Illustrated Guides to Understanding Earned Value: Cost Performance Index Versus Schedule Performance Index

Discover the Earned Value Components – CPI versus SPI and how understanding these indicators can help you identify how effective your budget and schedule are. Learn how we can help you prepare for your PMP exam.

By
Visual PMP Academy
,
on
February 24, 2023

Understanding why project managers use Earned Value Management, is key to determining which indicators are most effective for managing any given project. SPI and CPI provide you with tools to measure the effectiveness of the project schedule and budget.
Learn more here about SPI and CPI in this course.
Typically used in conjunction with visuals tools such as tables, videos, animation, SPI and CPI can help create a more detailed picture of the project and help identify any potential risks or issues that may arise. Here at Visual PMP Academy we illustrate these relationships with visual tools you can access below such as different categories of tables, videos, animation and questions to enhance your learning and understanding of SPI and CPI and how it can be used to better manage projects and ensure their success.

Earned Value (EV) is also known as Budgeted Cost of Work Performed (BCWP). It is the relationship between the budget and the percentage of completion of a project.

EV= Actual Percent Complete X Task Budget

There are three components of Earned Value Management as follows:

1. Earned Value is the amount of work completed.
EV= Actual Percent Complete X Task Budget

2. Planned Value is the amount of the task that is supposed to have been completed.
PV=Planned Percent Completed X Task Budget

3. Actual Cost is the actual amount of money that has been spent for the work completed.
AC= Actual Cost of the Task

Cost Performance Index (CPI) is a measure of cost efficiency of budgeted resources expressed as a ration of earned value to actual cost.
CPI=EV/AC

Schedule Performance Index (SPI) is a measure of schedule efficiency expressed as a ratio of earned value to planned value.
SPI=EV/PV

There are three scenarios for CPI values:

CPI<1:

What does a CPI of 0.9, 0.75, 0.85, 0.78, 0.89, 0.5 mean?
What does it mean when CPI is low?
What if CPI is less than 1?
How do you interpret the CPI value?

In this case, the budgeted cost for the work completed is less than the actual amount of money that has been spent for the work completed.

CPI=1:

In this case, the budgeted cost for the work completed is equal to the actual amount of money that has been spent for the work completed. 

Example:

CPI>1:

What does a CPI value greater than 1 indicate?

In this case, the budgeted cost for the work completed is more than the actual amount of money that has been spent for the work completed.

Example:

There are three scenarios for SPI values:

SPI<1:

What does an SPI of 0.8, 0.9 mean?
What happens if SPI is less than 1?
What does a schedule performance index SPI of 0.67 mean?
How do you calculate SPI?

In this case, the Work Performed is less than the amount of the task that is supposed to have been completed.

Example:

SPI=1:

In this case, the Work Performed is equal to the amount of the task that is supposed to have been completed.


Example:

SPI>1:

What if SPI is greater than 1?
Is a high SPI good?

In this case, the Work Performed is more than the amount of the task that is supposed to have been completed.

Example:

If CPI>1 and SPI>1:

In this case, the budgeted cost for the work completed is more than the actual amount of money that has been spent for the work completed and the Work Performed is more than the amount of the task that is supposed to have been completed. In this case, the Earned Value is higher than both the Planned Value and the Actual Cost.

Example:

If CPI>1 While SPI<1:


If CPI<1 While SPI>1:

If CPI<1 While SPI<1:

How do I study for PMP?

Contact us to learn how we can help you prepare for your PMP exam.

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