You might hear your team talk about variances in the schedule, but what do they actually mean? And are you all defining Schedule Variance (SV) in the same way?
Schedule Variance does have a very specific meaning in the world of earned value analysis, so it is worth making sure everyone has a clear understanding of what the term refers to. For a start, SV is expressed as a financial amount, not a number of days or any other way of referring to effort.
How to calculate Schedule Variance
The formula to calculate Schedule Variance is:
Schedule Variance = Earned Value – Planned Value
As you can see, before you can calculate Schedule Variance, you will need to know the Planned Value and Earned Value for the project as it stands today. As a recap, Planned Value (PV) is how much you thought you would have got done by now as a financial amount, and the Earned Value (EV) is what has actually been achieved, as a financial amount. The calculation lets you see if you have completed the amount of work that was planned based on where you are in the project schedule at any given time.
Another way of calculating SV, which provides the same information, is:
Schedule Variance = Budgeted Cost of Work Performed (BCWP) – Budgeted Cost of Work Scheduled (BCWS)
How to use SV
Whatever formula you prefer to use, the answer is going to tell you the difference between the value of the work that was scheduled and the value of the work that has actually been completed. For example:
Schedule Variance = $7,500 – $10,000 = -$2,500
In this example, the project is behind schedule. Any negative answer represents a project that has not been able to deliver the amount of work that was planned for the scheduled period. A neutral answer of $0 shows that the project is exactly on track. The work is being completed to schedule and there is no difference between the amount of work expected to have been delivered and what was actually delivered.
A positive number would show that the project is ahead of schedule. That equates to more work being completed in the time period than was expected.
Alone, the numbers provide one data point but not the whole picture. It’s worth understanding the context of the data so you can interpret it correctly. For example, was more work completed than expected because you have secured an extra 5 members of staff? The project might be speeding ahead but resource costs are going to be much higher than expected.
3 Benefits of Measuring Schedule Variance
Schedule Variance is an important part of the data that comes from your Earned Value Management System. It’s useful because:
- It shows you project progress in a measurable, repeatable way. Progress is not limited to an individual’s assessment of whether a task is 80% or 85% complete. Instead, you have a reasonable and realistic way of calculating whether the project is on track.
- It helps you spot trends. As a project manager, SV is a way of managing and controlling the project, taking remedial action as required in order to keep the project within the agreed tolerance limits. SV data helps identify performance trends which gives you an early warning sign that the project may need managerial action to get back on track.
- It’s good for communication. Sharing the SV data with stakeholders helps everyone see project progress in a structured way. If you are requesting changes in order to deal with schedule performance problems, the SV calculation provides the justification and a way of tracking that the changes will make a difference.
There are lots of reasons to make using SV a part of your project management practice, but remember, it provides the figure in a dollar amount, not a time amount. If your executives and project sponsor expect to see how many days the project is late, they won’t get that information from the raw SV calculation.
How to calculate Schedule Variance in Agile
Admittedly, most of our clients use predictive approaches given the nature of their projects and the planning approaches required, but there are still some teams that make the most of agile methods to plan and execute their work.
Schedule Variance doesn’t easily translate to agile project management. Agile approaches like Scrum focus on scope variance and project changes are made based on what did or did not get delivered as part of the sprint. There is no fixed schedule, only a series of sprints that iteratively deliver the priority user stories.
Agile methods are designed for situations where there is not a fixed scope but SV works best in situations where scope is fixed and carved up into work packages. Be careful about using SV in agile so that you don’t end up with meaningless data that doesn’t represent what you have managed to achieve. Tracking velocity and using burndown charts will be a better way of measuring progress in an agile environment.