The Two Numbers That Changed How I Look at Projects

When I first started working on projects, I thought being on budget and on time was just about checking if we were spending what we planned and finishing tasks on schedule. Simple, right?

But the reality is—it’s not that simple. Budgets get messy, schedules slip, and sometimes it feels like you’re managing chaos instead of a project. That’s when I discovered two numbers that changed how I evaluate project health: CPI (Cost Performance Index) and SPI (Schedule Performance Index).

Table of Contents

• CPI: How Well Are We Spending?

• SPI: How Well Are We Using Time?

• A Real Project Example

  • Planned Value (PV): $500,000

  • Earned Value (EV): $450,000

  • Actual Cost (AC): $550,000

  • Why These Three Matter Together

  • Running the Numbers

• Quick Reference Table

• Visual Snapshot

• What I Learned

• Your Turn

CPI: How Well Are We Spending?

The Cost Performance Index (CPI) tells you how efficiently you’re using money.

• Formula: CPI = EV ÷ AC

• Interpretation:

  • CPI = 1.0 → On budget

  • CPI > 1.0 → Under budget (good)

  • CPI < 1.0 → Over budget (problem)

Think of CPI as: How many cents of value am I getting for every dollar I spend?

SPI: How Well Are We Using Time?

The Schedule Performance Index (SPI) shows whether the work is being delivered at the pace you planned.

• Formula: SPI = EV ÷ PV

• Interpretation:

  • SPI = 1.0 → On schedule

  • SPI > 1.0 → Ahead of schedule

  • SPI < 1.0 → Behind schedule

Think of SPI as: Am I actually delivering the work I planned by this point in time?

A Real Project Example

Imagine you’re managing a $1,000,000 project planned for 12 months. At the halfway mark (month 6):

Planned Value (PV): $500,000

This is what you expected to complete by now, based on the original plan.

• The project is 12 months long. At month 6, you planned to be 50% finished.

• 50% of $1,000,000 = $500,000 worth of planned work.

• PV doesn’t measure reality — it’s simply the “should have been done” number.

PV answers: According to the plan, how much work should we have completed by now?

Earned Value (EV): $450,000

This is the value of the work actually completed.

• Instead of finishing 50%, the team only managed 45% progress.

• 45% of $1,000,000 = $450,000 worth of work delivered so far.

• EV is not about money spent — it’s about the value of the work produced, measured in budget terms.

EV answers: How much work have we really accomplished by now, measured against the budgeted plan?

Actual Cost (AC): $550,000

This is the real money spent to reach this point.

• To deliver 45% of the work, the project has already spent $550,000.

• That’s more than the $500,000 expected at this stage.

• AC doesn’t care about progress — it only tracks what’s been paid out.

AC answers: How much money have we actually spent up to now?

Why These Three Matter Together

• PV ($500,000): What was planned.

• EV ($450,000): What was achieved.

• AC ($550,000): What was spent.

On their own, these numbers don’t say much. But when you compare them, they tell the full story.

Running the Numbers

1. CPI = EV ÷ AC = 450,000 ÷ 550,000 = 0.82
   → You’re only getting 82 cents of value for every $1 spent. Over budget.

2. SPI = EV ÷ PV = 450,000 ÷ 500,000 = 0.90
   → You’ve delivered only 90% of the work planned by now. Behind schedule.

On paper, the project might look “fine.” But these two numbers reveal the truth: you’re both spending too much and delivering too little.

Quick Reference Table

(Formulas and thresholds based on PMI’s Earned Value Management framework.)

Visual Snapshot

CPI = 0.82 (red zone) → Over budget
SPI = 0.90 (yellow zone) → Behind schedule

This snapshot tells the full story at a glance: the project is both financially and schedule-challenged.

What I Learned

CPI and SPI cut through the noise. They don’t care about opinions or “gut feel.” They show you, in numbers, whether you’re truly on track.

Now, before every project review, I ask myself two questions:

• Are we spending wisely? (CPI = EV ÷ AC)

• Are we delivering on time? (SPI = EV ÷ PV)

If the answer to either one is “no,” it’s time to act.

Your Turn

Next time you’re reviewing a project, run the numbers. They might surprise you—and they might save your project.

P.S. Each Saturday, I share simple, practical tools like this to help you manage projects with confidence. Not subscribed yet? Click here to join.

Looking forward to sharing more next Saturday!