Does Project Performance Stability Exist? ...a re-examination of CPI and evaluation of SPI(t) stability

The development of the Earned Schedule (ES) method by Lipke in 2003 has been shown to be an important extension to the Earned Value Management (EVM) method, increasing the utility of EVM data for project schedule analysis, control and oversight. As ES provides a reliable time-based indicator of Schedule Performance, the objective of this paper is to investigate whether the SPI(t) exhibited similar stability characteristics to those extensively reported for the Cost Performance Index (CPI) in EVM. This paper analyzes EVM data from three different countries for projects in three industry segments. 37 projects were examined for SPI(t) stability and 26 for CPI stability. It has been found that while the behavior of SPI(t) is broadly consistent with CPI, the widely reported CPI stability rule cannot be generalized even within the US Defense Department (US DoD) project portfolio. Further research is required to develop improved understanding of project performance characteristics and the behavior of CPI and the SPI(t). Introduction The cancellation of the US Navy’s A-12 Avenger II stealth aircraft program in January 1991 [1] [2] resulted in research during the 1990s, which investigated the reliability of Earned Value Management (EVM) cost prediction and the behavior of the Cost Performance Index (CPI) 1 using US Defense Department (US DoD) project 2 data. These research findings have come to be regarded as generally applicable across all project types using EVM across multiple industry sectors. A finding regarded as particularly significant was that CPI stabilizes by 20% of project completion. Lipke proposed the ES method in 2003 to provide time based measures of schedule performance utilizing EVM data. Initial validation has shown that the time based ES derived Schedule Performance Index (time) (SPI(t)) to be reliable for both early and late finish projects. For a technical description of the ES method the reader is referred to Lipke’s seminal paper, “Schedule is Different” [3]. For an excellent easy to read non-technical but comprehensive discussion of the ES method, refer to “Not Your Fathers Earned Value” [4] by Stratton. Following the initial validation of ES, interest developed in ascertaining whether SPI(t) exhibited similar stability characteristics to those extensively reported for CPI. The objective of this research paper is to reexamine CPI stability and to compare the stability behavior of the SPI(t) with CPI. This paper has found that while the behavior of the SPI(t) is broadly consistent with CPI, the widely reported CPI stability rule cannot be generalized to all projects utilizing the EVM method or even within the US DoD project portfolio. However, the consistent behavior to CPI demonstrated by SPI(t) provides further support for the validity of the SPI(t) metric and the ES method. * The contents of this paper are the author’s personal views and conclusions which do not reflect an endorsed position of the PMI College of Performance Management.