What is a Schedule Performance Index (SPI)?
February 11, 2021
A schedule performance index (SPI) is an efficiency metric of how far ahead, behind or on time you are on a project. Put simply, it measures how on-pace you are to meet a project timeline. It’s calculated based on your project’s planned value (PV) and earned value (EV) using the estimate determined at the project’s start.
SPI is one of several numeric values that form your construction project’s overall earned value management, a method that tracks and forecasts the ongoing schedule and cost performance of your build.
So how do you arrive at this metric and what exactly does it tell you?
Determining an SPI
Calculating a schedule performance index requires one simple equation: SPI = EV/PV
You’ll need the budget at completion (BAC), also referred to as budgeted value, from your estimate that was created at the beginning of the build. Accuracy is key here; if anything is too far “off” you could end up with a skewed SPI that tells you a different story about how well your project is actually meeting schedule milestones.
- Planned value is how much work is projected to be done by a given point in time. It’s also expressed using the dollar value of what it will cost to complete the project to that point. To arrive at PV:
PV = % complete (planned) x Budget at Completion (BAC)
- Earned value is how much work was actually done by a certain time. EV is represented as a dollar value of what it has cost to complete this work. To determine EV:
EV = % complete (actual) x Budget at Completion (BAC)
Let’s look at an example using numbers for better context. Say you have a six-month project with a BAC of $1,000,000. If you want to know what the value of the work done after two months should be, you would calculate it as follows:
PV = % complete (2 months/6 months) x $1,000,000
PV = 33% x $1,000,000
PV = $333,333
To track the work that was actually done when you hit that two-month mark, you’ll calculate the EV. In our scenario, let’s say 60% of the work was done. The equation would be:
EV = 60% x $1,000,000
EV = $600,000
From there, you can determine your project’s timeline efficiency — your SPI:
SPI = EV/PV
SPI = $600,000/$333,333
SPI = 1.8
What do SPI values mean?
- Values greater than 1 are ahead of schedule. This means you’re doing more work by a given point in time, knowledge which could be helpful to know should you need wiggle room to accommodate any unforeseen project changes down the road.
- Values less than 1 are behind schedule. In this case, your SPI is giving you a heads up that decisions will have to be made about necessary adjustments to bring the project back on track, such as hiring extra labor to catch up.
- Values equal to 1 mean you are on schedule, your estimate was accurate and all work is on track as planned.
Referring to the example above, because the SPI of 1.8 is greater than 1, the project appears to be ahead of schedule.
Individually, these values provide a snapshot of what current work performance looks like. You can track them over time to see if there are any trends across the overall project or within specific phases. However, it’s a good idea to assess SPI in tandem with other metric methods. Why? If another measurement doesn’t align with what the SPI shows, you will have the opportunity to dive into the numbers to see if there’s more going on below the surface that you wouldn’t have known about otherwise.
Why is knowing your SPI important?
Of course, being ahead of schedule or on time are the ideal scenarios. But we all know timelines are at the mercy of so many variables: weather, supply chain disruptions, natural disasters or late-arriving materials. When you see your schedule performance index dip below 1, consider it an alert that gives you a chance to avoid or minimize the possible consequences that being behind can bring, such as:
- The risk of blowing your budget out of the water. “Time is money” takes on greater importance when even a minor delay can incur costs for extra labor, rush fees for materials that didn’t arrive on time, fines, etc.
- The domino or knock-on effect of one late task impacting dependent ones after it.
- Pressure on the impacted project team to bring everything back on track.
- The risk of losing your hard-earned reputation as a contractor of choice and costing you potential future business.
Calculating your project’s schedule performance index is technically easy. But when you’re managing large capital builds or public works projects, the calculations really add up. InEight’s estimating software can automate this process for you so you know how well each phase of your project is performing against established timelines. InEight’s data analytics software gives you visibility into your performance numbers, so you can pinpoint issues as they occur and have more control over how to address them. You’ll be able to make more timely decisions if schedules start to deviate, reducing the likelihood of you being caught off guard.