COST PERFORMANCE INDEX WORKSTATION

The result of the Cost Performance Index formula is a number. A value of less than one means that money is being spent inefficiently on the project. So if your CPI is 0.7 this means that for every $1 spent on the project you are getting $0.70 of value. A CPI of one means that your project is exactly on track. You spent $1 on the project and got $1 of value in return. A value of greater than one means that money is being spent efficiently on the project. So if your CPI is 1.4 this means that for every $1 spent on the project you are getting $1.40 of value. The Cost Performance Index answers the question, "We're spending money on this project, but is what we're producing worth something?" The formula to calculate CPI is Earned Value divided by Actual Cost.

ACTIVITY

Using a full sheet of paper, have one person on your team rip 100 pieces. One team member should time the event on their mobile phone. The team will have exactly two minutes to complete all 100 pieces. You may want to develop a plan of attack before you begin the activity.

At the end of two minutes, or when all 100 pieces have been torn (whichever comes first), stop the clock and record the time.

There are a few steps to work out your CPI. First, assume that each strand costs $10 to make (your cheque is in the mail).

1) Calculate your Budget at Completion. This is $10 times the number of pieces you were supposed to roll (100).

2) Calculate your Planned Percent Complete. This is the percent complete you expected to be at the time you stopped the clock. If you stopped the clock at two minutes, you expected to be 100% complete. If you stopped the clock prematurely, divide your recorded time by two minutes.

3) Calculated your Planned Value. This is your Planned Percent Complete times your Budget at Completion.

4) Calculate your Actual Percent Complete. This is the number of pieces you managed to tear before the clock stopped (you may use fractions) divided by the number of strands you were supposed to roll.

5) Calculate your Earned Value. This is your Actual Percent Complete times your Budget at Completion.

6) Calculate your Actual Cost. This is $10 times the number of torn pieces you actually ripped.

7) Calculate your Cost Performance Index. This is your Earned Value divided by your Actual Cost.

8) Determine, from your Cost Performance Index, whether you are using funds efficiently.

SCHEDULE PERFORMANCE INDEX WORKSTATION

The result of the Schedule Performance Index formula is a number. So what does this number mean? A value of less than one means that the project is potentially behind schedule. If your SPI is 0.8, the project will not finish on time. An SPI of one means that your project will finish exactly when the plan predicts. An SPI value greater than one means that the project will be completed early. If your SPI is 1.2, the project will be completed sooner than the plan predicts. The formula to calculate SPI is Earned Value divided by Planned Value.

ACTIVITY

Using whatever materials around your home select two people from the team to build a tower. One team member should time the event on their mobile phone. The team will have exactly two minutes to build a tower. You may want to plan this out before you start.

At the end of two minutes, or when the tower is built (whichever comes first), stop the clock and record the time.

There are a few steps to work out your SPI. First, assume that each tower costs $100 to build.

1) Calculate your Budget at Completion. This is $100 times the number of towers you were supposed to build (two).

2) Calculate your Planned Percent Complete. This is the percent complete you expected to be at the time you stopped the clock. If you stopped the clock at two minutes, you expected to be 100% complete. If you stopped the clock prematurely, divide your recorded time by two minutes.

3) Calculated your Planned Value. This is your Planned Percent Complete times your Budget at Completion.

4) Calculate your Actual Percent Complete. This is the number of towers you managed to build before the clock stopped (you may use fractions) divided by the number of towers you were supposed to build.

5) Calculate your Earned Value. This is your Actual Percent Complete times your Budget at Completion.

6) Calculate your Schedule Performance Index. This is your Earned Value divided by your Planned Value.

7) Determine, from your Schedule Performance Index, whether you are ahead of schedule or behind

schedule.