This article aims to summarize some comments on the most common project management measurement indicators: CPI and SPI.
The Cost Performance Index 'CPI' and The Schedule Performance Index 'SPI', are the values most used to evaluate project execution performance. The first is related to the execution cost and the second one is to the progress made in relation to the project planning.
These indices are based on others that are defined as follows:
• BAC: Budget at Completion, is the budget approved as Project Value of the project.
• PV: Planned Value, also called Budgeted Cost of Work Scheduled (BCWS) is the Value that the Executed Work should have in each period according to the Planning in terms of the authorized budget. 'PV' is the value of the work scheduled up to the time of analysis in relation to the value of the total budgeted work. The accumulated value of the PV is called the Performance Measurement Baseline (PMB) is the one that serves as a comparison with the Value of the work actually executed 'EV' for the analyzed period.
• EV: Earned Value. It was formally called the Budgeted Cost of Work Performed (BCWP). EV is the value of the work actually executed in the analysis period. Measurement Baseline (MBP) is used to calculate the EV of the completed portion of the project's work. The execution performance of the project can be measured in terms of the Earned Value “EV”. It is useful for understanding performance and for determining long-term performance trends.
• AC: Actual Cost, is the value of the costs incurred to carry out the work in the particular period of analysis. It is the total value of all cost elements, direct and indirect costs, which can be followed from invoices and accounting books. It is important to note that AC is unbounded and has no limit. The value of AC must be measured independently of the other indices for each period.
• CPI: Cost Performance Index is defined as the quotient of dividing the value of EV over AC; CPI = EV/AC, it represents the amount of earned value 'EV' for each unit of current cost 'AC' spent.
• SPI: Schedule Performance Index or Plan Performance Index, is defined as the quotient of dividing the value of EV over PV; SPI = EV/PV
Well, as we know, the Present Cost Value (AC) does not come from any formula, it is the sum of costs incurred to obtain the Earned Value (EV) in each period. Therefore, it can be greater than, less than or equal to EV, with which the value of the CPI Index can be < 1, = 1, or > 1. Normally, in projects, the Earned Value (EV) is less than the expenses incurred (AC) in the first periods of the project programming.
It should be mentioned that in the Project Management literature it is not mentioned, (or very little is done) that, as well as the EV values per period (PV) are planned until reaching the Project Value (BAC) it is important to have an estimate of the AC Value for each period and the final AC Value at the end of the project. Of course, at the end of the project, the value of AC should not be greater than the BAC because it would not make sense, either cost control was not carried out or there were force majeure causes that caused costs to rise excessively.
It must be said that the CPI value is an indication of what it is costing to obtain the earned value in a project period. It tells us nothing about what the earned value should be with respect to planning. We have this information with the SPI index since it tells us how far the EV earned value can be in relation to what it should be according to the Planning, that is, the PV. For this reason, the most useful index to keep track of project performance is the SPI.
In relation to the costs of the project, it is convenient to make an early estimate of the costs, which can be called PC or Planned Costs for each period, in this way a comparison can be made for each period of the costs incurred against those expected.
Examples of curves of indicators.
