Expertise On Demand
Articles by Deborah Van Huis


Charting Success through Performance Indices
for Construction Projects

A great tool to use in tracking and evaluating your construction projects is the Schedule Performance Index, SPI. SPI measures the success of project management or how much work is completed on time. SPI is expressed as the ratio of the budgeted cost of work performed (BCWP) to the budgeted cost of work scheduled (BCWS).

SPI = BCWP/BCWS

A project with a SPI greater than 1.0 indicates that the project is ahead of schedule. If the project SPI is less than 1.0, the project is behind schedule. An SPI equal to 1.0 indicates that a project is precisely on schedule - a rare occurrence. The SPI for individual projects and a company's projects as a whole will vary. Some parts of a project may be ahead of schedule and some will lag behind.

A consistently high value for SPI is actually not a good thing. This indicates that either the project schedule or budget was unrealistic. Check the starting assumptions to ensure that budgets are not unrealistically high and that schedules are not too long. Similarly a consistently low value for SPI is not desirable. This indicates that the original budget and schedule were unrealistically low and that not enough time was allowed to complete the project. If the SPI is always above or always below the target of 1.0 review scheduling and budgeting procedures to ensure that they are coordinated and realistic.

Use SPI as a trend indicator. If you manage a lot of similar projects the SPI should approach 1.0 as you become more experienced with them and as you apply lessons learned from previous projects. Additionally SPI for all projects should be within an established range above and below 1.0. If the project SPI exceeds the established range, then there is cause for concern and steps to gain control of the schedule and costs should be taken.

When using the Schedule Performance Index keep in mind that the value generated:
  • Considers all tasks, not just those on the critical path, so that non-critical tasks are not ignored
  • Does not take into account if a project's critical path is on schedule
  • Ignores tasks that have $0 budget such as submittals that require approval or ordering materials
  • Is used in conjunction with critical path analysis
Critical path is a term used in project management that refers to the "path" of project activities that add up to the longest overall duration. This path is "critical" because all the tasks on it must be done on time or the project will not be completed on time.

SPI is generally used in conjunction with the project's cost performance index, CPI. CPI measures relationship between the budgeted cost of work performed (BCWP) and the actual work performed (ACWP) as a ratio.

CPI = BCWP/ACWP

A project with a CPI greater than 1.0 indicates that actual cost is less than budgeted cost or that the project is under budget. A CPI less than 1.0 indicates that the project is over budget. As with SPI, consistently high or low CPI values indicate that the starting assumptions should be reviewed. Watch the CPI trends to ensure that the values are within the predetermined acceptable range and that projects are being managed effectively.

Lastly, compare the schedule and cost performance indices to each other to determine the Critical Ratio (CR):
CR = SPI x CPI

Charted values for CR should fall randomly on both sides of 1.0. And just like with the SPI and CPI individually, evaluate trends in CR to ensure that its value stays within the predetermined acceptable range. Taken together, the Schedule Performance and Cost Performance Indices are wonderful management tools to help ensure that your projects are on track and stay that way.