Schedule Variance
By James Bell
- Metrics and Ratios , Project Management ,
- 12 Apr
Schedule Variance is an Earned Value Management metric that tells us if a project is behind, on, or ahead of schedule. We will go over the traditional way of calculating it and then an alternate way of calculating this metric.
The result of this formula is a dollar amount. This is confusing because we are looking at a schedule and the value that we get to describe the variability of a schedule results in a dollar value. We interpret the dollar values as follows. Negative values means that the project is behind schedule which is not good. A positive number means that we are ahead of schedule which is generally viewed as good.
Schedule Variance
![\[ SV = EV - PV \]](http://stumptownfin.com/wp-content/ql-cache/quicklatex.com-7de37a8ddeed4e9b28ab45805d1a3365_l3.png "Rendered by QuickLaTeX.com")
where
= Earned Value
=Planned value
Earned Value
EV is the sum total of all the completed Planned Value activities. Click the hyperlink above to learn more about Earned Value.
Planned Value
PV is the value of completed work thus far. Click the link above to learn more about this.
Other Considerations
Previously, we said that a positive SV is generally good but this is not always the case. A high SV may be due to poor estimations or forecasts during planning. This means that resources were tied up and not being used to generate value either in other parts of the project or for another part of the business. While too high of a SV can be wasteful, if it is truly due to an increase in efficiency or some other type of magic, then we’re good right? Due to the complexity of this, proceed with a bit of caution when trying to traffic light this metric.
A problem with this method is shown when projects are front loaded or deviate from a consistent loading of work throughout the project. This is not an obscure thing with projects. What happens with this metric in those situations is that sometimes the time and the money spent do not line up. This can give us odd SV values. Front loaded projects may be red flagged as problems when the reality may be that it is actually our metric that isn’t working. This is just one simple example and hopefully you can see why we like the alternative way of calculating it.
Alternative Formula
This is a newer method of calculating Schedule Variance. It tries to avoid the problems we see with the previous SV calculation.
![\[ SV\:=\: ES \:-\: AT \]](http://stumptownfin.com/wp-content/ql-cache/quicklatex.com-74b6fc1438c0c0a0fccaa3fbe53bee87_l3.png "Rendered by QuickLaTeX.com")
where
Schedule Variance
Earned Schedule
Actual Time
Earned Schedule
This is a bit complicated to calculate and there are plenty of sites and articles that you can peruse using your favorite search engine. I would argue that complexity of this metric is one reason for slow adoption regardless of it’s validity. Our output for this method is in units of time which seems more natural than dollars.
Actual Time
Earned Schedule gives us time units and you can keep the actual time in similar units. From there it’s just subtracting AT from ES to get SV. The ES is the complicated part of this method.