By Scott Duehlmeier
One of your primary functions as a project manager is keeping your eye on the big picture. While team members are focused on individual tasks, and stakeholders are focused on the final product, you’re watching individual and group tasks and looking for anything that might threaten the timeline.
But, how do you know if you’re on track to deliver as expected? An effective and simple way to evaluate your timeline is with the schedule performance index.
See "How to Calculate and Use Slack Time" for more insight into how you can manage timelines for your projects.
Schedule performance index is one of several outputs of the earned value management system, which is essentially a project control technique to help project managers determine if their projects are on time and on budget. It’s a good way to assign a value to project progress that you can then show your team or stakeholders.
Schedule performance index is simple to calculate, and it provides a tangible insight into a project’s progress. If you measure early and often, it’s much easier to correct course when you’re 10% behind schedule than when you’re—gasp!—60% behind schedule.
Step 1: Determine Your Schedule Baseline
Start with a schedule baseline, which is made up of your original project scope, cost, and expected timeline. As you begin to complete the project, any changes you’ll need to make to the schedule or budget can now be measured against that baseline.
Your baseline is crucial, because it is the concrete marker that guides the entire project schedule. Any adjustments that need to happen should live in the project schedule, not the schedule baseline. So, you’ll want to make sure your stakeholders have signed off on the schedule baseline and everyone knows what it is before any work begins.
Step 2: Calculate Planned and Earned Value
Next up, you’ll calculate the planned value and the earned value. To find both, you’ll need to know what tasks have been completed so far and what tasks remain.
If you completed a work breakdown structure, this is a great time to use it. Here’s what you need to know about the planned and earned values:
- Planned value (PV) is what should have been completed by your current standpoint in the project. To calculate planned value, you multiply the total project budget by how much work your schedule baseline says should be complete by now.
Total Budget x Planned Work Completed = Planned Value
So if you are working on a six-month project with a budget of $10,000, and you are calculating the planned value from your vantage point at three months in, the equation will look like this:
$10,000 x 50% (or .5) = $5,000
Halfway through this project, you expect to have completed $5,000 worth of work, and your planned value is $5,000.
- Earned value (EV) represents how much of your budget has actually been used, or how much of the work has actually been done. To calculate your earned value, you will multiply the actual amount of work that has been completed by the total project budget.
Total Budget x Actual Work Completed = Earned Value
If three months into the six-month, $10,000 project, you have completed 60% of the work, the earned value equation will look like this:
$10,000 x 60% (or.6) = $6,000
Three months into the project, you completed $6,000 worth of work, and your earned value is $6,000.
Step 3: Calculate SPI
Finally, once you have determined what your planned and earned values are, calculating schedule performance index is simple: divide the earned value by the planned value. The equation looks like this:
SPI = EV/PV
Using the example from above, you know that the earned value is $6,000, and that the planned value is $5,000.
$6,000 / $5,000 = 1.2
So, in this example, at this point in the project, the schedule performance index is 1.2.
Step 4: Interpret the Results
Now that you’ve calculated and crunched your numbers, what does it all mean? When calculating schedule performance index, there are three possible outcomes:
SPI of 1: A schedule performance index of 1 means that your earned value and planned value are the same, and you are completing your project as expected.
SPI of Less Than 1: You have completed less of the work than you should have for the time or budget that have been used. You’ll need to adjust your schedule to make up time or budget.
SPI of More Than 1: You are ahead of schedule and have done more work than you planned to by this point in the project. Take a bow!
In our example, the SPI for the sample project is 1.2, which means you’re ahead of schedule. (Go you!)
How to Use (and Not Use) SPI
Schedule performance index is a great way to see how a project is progressing, but it’s not an in-depth analysis. It can tell you if things are on track or if they’re falling behind, but it can’t tell you why.
To get the most out of the schedule performance index, calculate it often and look at it through the lens of what else you know about the project.
A schedule performance index of 1 doesn’t necessarily mean everything is going smoothly; if your team has been working hours of overtime and stretching themselves thin to keep up with the timeline, it probably won’t be long before the schedule performance index starts to slip.
Remember schedule performance index is just one way of evaluating progress on a project. It shouldn’t be the only metric you watch, but it can be a good early indicator of problems, giving you enough time to make adjustments before it’s too late.
See "Keep Your Project on Budget with EAC (Estimate At Completion)" to learn about how you can manage financial resources more efficiently.