How do you handle schedule and cost variances in your work packages?

1 What are schedule and cost variances?

Schedule and cost variances are the differences between the planned and actual performance of your work packages. Schedule variance (SV) is the difference between the earned value (EV) and the planned value (PV) of your work packages. Cost variance (CV) is the difference between the earned value (EV) and the actual cost (AC) of your work packages. A positive variance means that you are ahead of schedule or under budget, while a negative variance means that you are behind schedule or over budget.

2 How to calculate schedule and cost variances?

To calculate schedule and cost variances, you need to collect and analyze the data of your work packages. You can use a spreadsheet, a software tool, or a dashboard to track and report the data. The basic formulas for schedule and cost variances are:

SV = EV - PV

CV = EV - AC

You can also calculate the schedule and cost performance indexes (SPI and CPI), which are the ratios of earned value to planned value and actual cost, respectively. The formulas for SPI and CPI are:

SPI = EV / PV

CPI = EV / AC

An index greater than 1 means that you are performing better than planned, while an index less than 1 means that you are performing worse than planned.

3 How to interpret schedule and cost variances?

Schedule and cost variances help you assess the status and health of your work packages, allowing you to determine the root causes of deviations and evaluate the impact on the project scope, time, and budget. When examining variances, it is important to consider whether they are due to internal or external factors, if they are temporary or permanent, and if they are within acceptable thresholds or tolerances. Additionally, ask yourself if the variances are affecting the quality and risk of the work packages, as well as the stakeholder expectations and satisfaction.

4 How to handle schedule and cost variances?

Managing schedule and cost variances necessitates proactive and reactive measures to control and improve work package performance. You should update and communicate baselines and forecasts regularly, adjust scope, schedule, or budget to meet project objectives, implement change requests, corrective actions, or preventive actions to address the variances and their causes, monitor and review work package metrics and trends using EVM tools and techniques, and document and share lessons learned and best practices.