The schedule performance index in project management was developed to eliminate the guesswork and to provide a definite, quantifiable answer to the question, as well as to show where improvements are required for maximum efficiency. Following is a guide to SPI in Project Management.
What is the Schedule Performance Index (SPI) in Project Management?
The Schedule Performance Index in project management, commonly abbreviated as SPI, is one of the key outputs of Earned Value Management. It tells the project manager how far forward or behind the project is at the point of analysis.
“The Schedule Performance Index (SPI) is a measure of schedule efficiency, expressed as the ratio of earned value to planned value.” According to the PMBOK Guide
Schedule Performance Index (SPI) per project is a key project management performance measure that answers the question “Is your project behind or ahead of schedule in terms of time?” This indicates how efficiently time is used to complete a project by comparing what has been done to a certain date with what should have been completed to a certain date.
Schedule Performance Index Terms
You must be familiar with a few essential terms in order to understand the schedule performance index in project management and how to calculate it for yourself. Each of these is a key element of the SPI formula.
- Earned Value Management: Earned Value Management (EVM) is a technique for measuring project performance. This method includes calculating the schedule performance index.
- Planned Value: The Planned Value (PV) represents where you expected to be on the project schedule. Another method to consider planned value is how much you expected to achieve by a certain point in time. This is usually expressed in terms of hours worked or, in some cases, units produced.
- Earned Value: The Earned Value (EV) is the reality; where a project is on the schedule. This number should be close to, or the same as, the planned value, indicating that everything is on schedule. This is confirmed by an SPI calculation.
Schedule Performance Index (SPI) Formula in Earned Value Management
Schedule Performance Index = (Earned Value) / (Planned Value)
SPI= EV / PV
- If SPI is less than 1, this means that the project is behind schedule.
- If SPI equal 1, this means that the project is on schedule
- If SPI is greater than 1, this means that the project is ahead of schedule.
When Should you Calculate the Schedule Performance Index?
Throughout a project, a schedule performance index in Earned Value Management should be calculated at regular intervals. One of the main causes of project failure is falling behind schedule, and creating an SPI is a simple way to be proactive.
You can decide on these intervals as you create your schedule, as they may differ depending on the type of project and the length of the project. The important thing is that the SPI is calculated on a regular basis.
Schedule Performance Index (SPI) in Project Management Example
Project XYZ is to be completed in 12 months, and the budget is 220,000 USD. Six months have passed, and 120,000 USD has been spent, but upon closer review, you find that only 40% of the work has been completed so far.
Find the Schedule Performance Index and deduce whether the project is ahead or behind schedule.
Given in the question:
Actual Cost (AC) = 120,000 USD
Planned Value (PV) = 50% of 220,000 USD
In the question, the Planned Value(PV) is not given. However, the project duration is 12 months & 6 months have passed. In this situation, you can assume the budget was distributed equally for each month. Therefore, in 6 months, 50% of the budget will have been spent.
Earned Value (EV) = 40% of 220,000 USD
= 88,000 USD
Schedule Performance Index (SPI) = EV / PV
= 88,000 / 110,000
Hence, the Schedule Performance Index is 0.8
This means that Project XYZ is behind schedule since the Schedule Performance Index is less than 1.
To conclude, SPI in Project Management is one of the most often used techniques for ensuring that the project advances according to the established schedule. Although this technique is sometimes questioned due to flaws, it can provide a rough idea of your project’s performance as expected from the scheduling.
The Schedule Performance Index in Earned Value Management can help you in evaluating the progress of a project. These measures can help to determine whether or not you are performing to standards. If the ratio is more than one, you are doing well. If the ratio is less than one, there is a problem with the project that needs to be solved. In ideal conditions, the ratio should be one.