Hopefully you’ve been following our series on PMP Exam calculations.
If you have, you’ll know that one of the areas that people often struggle with when studying for the PMP is the calculations involved with the Cost Management knowledge area.
This post is about how to calculate Schedule Variance. Otherwise known as SV.
Schedule Variance shows if there are any variations in the schedule of the project.
In other words, Schedule Variance shows if your project is ahead or behind schedule.
Schedule Variance Formula
Schedule Variance is calculated as follows:
Schedule Variance = Earned Value – Planned Value
Tip – Earned Value is also known as Budgeted Cost of Work Performed (BCWP). And Planned Value is also known as Budgeted Cost of Work Scheduled (BCWS).
So you may see the formula written as:
Schedule Variance = BCWP - BCWS
What does Schedule Variance mean?
The result of the Schedule Variance formula is a number. So what does this number mean?
A value of less than zero means the project is behind schedule.
And a value greater than zero means the project is ahead of schedule.
(A value of zero means the project is exactly on schedule but this is very rare).
Tip – most people understand that being behind schedule is bad.
But did you know that being ahead of schedule can be bad as well?
For example, if a team works overtime and gets a task finished early this may mean that they sit around idle waiting for the next task to start.
Basically if a project has a Schedule Variance that isn’t zero – you need to investigate why and mitigate the risks.
Example of Calculating Schedule Variance
Lets see an example.
Doug is the project manager for a software company based in San Francisco. He is working on a project to build a new inventory management system. The project has been underway for six months. Doug has estimated that the project should have a planned value of $825,000 at this point. The value earned by the project is $815,000.
What is the Schedule Variance? And what does this tell us about Doug’s project?
Answer: The Schedule Variance is -10,000. And this tells us that Doug’s project is behind schedule.
How did we calculate this?
Well we know that Schedule Variance = Earned Value – Planned.
The Earned Value is $815,000.
Tip – the PMP exam may use slightly different descriptions to describe the input to a formula. This is to test your knowledge and make sure you understand what you are calculating. EG “value earned by the project” is another way of saying Earned Value.
The Planned Value is $825,000.
Knowing this we can calculate:
Schedule Variance = $815,000 – $825,000 = -$10,000
That wasn’t too hard to calculate, right?
Next in the PMP Exam calculation series is Cost Performance Index (CPI).
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