Project Management Guide
Project Management Guide
What Is Project Management?
What Is a Project?
Why Is Project Management Important?
Project Life Cycle Phases
- Project Initiation
- Project Planning
- Project Execution
- Project Monitoring
- Project Closure
Project Management Methodologies
- Waterfall Project Management
- Critical Path Method
- Critical Chain Project Management
- Agile Project Management
- Scrum Project Management
- Kanban Project Management
- Lean Project Management
- Six Sigma Project Management
- PMBOK Method
Project Management FAQ
What Is Schedule Variance in Project Management?
Ever wondered how project managers ensure that their project is delivered on time and within the stipulated budget? How do they know whether the project is behind schedule? What is the cost of the work scheduled? Do they work solely on instinct or a hunch? Or can project managers actually quantify and measure a project's progress using a formula? The answer to all these critical questions lies in two words: Schedule Variance (SV).?
In this blog, we'll look at what schedule variance is, how project managers can calculate schedule variance, and top tips to keep in mind when using the schedule variance formula. Let's get the ball rolling.?
What is Schedule Variance?
Let's start with the absolute basics and define what schedule variance means:
- It is a calculation that measures the total project's progress and takes into account the actual progress versus the expected progress.
- In terms of the benefits, it allows project managers to quantify the project by making use of real-time data and absolute numbers.
- It can be calculated manually or by using robust project management software. The benefit of using the latter is that you can make real-time updates as the project progresses.
Moving on, it is time to look at how you can calculate the schedule variance.
How do I Calculate it?
To calculate schedule variance, you can use two formulas.
The first one takes into account two components, namely:
- BCWP (Budgeted Cost of Work Performed):
This entails the budget value of the work which is already finished, which is calculated by using the following formula:
(Total Project Budget) X (Percentage of Work that has been Completed)
- BCWS (Budgeted Cost of Work Scheduled):
This includes the budget value of the work that was expected to be completed and is calculated as:
(Total Project Budget) X (Percentage of Work that should have been Completed, based on the Time Elapsed)
Note: All the values for schedule variance are always calculated in monetary terms such as USD, GBP, and so on. Here’s the formula for your reference:
Budgeted Cost of Work Performed (BCWP) – Budgeted Cost of Work Scheduled (BCWS) = SV
Let's use this formula with defined numbers. For example, if you have a BCWS of $35,000 and a BCWP of $40,000, your schedule variance formula would be:
$40,000 (BCWP) – $35,000 (BCWS) = $5,000 (SV)
Your schedule variance is $5,000 and since it is positive, it means that your project is ahead of schedule. To represent it as a percentage, you will need to divide it by the BCWS:
$5,000 (SV) ÷?$35,000 (BCWS) = 0.14
This means your project is 14% ahead of schedule.
Note: If the end value for the schedule variance is:
- A positive number, then your project is ahead of schedule
- A negative number, then your project is behind schedule
- Zero, then the project is exactly where it should be
Alternatively, you can use the following formula to calculate the schedule performance:
EV?(Earned Value) –?PV?(Planned Value) =?SV
This begs the question: "Why is schedule variance important to complete the project?" Keep reading.
The Role of Schedule Variance in Project Management
If you're still wondering about the kind of important role schedule variance plays in project management, the following pointers will help you:
- It empowers project managers to understand whether a project is ahead or behind schedule.
- It helps them to gauge whether a project is over or under budget. In other words, it can help monitor costs at every stage of the project.
- It helps to monitor the available resources for a project so that you can assign assets effectively and optimally.
- It enables managers to stay in control of their projects by ensuring timely project delivery, which ultimately positively impacts the bottom line.
- It helps project team members to work in an organized fashion so that the work is completed efficiently on time. This leads to greater employee work satisfaction with the team morale and motivation always high.?
- It helps to manage your internal and external stakeholder's expectations as managers can use the various insights and figures that they get (when calculating the schedule variance) to keep everyone informed and on the same page. It also allows for a more personalized, data-informed, and contextual style of course correction in case the project is getting delayed.
The learning: Schedule variance provides project managers with an accurate picture of the project's progress in real-time.?
Moving on, let's look at some of the best practices to consider when preparing to calculate schedule variance.
How to Ace Schedule Variance Calculations: Top-5 Tips
- Leverage powerful software: Manually crunching the project numbers can become a tedious task. This is why you need project management software that allows you to perform multiple calculations every day as the project requirements change.
- Cross-check your calculations, always: You might love manual calculations, but it always helps to cross-check your calculations using a calculator to avoid small errors and mistakes.
- Come back to the schedule variance at multiple project stages: Everyone understands that projects are dynamic. So, as a rule of thumb, it helps to make (and get) constant updates in real-time. This strategy is especially useful if you wish to understand whether your project is on track or not if the previous calculation demonstrated that you were behind schedule.
- Don't ignore quality assurance when using schedule variance: Your project may be ahead of schedule, but ensuring top-notch quality is equally important. It is not just about completing projects on time; it is about delivering 'great' projects on time and within the budget.
- Leverage a Gantt chart to monitor your project timeline: Every seasoned project manager understands the central role Gantt charts play in identifying scheduling clashes and ensuring that the key project milestones are met on time. This is why when you're monitoring the project timeline, you should use a Gantt chart in accordance with the schedule variance calculations.
When it comes to effective and accurate project planning, schedule variance is a must. In other words, schedule variance is really the cornerstone of effective project management. Using reliable data, project managers can stay ahead of their project deliverables and address any roadblocks proactively. Within minutes and without much effort, you can get a glimpse of the project's status and use the 'saved' time to focus on other pressing priorities.