig deeper and uncover the true story.
SPI is just one of several ways to stay in control of the project’s schedule. While not perfect, it’s no doubt a useful tool for ensuring the project follows its designated roadmap.
So your project team can more efficiently collaborate on projects and better track your project’s schedule, consider some of the project management software options The Ascent has reviewed. We rate each one according to ease of use, features, pricing, and quality of support.
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