Project managers are a vital part of any organizational structure, and they are in charge of tasks across every aspect of a business. They have to handle the budget, schedule meetings and work, manage people, among many other things.
If we had to define a project manager's responsibilities in one sentence, the project manager would make sure that work is completed within the designated time frame and within budget. However, they aren't masterminds to know how long the project will last or fall behind.
For this purpose, they rely on a powerful calculation that measures and evaluates project progress called schedule variance. So, whether you are preparing for your PMP exam or you are in the process of controlling the schedule of your project, at some point, you will be more likely to use schedule variance (SV).
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What is schedule variance?
Schedule variance (SV) is a term used to describe the difference between earned value (EV) and the project's planned value (PV). The schedule variance pinpoints whether the authorized work performed is equal, falls behind, or exceeds the planned performance.
We can identify two types of SV:
- Point-in-time schedule variance
- Cumulative schedule variance
While we can use the same approach to calculate them, their results are quite different.
Point-in-time SV indicates the difference between EV (earned value) and PV (planned value) concerning one period. Variances of other periods like shortfalls or exceeds aren't considered.
Cumulative SV shows the difference between EV (earned value) and PV (planned value) over a few consecutive periods. It is either the sum of point-in-time SV of all periods of scope, or the difference of the sum of earned values and planned values for these periods.
When it comes to project management, schedule variance specifies if a project schedule is ahead or behind. It is mostly used in EVM (Earned Value Management). We calculate SV when the budgeted cost of work scheduled is subtracted from the budget cost of work performed.
- Budgeted Cost of Work Scheduled (BCWS) also called planned value evaluates the budget of the whole project
- Budgeted Cost of Work Performed (BCWP) evaluates the costs of performed work
How to calculate schedule variance?
To calculate one or a few periods, you can use the following schedule variance calculation:
SV = EV – PV
In this case, EV is the earned value, while PV is the planned value. We use earned value analysis to determine EV. Earned value shows how much of the authorized work has been finished within single or several periods.
Planned value is part of the budget that has been assigned to the amount of work that should have been finished in one or several periods. We need to denominate both parameters, EV and PV, in the same unit, usually a currency such as dollars or days, and refer to the same period or periods. You've probably noticed that both EV and EP indicate two options; they can either describe a single period or a couple of periods. Even though the basic calculations are identical, the parameters are different for each case.
Another essential part of SV is point-in-time or period-by-period schedule variance, and it's calculated through the following formula:
SV (period) = EV (period) – PV (period)
As you can see, all parameters show one period.
For the cumulative SV, we apply a similar formula as in the previous case, but with input values for several periods:
SV (cumulative) = EV (cumulative) – PV (cumulative)
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We can use cumulative SV to measure and evaluate multiple periods. We can also apply it to the different time frames, for instance, to measure from the 1st to 3rd period of the project if we need this type of information.
When it comes to SV values, we have three potential value ranges, and they all have different results.
- SV < 0: this is a negative SV, and it shows that a project is behind schedule. In this case, the EV doesn't meet PV.
- SV > 0: this is a positive SV, and it indicates that a project is ahead of schedule. Therefore, the EV exceeds the PV.
- SV = 0: when SV is 0, it shows that the schedule has met its baseline, meaning that EV is equal to the PV.
Based on the period or periods you have selected, note that schedule variance can vary within the same project. For example, we can have negative schedule variance in a single period, while at the same time, the cumulative schedule variance can be positive or 0.
Schedule variance is an excellent method to analyze and estimate the health of your project. If the variance is positive, it means your project is going well. On the other hand, if the variance is negative, something went wrong with your project, and you should take specific actions to bring it back to life.