Concepts
Schedule Variance (SV) is a key component in project management, and especially crucial for those preparing for the Certified Associate in Project Management (CAPM) exam. It provides insight into whether a project is ahead, on track or behind schedule. This post will elaborate on how to calculate Schedule Variance and its real world examples.
Understanding Schedule Variance
Before detailing the calculation process, it is important to understand what Schedule Variance (SV) is. Schedule Variance is a quantitative measure that shows the difference between the planned and actual work accomplished at a specific point of time during a project.
A positive SV indicates that the project is ahead of schedule while a negative SV indicates that the project is falling behind schedule. An SV of zero denotes that the project is going perfectly as per the plan schedule.
SV is a part of Earned Value Management (EVM), a projected management technique that objectively tracks physical accomplishment of work.
How to Calculate Schedule Variance (SV)
Now, let’s take a look into how to calculate SV. The Schedule Variance can be calculated using the following formula:
SV = EV – PV
Where:
- EV (Earned Value) is the value of the work actually completed
- PV (Planned Value) is the cost of the work scheduled/planned to have been done at any given point in time
Application of Schedule Variance: An example
Consider a project with a Planned Value of $200,000. As of the third month, the monitoring and evaluation department has calculated Earned Value to be $150,000.
Using the SV formula (SV = EV – PV), this can be calculated as follows:
SV = $150,000 – $200,000 = -$50,000.
The negative SV indicates that the project is not achieving as much as planned during the prescribed timeline, hence the project is behind schedule.
Importance of Schedule Variance
The importance of knowing how to determine the Schedule Variance cannot be underestimated. It allows project managers to make strategic decisions to control the schedule of the project. By pinpointing variances early, measures can be taken to remediate and mitigate delays, preventing potential budget overspills or unnecessary costs.
In conclustion, understanding and calculation of Schedule Variance is a key part of the CAPM exam and plays an essential role in the overall project management lifecycle. Regular tracking of Schedule Variance helps in efficiently managing and controlling the project progress, thereby contributing significantly to the success of a project.
Answer the Questions in Comment Section
True or False: Schedule variance is calculated by the formula: SV = EV – PV.
- True
- False
Answer: True.
Explanation: The schedule variance is indeed calculated using the formula SV = EV – PV, where EV stands for Earned Value and PV stands for Planned Value.
In SV = EV – PV, if the result is negative, does it mean the project is ahead of schedule?
- True
- False
Answer: False.
Explanation: If SV is negative, it means the project is behind schedule, ending up costing more than what was planned.
The result of schedule variance can be expressed in:
- A. Percentage
- B. Dollar value
- C. Both
Answer: C. Both
Explanation: Schedule Variance can be represented as a dollar value identifying the amount by which the project is exceeding or meeting budget expectations. It can also be represented as a percentage showing a proportion of variation to the total budget.
True or False: An SV of 0 means the project is exactly on schedule.
- True
- False
Answer: True.
Explanation: SV of 0 means that the Earned Value and the Planned Value are equal, thus the project is on schedule.
SV = EV – PV is the only formula used to calculate schedule variance.
- A. True
- B. False
Answer: B. False
Explanation: The formula SV = EV – PV is commonly used, however, in certain contexts other formulas like SV% = (EV – PV) / PV might be used to calculate the schedule variance as a percentage.
If a project has a Schedule Variance of $2,000, it means:
- A. The Project is $2,000 over budget-
- B. The Project is $2,000 under budget
- C. The project has generated $2,000 more in value than planned.
- D. None of the above
Answer: C. The project has generated $2,000 more in value than planned.
Explanation: A positive SV indicates the project has earned more value than what was initially planned, hence C is the correct answer.
True or False: Earned Value (EV) is the actual cost of the work completed.
- True
- False
Answer: False.
Explanation: This is a common misconception. EV is the value of the work actually performed, not the actual cost of completing it. The actual cost is represented by AC.
In SV = EV – PV, what does PV represent?
- A. Present Value
- B. Projected Value
- C. Planned Value
- D. Purchased Value
Answer: C. Planned Value
Explanation: In context of calculating schedule variance, PV stands for Planned Value.
True or False: A negative Schedule Variance indicates that the project is performing better than expected.
- True
- False
Answer: False.
Explanation: A negative SV actually signals that the project is performing less efficiently than planned, usually behind schedule or over budget.
Schedule Variance is a critical part of:
- A. Earned Value Management
- B. Risk Management
- C. Procurement Management
- D. Quality Management
Answer: A. Earned Value Management
Explanation: Schedule Variance is a key aspect of Earned Value Management that helps determine whether a project is ahead or behind schedule.
True or False: Schedule Variance can be used to evaluate the cost performance of a project.
- True
- False
Answer: False.
Explanation: While Schedule Variance helps evaluate the time performance of a project, Cost Variance is used to evaluate the cost performance.
In Project Management, earned value and planned value:
- A. Are the same
- B. Are always different
- C. Can be the same or different, depending on the project’s status
Answer: C. Can be the same or different, depending on the project’s status.
Explanation: On some projects, the earned value might be equal to the planned value (if the project is exactly on schedule). Otherwise, these two values can differ.
Great post on calculating schedule variance! This is crucial for CAPM.
How exactly do you calculate Schedule Variance (SV)?
You calculate SV using the formula: SV = EV – PV, where EV is Earned Value and PV is Planned Value.
Thanks for explaining the formula!
This post helped clarify a lot about schedule variance for my CAPM preparation.
Can someone provide a real-world example of calculating SV?
Sure. Imagine a project has a PV of $10,000 and EV of $8,000. The SV would be SV = EV – PV = $8,000 – $10,000 = -$2,000. This means the project is behind schedule.
Good example. It really helps visualize the concept!
What’s the significance of a negative schedule variance?
A negative SV indicates that the project is behind schedule, meaning it has not achieved as much work as planned.
Very useful information on SV. Appreciate it!
Important topic for any project manager. Thanks for sharing!