1. Schedule Variance (SV): Schedule Variance provides insights into the time performance of the project. It indicates whether you’re ahead or behind schedule at a specific time.
    • Formula: SV=EV−PV
      • Positive SV: Indicates that the project is ahead of schedule. The earned value of work is greater than what was planned.
      • Negative SV: Indicates that the project is behind schedule. The earned value of work is less than what was planned.
    • Example: If the planned value for a task is $1000, but the earned value at a certain point is $800, the schedule variance is $800 – $1000 = -$200. This means the project is behind schedule.
  1. Cost Variance (CV): Cost Variance provides insights into the project’s financial performance. It indicates whether you’re under or over the budget at a specific time.
    • Formula: CV=EV−AC
      • Positive CV: Indicates that the project is under budget. The value of work performed is greater than the actual costs incurred.
      • Negative CV: Indicates that the project is over budget. The value of work performed is less than the actual costs incurred.
    • Example: If the actual cost for a task is $1200, but the earned value of the work done is $1000, the cost variance is $1000 – $1200 = -$200. This means the project is over budget by $200.

Implications of Variances:

  • Monitoring Variances: Regularly monitoring SV and CV is crucial for project managers. It helps identify potential issues early on and allows for timely corrective actions.
  • Decision Making: Understanding variances can guide decision-making. For instance, a negative SV might prompt a project manager to allocate additional resources to get back on track.
  • Forecasting: Variances can also be used to forecast future performance. If a project consistently has negative CV, it might indicate that it will go over budget unless corrective actions are taken.
  • Stakeholder Communication: Variances are essential metrics to communicate to stakeholders. They provide a clear picture of the project’s schedule and budget.

In conclusion, Schedule Variance (SV) and Cost Variance (CV) are critical metrics in Earned Value Management. They clearly understand the project’s performance against its baseline, enabling project managers to make informed decisions, take corrective actions, and ensure successful project delivery.