scopeeconomics
Distinguish work planned, work earned and actual cost in a status report.
Planned value is the budgeted value of work scheduled by the status date. Earned value is the budgeted value of the work actually accomplished. Actual cost is what that accomplished work has cost. These positions answer different questions and should use a consistent scope, measurement basis and status date.
Spending less than planned is not enough to demonstrate good performance. The team may also have completed less work than planned. Compare actual cost with earned value to examine cost performance, and earned value with planned value to examine performance against the planned work.
Cost variance is earned value minus actual cost. The cost performance index is earned value divided by actual cost. Schedule variance in earned-value terms is earned value minus planned value; the schedule performance index is earned value divided by planned value. The signs and units matter.
In the example, £80,000 of earned value has cost £90,000, so cost variance is negative £10,000 and CPI is about 0.89. Earned value is also below the £100,000 planned value, giving SPI of 0.80. These indicators need investigation; they do not identify the cause on their own.
One simple forecast divides the budget at completion by the current CPI, assuming the same cost efficiency continues. Other circumstances may call for a different forecast, including a bottom-up reassessment of the remaining work. Explain the assumption rather than presenting a formula as universally correct.
Earned-value schedule indicators are expressed using budgeted value. An SPI of 0.80 does not by itself establish a 20% delay in calendar time. Review the actual schedule logic and remaining work before making a finish-date conclusion. For study, practise the interpretation immediately after the arithmetic.
At one status date, PV is £100,000, EV is £80,000 and AC is £90,000. All three use the same scope and approved measurement basis.
Original performance example. CPI = 80,000 ÷ 90,000 ≈ 0.89; SPI = 80,000 ÷ 100,000 = 0.80.