CPI and SPI: how to calculate and read them
The cost performance index (CPI) and the schedule performance index (SPI) are the two numbers most project dashboards lead with. CPI = EV / AC and SPI = EV / PV: 1.0 is on plan, below 1.0 is worse, above 1.0 is better. They are simple to calculate and easy to misread. Here is how to read them properly.
Calculating them
Both indexes use earned value (EV), the budget of the work actually done. See earned value management for how EV, planned value (PV) and actual cost (AC) are measured.
- CPI = EV / AC. Work worth $90,000 that cost $100,000 gives CPI 0.90: each dollar bought 90 cents of planned work.
- SPI = EV / PV. Work worth $90,000 done when $120,000 was planned gives SPI 0.75: three quarters of the planned work is done.
Reading them together
| SPI at or above 1 | SPI below 1 | |
|---|---|---|
| CPI at or above 1 | On or ahead of plan and under cost. | Behind, but the work done is efficient: often a staffing or access problem rather than productivity. |
| CPI below 1 | Ahead but over cost: buying speed (overtime, extra crews), or rates above plan. | Behind and over cost: productivity, scope growth or estimating problems. Act now. |
Where they mislead
- SPI drifts back to 1.0 late in a project. When all the work is done, EV equals PV, so SPI ends at 1.0 even on a project that finished months late. Late in a job, read the critical path and the forecast finish, not SPI. (Earned schedule methods restate SPI in time units for this reason.)
- SPI is not about the critical path. Lots of non-critical work done early can push SPI above 1.0 while the critical path slips. Check float and the forecast finish alongside it.
- CPI depends on actuals being timely and matched. An invoice that lands a month late makes one period look excellent and the next terrible. Accrue costs for work done, and compare the same work in the same period.
- Cumulative indexes hide turning points. A cumulative CPI of 0.97 can hide a last month of 0.80. Look at the period index too.
- Soft percent complete inflates both. If EV comes from optimistic estimates of progress, both indexes look better than reality. Use objective rules of credit.
Thresholds
Many organizations set bands for action, for example green at 0.95 and above, amber below 0.95 and red below 0.90, and require a variance explanation and recovery plan in the red band. The exact values are a company decision; what matters is agreeing them before the project starts and applying them the same way every period.
CPI and SPI in DeltaSys
DeltaSys shows CPI and SPI for the period just closed, the one before it and to date, by project, WBS, cost account and portfolio, colours projects green, yellow or red by health rules that combine the indexes with float and the baseline, and forecasts the cost at completion from the CPI.
Questions
What is a good CPI?
1.0 or above means the work is costing what it was budgeted to cost or less. Sustained values below about 0.9 rarely recover without a change in how the work is done.
Can CPI be above 1 for the wrong reasons?
Yes: late invoices, costs charged to the wrong account, or progress claimed before the work is really done. Check that actuals and progress cover the same work.
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