CPI and SPI are the two indices of earned value analysis most widely used in project management. They summarize in two numbers whether a project is doing well or badly on cost and on schedule, and they allow projects of very different sizes to be compared.

Formulas

  • CPI (Cost Performance Index) = EV / AC
  • SPI (Schedule Performance Index) = EV / PV

Where EV is earned value (work performed, valued at planned cost), AC is actual cost and PV is planned value.

How to interpret the CPI

  • CPI > 1: the project costs less than planned for the work performed. Example: 1.08 → for every euro spent, work worth €1.08 is produced.
  • CPI = 1: the cost budget is being met.
  • CPI < 1: there is a cost overrun. A CPI of 0.92 means spending 8.7% more than planned (1 / 0.92 ≈ 1.087).

The cumulative CPI tends to stabilize early: project management experience indicates that, once roughly 20% progress has been passed, it is usually difficult for it to improve significantly. That is why detecting it in time is so valuable.

How to interpret the SPI

  • SPI > 1: more has been executed than planned (ahead of schedule).
  • SPI = 1: the plan is being met.
  • SPI < 1: behind schedule. An SPI of 0.90 means 90% of what should be done has been done.

The limitation of the SPI

At the end of the project, when everything is executed, EV = PV = BAC and the SPI returns to 1 even if the project finished late. That is why, in the final stretch of the project, the SPI loses its warning ability. Alternatives:

  • Review the critical path and milestone dates.
  • Use Earned Schedule, which expresses delay in time rather than in euros.

In addition, the SPI measures production, not the critical path: you can have SPI = 1 by advancing non-critical activities while the critical one slips.

The four quadrants

If we plot each project on a chart with the SPI on the horizontal axis and the CPI on the vertical axis, we get four situations:

  1. CPI ≥ 1 and SPI ≥ 1 – Ahead of schedule and under budget. The ideal situation; make sure quality does not suffer.
  2. CPI ≥ 1 and SPI < 1 – Behind schedule and under budget. May indicate a lack of resources: little is being spent because little is being produced.
  3. CPI < 1 and SPI < 1 – Behind schedule and over budget. The most worrying; requires an immediate action plan.
  4. CPI < 1 and SPI ≥ 1 – Ahead of schedule and over budget. Work is being accelerated with expensive resources (overtime, more crews).

In the example chart in the header (a portfolio of five projects, with SPI · CPI values), Project B (0.90 · 0.92) is management's priority, while Project C (1.10 · 0.88) is ahead of schedule but spending about 14% more than planned (1 / 0.88 ≈ 1.14).

Combined index: CPI × SPI

Some companies use the product CPI × SPI (sometimes called the critical ratio) as an overall indicator. For Project B: 0.92 × 0.90 = 0.83. It is also used to estimate the final cost when assuming that delay will also make the project more expensive; we explain it in EAC, ETC, VAC and TCPI.

Recommended alert thresholds

Each company should set its own thresholds, but a common scheme is:

  • ≥ 0.98: under control.
  • 0.95 – 0.98: watch; analyze causes.
  • < 0.95: alert; action plan with an owner and a date.

Always use the traffic light together with the numerical value, never the color alone.

What to do when the CPI drops

  1. Identify the line items with the largest variance with a price and consumption analysis.
  2. Check that AC does not include costs from other projects or advances for material not yet consumed.
  3. Review labor productivity rates and subcontractors.
  4. Analyze whether there are changes not yet claimed from the client.

What to do when the SPI drops

  1. Check whether the delay affects the critical path.
  2. Check pending supplies and subcontractors.
  3. Re-plan in the short term with the person in charge of each work front; measure the weekly PPC (Percent Plan Complete).

Frequently asked questions

Are CPI and SPI calculated cumulatively or per period?

Both are useful. The cumulative value shows the overall trend; the period value detects recent changes.

Is a CPI of 1.10 always good?

Not necessarily: it may indicate costs not yet recorded (invoices that have not arrived) or an overly generous cost budget.

Conclusion

CPI and SPI are the fastest way to know how a project is doing and to compare all of the company's projects on a single chart. With clear thresholds and reliable data, they become management's traffic light.

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