A short, informal YouTube tutorial (by Anthony LaFazia) explaining earned value management basics: how to compute and interpret schedule variance (SV = EV − PV) and cost variance (CV = EV − AC), plus the schedule performance index (SPI = EV / PV) and cost performance index (CPI = EV / AC). The speaker uses humorous analogies to explain interpretation thresholds (positive/negative/zero for variances; >1, <1, =1 for indices) and notes these metrics are useful beyond projects (e.g., sales, operations).
Questions this video answers
SV = EV − PV
CV = EV − AC
SPI = EV / PV
CPI = EV / AC
EV − PV > 0 means the project is ahead of schedule.
Chapters
Alright, time for some math. Don't freak out. It's not rocket science. We're just doing some fancy subtraction and division to see if we're winning or spectacularly failing. First up, the variances. Variance analysis or comparing our planned value, earned value and actual cost numbers against each other tells the difference between our project reality and our project dreams. Schedule variance SV. Take EV minus PV. Is the result positive as in greater than 0, you're ahead. Pat yourself on the back. Show off. Negative, you're behind. Welcome to the majority. Zero, you're exactly on schedule. Which is about as common as finding a decent cup of coffee at a gas station out in the middle of nowhere. Cost variance. Now take EV minus ac. Positive, you're under budget. Cherish this moment, it won't last. Negative, you're bleeding cash. Start looking for ways to cut costs, like maybe replacing the office coffee with tea bags. Zero, you're exactly on budget. Right up until the next unexpected expense. Now the indices. These give us a sense of efficiency. Are we getting the most bang for our buck? And our Time Schedule Performance Index. SPI measures how efficiently your project's progressing based on its schedule. Take EV pv. Over one, you're getting more done than planned for the time spent. You speed demon. Under one, you're dragging your feet or facing some serious roadblocks. Exactly one, you're precisely on your planned pace. Cost Performance Index cpi. CPI is a measurement of how efficiently the project's being completed within its budget. Take EV ac. Now is it over one, You're a cost cutting wizard. Under one, you're spending more than you should be. Time to investigate where all the money's going. Probably spent too much in the gumball machines at that Fancy gas station 80 miles back. Exactly one, you're spending exactly what you've earned. These metrics not only work for project management, they apply to sales management and general operations too.
