Page 207 - Project+

PV = 75,000

AC = 71,000

EV = 70,000

Now let’s calculate the CV using these numbers:

70,000 – 71,000 = –1,000

The result is a negative number, which means that costs were higher than what was
planned for the work that was completed as of December 1. These costs are usually not
recoverable. If the result was a positive number, it would mean you spent less than
what you planned for the work that was completed as of December 1.

Schedule Variance

Schedule variance, another popular EVM variance, compares an activity’s actual
progress to date to the estimated progress and is represented in terms of cost. It tells
you whether the schedule is ahead of or behind what was planned for this period. This
formula is most helpful when you’ve used the critical path methodology to build the
project schedule. The schedule variance (SV) is calculated as follows:

SV = EV – PV

Plug in the numbers:

70,000 – 75,000 = –5,000

The resulting schedule variance is negative, which means you are behind schedule or
behind where you planned to be as of December 1.

Together, the CV and SV are known as efficiency indicators for the project and can be
used to compare the performance of all the projects in a portfolio.

Performance Indexes

Cost and schedule performance indexes are primarily used to calculate performance
efficiencies, and they’re often used to help predict future project performance.

The cost performance index (CPI) measures the value of the work completed at the
measurement date against the actual cost. It is one of the most important EVM

measurements because it tells you the cost efficiency for the work completed to date or
at the completion of the project. If CPI is greater than 1, you are spending less than
anticipated at the measurement date. If CPI is less than 1, you are spending more than
anticipated for the work completed at the measurement date.

The cost performance index (CPI) is calculated this way:

CPI = EV / AC

Plug in the numbers to see where you stand:

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