What is Schedule Variance?
Schedule variance is the comparison of the amount of money that was planned to be spent on a project or part of a project to the amount of work that was actually accomplished.
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In the earned value reporting system for projects, we are concerned with knowing how our project is doing with respect to the actual work that was done, the BCWP, and the amount of work that was expected to be completed, the BCWS. The measure for this comparison is the schedule variance.
It may seem a bit odd that we would be measuring schedule variance in terms of dollars since most of us are used to hearing that the project is ahead or behind schedule by so many days or weeks or months. Measuring schedule variance in dollars is actually a more indicative way of showing this. If, as is often the case, we say that we are ahead of or behind schedule by three weeks, it might not be serious if there is only one person working part-time on one task over the three weeks. On the other hand, it might be quite serious if there are one hundred people working on twenty tasks and they are all behind three weeks. If a person’s time is worth $1,000 per week, the earned value report’s schedule variance for the first condition might say that the schedule variance is $1,500. The second condition would have a schedule variance of $300,000. This is quite a noticeable difference in two situations where the project is three weeks behind schedule. So, it really makes a lot of sense to consider project schedules as being ahead or behind in terms of dollars rather than weeks or months.
To compute the schedule variance, we compare the work that was actually completed to the work that was planned to be accomplished. This means that we will be comparing the budgeted cost of work performed, the BCWP or the EV to the budgeted cost of work scheduled, the BCWS or the PV.
As with the cost variance, people often have trouble remembering this calculation. They get them mixed up and end up having a positive variance when they are really having a negative variance. It is good to remember that bad variances are always negative and good variances are always positive. If we consider that completed project tasks are greater than what was planned, we could say that this is a good variance and it should have a positive value. If on the other hand we have accomplished fewer tasks than the plan allowed for, we could say that this is a bad condition and our variance will be a negative number.
The schedule variance is an important figure for the project manager and the other managers of the company because it is an indicator of how well the project is doing in terms of following the project schedule. It can be used to predict or forecast how much time it will take to finish the project.
Suppose a project is in progress and that as of today the ACWP is $190,000, the BCWP is $210,000, and the BCWS is $200,000.
Schedule variance is the difference between the work that was really accomplished, the BCWP, and the planned work that was supposed to be accomplished, the BCWS.