What is SPI and where is it used?

SPI stands for Schedule Performance Index.

The SPI is a very powerful measure of the amount of work actually completed on a project. It is part of the Earned Value Management Techniques.

According to PMBOK Guide, the Schedule Performance Index definition is: A measure of schedule efficiency expressed as the ratio of earned value to planned value.

To calculate SPI for any project, find out the Planned Value (PV) and the Earned Value (EV). The formula for calculating the Schedule Performance Index is:

SPI = EV / PV

Schedule Performance Index Example: If you planned to finish 80% of the construction in 6 months time, but you actually managed to finish only 60% work due to delays, quality issues etc., then the SPI would be calculated as follows:

SPI = 60/80
= 3/4
= 0.75

SPI is a ratio, which shows you the amount of value you are getting for every day you are working on the project.

So an SPI of 0.75 means that for every time unit you are spending on the project, you are getting only 0.75 worth of work done. So for each day, you get only a 75% value, and the project schedule will be delayed. It will need an extra 25% time to recover.

Also, there are other repercussions. Most of the time, if the schedule is extended beyond the deadline or time line, then additional cost is required to complete it. Or else the project manager may choose to reduce scope, so as to finish as per the time line.

In either case, the project suffers – it has to be extended, or more funds need to be raised, or else the scope has to be cut – an impact on the Triple Constraints of a project.

As a rule of thumb,  for Schedule performance index (SPI),

EV/PV  greater than 1 is good (ahead of schedule), and less than 1 is bad ( behind schedule).

Keep this rule in mind, and it will assist you to gauge the speed and efficiency of the project with just these 2 numbers.

Mock PMP Questions on Schedule Performance Index:

Q1 : A schedule performance index (SPI) of 0.83 would mean:
1. The project is over budget
2. The project is under budget
3. The project is ahead of schedule
4. The project is behind schedule.

Q2 : The BlueStar project has a schedule performance Index(SPI) of 0.83. There have been many delays and the contractors have delivered poor quality materials, resulting in delays. What would you do FIRST?

1. Find other suppliers who can deliver better quality materials.
2. Check the CPI to see if it is below 1 also. IF CPI is above 1, then no action is required.
3. Examine the Critical Path Method to look at crashing or fasttracking to bring the schedule under control.
4. Plan to do a parametric estimation in future projects.

Test your knowledge about the Schedule performance Index and its calculations, and the SPI indicator. Post your answers as comments below, along with your reason. I’ll see if your reasoning is correct!

All the best if your PMP exam preparation. Prepare well on the Earned Value Management Techniques. There will be easily about 10 questions touching on the SPI and CPI calculations.

If you wish to learn how to apply the Earned Value Techniques in Microsoft Project, you can visit this site for a step by step tutorial

We will cover CPI in the next post.  Till then…

Cheers
Vinai Prakash, PMP
Editor, PMChamp.com