Lessons · Project management · CPI and SPI
CPI and SPI: what each dollar bought, and how fast
The cost performance index is EV / AC and the schedule performance index is EV / PV; 1.0 is on plan, below 1.0 is bad, above 1.0 is good.
Hone is a place to practise a career, one idea a day. This is one of its lessons, written out in full and free to read without an account.
What it is for
A $20,000 variance is a disaster on a $100,000 project and a rounding error on a $10,000,000 one. The index removes the size: a CPI of 0.80 means every dollar spent bought 80 cents of work, on any project, and that number can be compared across a whole portfolio.
How to think about it
Earned value on top, always. Divide by actual cost for CPI, by planned value for SPI. Read CPI as cents of work per dollar spent, and SPI as the fraction of the planned pace.
Worked example
EV = $80,000, AC = $100,000, PV = $100,000The status.
CPI = 80,000 / 100,000 = 0.80Every dollar spent bought 80 cents of work.
SPI = 80,000 / 100,000 = 0.80The team is moving at 80% of the planned pace.
Both below 1.0: over cost and behind scheduleThe same story as the variances, now in a size-free form.
Your turn
EV is $90,000 and AC is $75,000. Write the cost performance index.
CPI = 90,000 / = 1.20
Solve one, graded on the server
The trap
Putting AC on top. 100,000 / 80,000 = 1.25 looks healthy. The formula is EV over AC so that below 1.0 always means trouble.