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As I mentioned in Part 1, EVM is not scary. In fact, once the tools are in place it is really a matter of interpreting the data that is presented. As far as analyzing and presenting data is concerned, I would not want to use any other tool. Nothing else can get us the granularity to see how things are really progressing with our projects at any given time. There is one key, however . . . earned value is just that, what have you EARNED. Perhaps better stated is “what have you completed”. If the customer stopped the project today and asked for completed products, what would you give them. A car that has no wheels on it is not a completed product, therefore would not be counted as complete in our calculations.

So, keep that in mind when doing your calculations.

I want to first introduce to you my favorite calculations – The Performance Indices, CPI and SPI. CPI, or Cost Performance Index, is a quick look at how your project is measuring up from a cost perspective. Meaning, how much have you spent to earn what you’ve earned. It is presented as a number that should hover around 1.0. A 1.0 CPI is a “perfect” cost index. Anything above 1.0 is good or under budget. Anything below 1.0 is bad, or over budget. And of course, a 1.0 is exactly on budget. The SPI: Schedule Performace Index is exactly the same as the cost index except it deals with time rather than dollars. Again, anything 1.0 or above is good (on or ahead of schedule) and below is bad (behind schedule).

Take a look at the following graphic. What are some things you notice?

One thing, as you can see, the CPI, or cost performance index, is way above 1.0. This is good from a budget standpoint(way under), but the PM (me in this case) chould probably take a look at his estimating techniques. The SPI has a completely different story. For much of this project, the team was behind schedule, sometimes severely. This indicated that the project was way behind schedule and more money should be spent in order to catch up. Looking back on this chart and thinking about the challenges we had, I know exactly what I would do for the next one (and it involved spending more money on specific resources that would allow for the schedule to be even higher.)

How did I get there? Simple . . .
CPI=Earned Value divided by Actual Cost (CPI=EV/AC)
SPI=Earned Value divided by Planed value (SPI=EV/PV)

Do you remember what EV is? That’s right, it is the % complete based on what deliverables have actually been completed. Your planned value, of course, is what your project plan said you were going to have completed (in % Complete) on the date of the report.

You might have noticed the little “c” at the end of CPI and SPI (CPIc – SPIc). This stands for “cumulative” or the current state of the entire projet, not just a single snap shot. The chart above has data points for each week so I could see any trends developing.

That’s it for this post. I hope you all had a Merry Christmas. Thanks for reading.

Next up: Variances!

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