Page 208 - Project+

70,000 / 71,000 = .99

Since the result is less than 1, it means cost performance is worse than expected.

The schedule performance index (SPI) measures the progress to date against the
progress that was planned. This formula should be used in conjunction with an
analysis of the critical path activities to determine whether the project will finish ahead
of or behind schedule. If SPI is greater than 1, your performance is better than
expected, and you’re ahead of schedule. If SPI is less than 1, you’re behind schedule at

the measurement date.

The schedule performance index (SPI) is calculated this way:

SPI = EV / PV

Again, let’s see where you stand with this example:

70,000 / 75,000 = .93

Schedule performance is not what you expected as of December 1.

Keep in mind that all of these formulas start with EV. Remember that the
variances use subtraction and the performance indexes use division. Cost

performance uses actual costs, and schedule performance uses planned value.
Here’s a recap of the formulas:

CV EV – AC

CPI EV/AC

SV EV – PV

SPI EV/PV

Burn Rate

Burn rate is the rate you are spending money over time. For example, if you had a
$12,000 budget and you’re spending $2,000 a month, you’ll run out of money in six
months. That’s great if you are running a five- or six-month project. It’s not so great if

you’re running a twelve-month project. Unfortunately, spending is rarely spread out
evenly over the course of the project, so calculating burn rate isn’t quite as simple as
I’ve just explained. Burn rate on a project is typically calculated using the cost
performance index (CPI) calculation.

Another method of determining burn rate uses the estimate to complete (ETC)
formula. This is the cost estimate for the remaining project work. It is typically
provided by the team members actually working on the project activities. Using the

previous example, the project budget is $12,000, you’ve spent $8,000 to date, and the
ETC is $6,000. Your spending is outpacing the project work, and you will likely run out

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