CPI vs SPI Explained: Cost vs Schedule Performance in EVM
The Cost Performance Index (CPI) and Schedule Performance Index (SPI) are the two most-watched metrics in Earned Value Management. Both are efficiency ratios that use 1.0 as the baseline — but they measure completely different things, and a project manager who misreads them can draw badly wrong conclusions.
This article explains both indexes in depth: how they are calculated, what their values mean, how they interact, and what to do when they diverge.
The Formulas at a Glance
| Index | Formula | Measures | Good value |
|---|---|---|---|
| CPI | EV ÷ AC | Cost efficiency | > 1.0 |
| SPI | EV ÷ PV | Schedule efficiency | > 1.0 |
CPI: Cost Performance Index
CPI measures how much budgeted work value is being delivered per dollar spent. A CPI of 0.85 means that for every $1.00 actually spent, only $0.85 worth of planned work has been completed — an 18% cost overrun rate.
CPI Interpretation Guide
| CPI Value | Status | What it means |
|---|---|---|
| > 1.0 | Under budget | Delivering more value than each dollar costs |
| = 1.0 | On budget | Delivering exactly as planned per dollar |
| 0.9 – 0.99 | Slight overrun | Monitor closely; corrective action may be needed |
| < 0.9 | Over budget | Significant cost problem; management action required |
Key research finding: Studies show that once CPI drops below 0.9 after the 20% project completion point, it very rarely recovers. Early CPI values are strong predictors of final project cost performance.
SPI: Schedule Performance Index
SPI measures how efficiently the project is progressing through its planned work. An SPI of 0.80 means the team is completing only 80% of the work that was scheduled to be done by this point — the project is running 20% behind its timeline.
SPI Interpretation Guide
| SPI Value | Status | What it means |
|---|---|---|
| > 1.0 | Ahead of schedule | More work done than was planned for this period |
| = 1.0 | On schedule | Exactly on the planned timeline |
| 0.9 – 0.99 | Slight delay | Minor slippage; may self-correct |
| < 0.9 | Behind schedule | Significant delay; may impact deadline or cost |
Important SPI limitation: SPI is calculated in dollar terms (EV/PV), not in calendar days. At the end of a project, SPI always equals 1.0 (since total EV = total PV = BAC when complete) — regardless of how late the project finished. This makes SPI unreliable for measuring schedule delays near project completion. For time-based scheduling analysis, use Earned Schedule (ES) methods instead.
The 4 CPI/SPI Combination Scenarios
CPI > 1, SPI > 1
Under budget AND ahead of schedule. The ideal scenario. Investigate why — understand what's working so you can repeat it.
CPI > 1, SPI < 1
Under budget BUT behind schedule. Spending less than planned, but not completing work fast enough. May need to add resources to accelerate.
CPI < 1, SPI > 1
Over budget BUT ahead of schedule. Completing work faster, but at higher cost. Evaluate if the schedule gains justify the spending.
CPI < 1, SPI < 1
Over budget AND behind schedule. The worst case. Immediate management intervention required. Consider scope reduction or baseline revision.
Worked Example
A software development project has: BAC = $300,000, PV = $150,000, EV = $120,000, AC = $140,000
SPI = EV ÷ PV = 120,000 ÷ 150,000 = 0.800
This project is both over budget (CPI 0.857 = 16.7% cost overrun) and behind schedule (SPI 0.800 = 20% schedule slippage). The EAC factoring in both indices would be:
CPI vs SPI: Which One Matters More?
Both matter — but in different contexts:
- CPI is more predictive of final project outcome. Cost overruns compound: if you're inefficient now, the inefficiency continues. CPI is the primary metric for forecasting EAC.
- SPI matters most when deadlines are fixed. A fixed deadline contract or regulatory milestone makes SPI critical. A behind-schedule project may incur overtime costs that push CPI even lower.
- Use both together for the most complete picture. A project with CPI = 1.05 and SPI = 0.75 is doing well on cost but will likely miss its deadline.
Common Misconceptions
- "SPI > 1 means we're saving time." Not exactly — it means you're completing more budgeted work than planned. If your team is doing easier tasks first, this can be misleading.
- "CPI and SPI should always match." They frequently diverge. Projects that crash (add resources to accelerate) typically see SPI improve while CPI drops.
- "A CPI of 1.3 is always great." Extremely high CPI can indicate that scope was over-budgeted or that the team is cutting corners to appear efficient.