Many project managers manage their project performance by comparing planned to actual results. With this approach, you could easily be on time but overspend according to your plan.

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A better method is Earned Value Management (EVM). Simply stated, EMV compares what you’ve received or produced to what you’ve spent.

**Cost Variance**

Cost variance is one of the most popular variances that project managers use. Cost variance shows whether your actual costs are higher than budgeted (with a resulting negative number) or lower than budgeted (with a resulting positive number).

The cost variance (CV) is calculated as follows:

**CV = EV – AC**

In our **Example**

**Schedule Variance**

Schedule variance, also a popular variance, tells you whether the schedule is ahead or behind what was planned for this period in time. The schedule variance (SV) is calculated as follows:

**SV = EV – PV**

Lets plug in the numbers:

SV = $375-$400 = -$25 (Behind schedule as of July 1)**Performance Indexes**

Together, the CV and SV are known as efficiency indicators for the project.

Cost and schedule performance indexes, (CPI and SPI) are primarily used to calculate performance efficiencies. They’re often used in trend analysis to predict future performance.

You’ll need to know the calculations and what the results mean.

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**Cost Performance Index (CPI)**

The cost performance index (CPI) is calculated this way:

**CPI = EV ÷ AC**

Let’s plug in the numbers:

CPI = 375 ÷ 325 =1.15Interpretation: as of July 1, we are getting $1.15 for every dollar invested on this project**Schedule Performance Index (SPI)**

The schedule performance index (SPI) is calculated this way:

SPI = EV ÷ PVLet’s plug in the numbers:

SPI = 375 ÷ 400 =0.94Interpretation: Uh-oh, not so good. You are only progressing at 94% of the rate planned