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Taking the Watch (Monitoring and Controlling) • 141

• Cost variance (CV) = EV – AC = $4,000 – $6,500 = –$2,500

We are over budget by $2,500!

• Schedule variance (SV) = EV – PV = $4,000 – $5,000 = –$1,000

We are behind schedule by $1,000 (a peculiar way to state schedule, but
a standard one).

• Cost performance index (CPI) = EV/AC = $4,000/$6,500 = 0.6153

For each dollar we spent, we are getting only about 62 cents worth of
accomplishment.

• Schedule performance index (SPI) = EV/PV = $4,000/$5,000 = 0.8

For each hour we put in, we are completing only 80% of what we had
planned.

It’s beyond the scope of this book, but we can also use these figures
to forecast the completion figures for the project. In this case, for
example, we can take our budget at completion (BAC) of $10,000
and divide by the CPI to get our estimate at completion (EAC) to
predict our final project cost, given the data at our halfway point.
That would be:

• EAC = BAC/CPI = $10,000/0.6153 = $16,252

endnotes

1. Robert K. Wysocki, Robert Beck Jr., and David Beck, Effective Project Management,
2nd ed., (New York: Wiley, 2000).
2. Alexander Laufer, “Managing Projects in a Dynamic Environment: Results-Focused
Leadership,” http://askmagazine.nasa.gov/pdf/pdf19/105553main_19_resources_
letterfromeditor.pdf.