Schedule Variance (SV) in Earned Value Management

Schedule Variance (SV)

Schedule Variance (SV) in Earned Value Management
Schedule Variance (SV) in Earned Value Management

There are many tools and techniques used in project management to measure the performance of a project. One of the most popular tools for this purpose is the Earned Value Analysis.  This method allows the project team to measure the amount of work actually performed on a project in a correct way. While making performace measurements, Earned Value Analysis use the following parameters: Schedule Performance Index (SPI), Cost Performance Index (CPI), Schedule Variance (SV) and Cost Variance (CV). In this article we will explain the Schedule Variance (SV) and analyze some examples for calculating it.

Earned Value Analysis (EVA)

In the simplest form, Earned Value Analysis (EVA) can be explained as in the following scenario:

You created a schedule to produce six machine parts in this year. According to your plan, you will spend 100 hours to produce each of them. Ten months have passed and five of the machine parts are produced. When you check the projects performance with the project control team you see that you spent 300 hours to produce 5 machine parts.

This simple example shows that you are in a good position considering the performance of your project. Because there is no delay in the project schedule and you spent less manhours than planned. Basically, Earned Value Analysis use parameters to breakdown a projects schedule and cost performance . Schedule Performance Index (SPI), Cost Performance Index (CPI), Schedule Variance (SV) and Cost Variance (CV) are the indicators of Earned Value Analysis (EVA) that enables to make mathematical calculations.

Schedule Variance (SV) in Earned Value Management

Schedule variance (SV) calculates the difference between the Earned Value (EV) (the value of work performed) and the planned value (PV). Although variance in a schedule can be measured in time units, such as days and months, Schedule variance (SV) is expressed as a monetary value such as dollars.
SV is one of the essential outputs of Earned Value Management which informs the project teams how far ahead or behind the project is at the point of analysis.

Schedule Variance Formula

SV = EV – PV
 SV = Schedule Variance
 EV = Earned Value
 PV = Planned Value



Explanation of Results

 If SV is positive, the task is ahead of schedule.
 If SV is negative, the task is behind schedule.
 If SV is zero, the task is on schedule.

Now, let’s analyze the examples below for better understanding.

Schedule Variance Example 1

We have a project to be completed in 20 months and the budget of the project is 500,000 USD. 10 months have passed and 300,000 USD has been spent, but only 35% of the work has been completed so far.
Now we will calculate our project’s Schedule variance (SV) and understand if we are behind or ahead of our workschedule.
Planned Value (PV) = %50 * 500,000 = 250,000 USD
Earned Value (EV) = %35 * 500,000 = 175,000 USD
Actual Cost (AC) = 300,000 USD
SV = EV – PV
SV = 175,000 – 250,000 = – 75,000 USD
Our project’s Schedule Variance is -75,000 USD and we are behind the schedule. Therefore, corrective action should be taken to reach the targets.



Schedule Variance Example 2

We have a budgeted cost of a project at $700,000. The project is to be completed in 10 months. After a month, we have completed 10% of the project at a total expense of $150,000. The planned completion should have been 20%.
Planned Value (PV) = %20 * 700,000 = 140,000 USD
Earned Value (EV) = %10 * 700,000 = 70,000 USD
Actual Cost (AC) = 150,000 USD
SV = EV – PV
SV = 70,000 – 170,000 = – 70,000 USD
SV is negative and the project is behind the schedule.



Schedule Variance Example 3

Assume that you have a construction project to be completed in 30 weeks. The estimated project budget is 450,000 USD. 10 weeks have passed and 180,000 USD has been spent for the construction works. However only 20% of the project scope has been completed. Is your project behind or above the schedule ?

Now we will calculate the project’s Schedule variance (SV)

Planned Value (PV) = (10/30) x 450,000 = 150,000 USD
Earned Value (EV) = %20 x 450,000 = 90,000 USD
Actual Cost (AC) = 180,000 USD
SV = EV – PV
SV = 90,000 – 150,000 = – 60,000 USD

Your project’s Schedule Variance is -60,000 USD and you are behind the schedule. Therefore you must perform schedule analysis to understand the root cause of the delay.

Schedule Variance Example 4

Assume that you are a project manager of a software development project. The project consists of 20 phases and all the phases must be completed in 20 weeks. The estimated project budget is 90,000 USD. 10 weeks have passed and 20,000 USD has been spent. Your team completed 14 phases.  Is your project behind or above the schedule ?

Now we will calculate the project’s Schedule variance (SV)

Planned Value (PV) = (10/20) x 90,000 = 45,000 USD
Earned Value (EV) = (14/20) x 90,000 = 63,000 USD
Actual Cost (AC) = 20,000 USD
SV = EV – PV
SV = 63,000 – 45,000 = 18,000 USD

Your project’s SV is 18,000 USD. This positive variance demonstrates that you are above the schedule. Your projects performance is good.

Summary

Earned Value Management (EVA) allows the project team to make decisions related with the projects performance by answering the following questions: Where have we been ?, Where are we now ? and Where are we going? While answering these questions, Earned Value Management System needs parameters such as Schedule Variance (SV) and Schedule Performance Index (SPI).

Schedule Variance is a strong tool to inspect projects performance . If variance is negative we are behind the schedule and corrective action should be taken to reach the targets. If variance is positive we can say that our projects progress is well.

Note that this is a significant concept for the PMP Exam. Therefore you must understand the Earned Value Management Concept and its key aspects to pass the exam.

External References

Earned value management systems (EVMS)

See Also

Cost Variance (CV) in Earned Value Management

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