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Software Development and Project Management

In a project with a budget at completion (BAC) of ¥20 million, at a certain point the planned value (PV) was ¥8 million, the earned value (EV) ¥6 million and the actual cost (AC) ¥7.5 million. Which correctly describes the project's status at that point?

  1. AIt is behind schedule (SPI = 0.75) and over budget (CPI = 0.8)
  2. BIt is behind schedule (SPI = 0.75) but within budget (CPI = 1.25)
  3. CIt is ahead of schedule (SPI = 1.33) but over budget (CPI = 0.8)
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Answer: A. It is behind schedule (SPI = 0.75) and over budget (CPI = 0.8)

The schedule performance index is SPI = EV ÷ PV = 6 ÷ 8 = 0.75, which is less than 1, so the project is behind schedule (schedule variance SV = EV − PV = −¥2 million). The cost performance index is CPI = EV ÷ AC = 6 ÷ 7.5 = 0.8, which is less than 1, so more has been spent than the budget for the completed work (cost variance CV = EV − AC = −¥1.5 million). In EVM, comparing the earned value (EV) with both the planned value (PV) and the actual cost (AC) evaluates progress and cost on the same monetary scale.

  • A. Correct. SPI = 6 ÷ 8 = 0.75 and CPI = 6 ÷ 7.5 = 0.8, both less than 1.
  • B. This computes CPI the wrong way round, as AC ÷ EV. CPI = EV ÷ AC = 0.8, so the project is over budget.
  • C. This computes SPI the wrong way round, as PV ÷ EV. SPI = EV ÷ PV = 0.75, so the project is behind schedule.
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