Need Some expert advice on CPI and SPI interprettation

Submitted by Anonymous (not verified) on Tue, 11/13/2012 - 23:55

 I had a question in OL 175.

Post-mortem analysis after scheduled finish date of a project shows a CPI of 0.8 and an SPI of 1.25. What is a plausible explanation for that?92

o The project was terminated early. At that time, it was over budget and ahead of schedule.

o The project has produced additional deliverables which were originally not required.

o The project has evidently been finished under budget and behind of schedule.

o The project has evidently been finished over budget and ahead of schedule.

 

The answer is No 1. I am seeing lot of thread saying If your EV<PV then it seems the project is canceleed. This doesn't convince me because this EVM calculation is for as of today and the project still could go on and adjust the variance and then it could get cancelled.

 

Can some one explain my why No1 was the right answer in the above case and Can we really get the Project cancellec/terminated status based on CPI or SPI?

 

Spent lot of time in googling.. couldn't find a good answer.. Would appreciate any responses

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rajesh.thallam

Wed, 11/14/2012 - 00:45

Would have gone with option D but that word post-mortem makes the difference

Check this thread 

http://pmzilla.com/closing-question

501796652 (not verified)

Wed, 11/14/2012 - 19:50

 Thanks Rajesh.. 

 

The other question i have is can we really say the project i cancelled or Terminated  based on SPI?

-Arun

rajesh.thallam

Thu, 11/15/2012 - 02:43

 Hi Arun,

From the question, we know that performance  indices given are at the closure of project.

When a project completes successfully, it's earned value and planned value should be same (by definition) i.e. SPI should be always 1 if project completes successfully.

In the question, we see that SPI is 1.25 which means all planned work supposed to be completed at the end of project may or may not have been completed though project was ahead of schedule at that time. This would be indication that project was terminated.

Please correct me if I am wrong

 

501796652 (not verified)

Thu, 11/15/2012 - 23:09

 Thanks Tim and Rajesh for the Response.

Just to make the discussion interesting and more specific. let's not talk about answer to this specific question. Let's talk about, is it possible to identify the Project is cancelled /terminated based on the SPI?

You both have made a statement at the project completion the SPI will always be 1. This is just mathematically correct but not in actual scenario.

what if the project completes three months later than the actual planned ? Obvisously there is schedule variation but if we go by the Earned value calculation , Mathematically our EV calculation will show the Schedule variation is zero  and our SPI will be 1. So my point is, saying a project cancelled just based on the SPI will be mathematically correct but it will not be actually correct? There is no way we can identify the project is cancelled based on on the SPI

I hope this makes sense and any thought from your side about this?

-Arun

rajesh.thallam

Fri, 11/16/2012 - 00:14

Arun,

I agree with you. Using just SPI we cannot determine whether project is cancelled or terminated.

 
What I undertand is, SPI and CPI are calculated relative to approved baseline. If PM knows that the project is going to delay than the actual planned
 
1. He might want to change baselines as part of change request which includes planned value also. This would have SPI to always 1 at the end of the project.
2. Now if the baseline was not changed, SPI will be > 1
3. Also, frequent updates to baseline means bad scoping/estimating.
 
Not sure, my understanding is correct but experts can throw some light

Tim0922

Fri, 11/16/2012 - 02:21

Arun,

I understand what you are saying.  It does not make sense for a project that finishes 3 months behind schedule to have a 0 schedule variance at completion, but yet it does.  I have seen this many times in Defense Acquisition programs here in the U.S.

Think of it like this:  When the project is SUPPOSED to complete, it has a large negative schedule variance.  This means the planned value is 100% (BAC) and the earned value is something less than that.  As time moves on, assuming the project doesn't change, the planned value is capped at the BAC value, but the team is still completing work, so Earned Value is going up.  Since SPI=EV/PV, SPI is going up.  Finally, at the point where the team finally finishes and Earned Value finally equals Planned Value, SPI=1. 

If the project gets rebaselined, the Planned Value at that given point in time will now change (most likely go down), and this also will cause SPI to go up.

Could the project be cancelled based solely on SPI? Probably not.  There could be a good reason why the project was behind or the project could be so important that the company could tolerate a bit of mismanagement to get it completed.  From my experience, the senior decision makers are looking at CPI/SPI trends more than the numbers.  They also look at other metrics and concerns to make go/no-go decisions. 

Remember this question was asking for MOST likely explanation.  Terminating a project early while it is behind schedule and overbudget (note I didn't say because of being behind) would give you the indications in the question.

Good Luck!

Tim

Tim0922

Thu, 11/15/2012 - 01:19

1. When a project completes, its SPI is always 1.  This is because the value of all the work completed is the same as the complete value of the work planned.  It doesn't matter if the project is early or late, SPI is 1.This elminates C and D.

2. Answer B is a little tougher, but I would eliminate it because producing additional deliverables would not be consistent with being ahead of schedule.  If the project were changed to accomodate these additional deliverables then CPI and SPI should be in line with a more baselined project.

3. I would answer A because this explanation (terminated early over budget and ahed of schedule) most cleanly fits the data provided.

All these questions are hard and many are open to interpretation. Good Luck!

pmalik

Wed, 07/13/2016 - 20:29

Hi,

You should read the following article to understand what is CPI and SPI

Earned Value Management System Explained in Easy Language -
http://www.pmbypm.com/earned-value-management-system-explained-easy-language/

All the best.