What Is Schedule Variance? (And How to Calculate It)
By Indeed Editorial Team
Published June 18, 2022
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Teams that work on complex projects use a variety of tools to track progress and ensure they complete stages of work on time and under budget. Schedule variance is a calculation for tracking work by comparing actual progress to expected progress at a given point in time. Learning about schedule variance and how to calculate it can help you work on projects more efficiently. In this article, we answer the question, "What is schedule variance?", explain the benefits of tracking it, share steps for calculating schedule variance, provide examples, and give tips for using it to manage projects.
What is schedule variance?
The question to the question, "What is schedule variance?", is it's a measurement of how the actual progress on a project compares to the expected progress. Businesses and project managers calculate schedule variance as a method for determining if a project is ahead of schedule or behind based on the relationship between the cost of the work planned and the actual cost of the work currently completed. Schedule variance calculations allow project managers to be more exact about the state of a project.
After evaluating progress with this calculation, project managers can make adjustments to the project schedule and the overall approach to try to correct any imbalances. Schedule variance calculations are an aspect of the earned value management (EVM) approach to project management. This approach emphasizes using quantifiable budget calculations to measure project progress. Using this approach, you determine the planned value of work on a project by a given date, then calculate the actual value of work completed, before using these figures to calculate schedule variance and other measurements like cost variance, schedule performance index, and cost performance index.
Benefits of tracking schedule variance
There are several benefits that tracking schedule variance can offer a project. Here are the main benefits of considering schedule variance:
You can use schedule variance calculations to quantify your progress on a project at a given point in time. Obtaining a more exact understanding of your progress towards a goal can help you stay on budget and on schedule. Variance calculations give you a specific measurement of how much a project is under or over its expected budget. If a project is significantly over budget, you can take steps to lower costs, and if it's under budget, you can focus more on perfecting small details.
Schedule variance allows you to identify trends concerning project progress and make adjustments as you work towards your goal. You can calculate variance at multiple stages of your project and use it to make adjustments to your methods, approach, and goals. For example, if variance calculations show that a project is more over budget each time, it can suggest that the current approach requires adjustments.
Communicate with stakeholders
Calculating schedule variance gives you accurate data that you can share with project stakeholders to explain current project progress. This can assist with long-term planning or requests for additional resources. Variance calculations can help every level of an organization understand the status of a project and make adjustments accordingly.
How to calculate schedule variance
Calculating schedule variance is an effective way to determine the current state of a project. Here are steps to follow for calculating schedule variance:
1. Determine project budget
Before you calculate schedule variance, determine the overall project budget. This is the amount that the organization intends to spend on the entire project. You can express the project budget as a dollar amount, or as a total amount of work hours.
2. Calculate budgeted cost of work scheduled
Budgeted cost of work scheduled (BCWS) represents the amount of the budget you plan to spend over a certain amount of time. You can also call this the planned value, or PV, of the work completed at a specific time. Here is the formula for BCWS:
BCWS= (total project budget) x (percentage of the work expected completed at a given time)
For example, if the overall project budget is $100,000, and you expect to complete 25% of the work by a certain date, the budgeted cost of work scheduled at that time is $25,000.
3. Calculate budgeted cost of work performed
Budgeted cost of work performed, or BCWP, is the actual amount of the project budget spent at a specific time. Some formulas refer to this as the earned value, or EV. Here is the formula for BCWP:
BCWP= (total project budget) x (percentage of the work completed)
For example, if the overall project budget is $100,000, and you completed 20% of the work by a certain date, the BCWP is $20,000
4. Calculate schedule variance
Once you complete the BCWS and the BCWP calculations, you can determine the schedule variance for a project. Here's the formula for schedule variance, or SV:
SV= BCWP- BCWS
For example, if you have a BCWS of $50,000, and a BCWP of $25,000, you can calculate schedule variance like this:
SV= 25,000 - 50,000
You can express schedule variance as a percentage by dividing SV by BCWS and multiplying by 100.
SV= -25,000/50,000 x 100
5. Interpret calculations
After you calculate schedule variance, you can interpret the calculation to determine the state of the project. If you have a negative schedule variance, the project is behind schedule by that percentage. The larger the percentage, the more the project is behind schedule. You can consider adjusting work schedules and increasing development speed to bring the project back into a healthy range. If the schedule variance is positive, it signifies that the project is ahead of schedule at that point in time. The larger the number, the more the project is ahead of schedule.
6. Make adjustments
Once you understand the significance of the schedule variance results, you can make adjustments to your project schedule, use of resources, and overall project plan. Depending on the size of the schedule variance, you might make significant adjustments or small corrections. Try to calculate schedule variance regularly to see if it's growing or decreasing. You can use graphs and charts to represent increases or decreases in variance over time. You can also use schedule variance figures to perform other calculations that can indicate the state of the project.
Here is an example schedule variance calculation. You can use it as a guide to calculate schedule variance for your own project:
Dansden Inc. is working on a construction project with a project budget of $600,000. The budgeted cost of work scheduled for the first month of construction, including payroll, materials, and other costs, is $200,000. After a month of construction, they calculate that the budgeted cost of work performed was $150,000. They calculate schedule variance as follows:
The project planned to use 200,000 of the budget after one month, but only used 150,000, producing a schedule variance of -25%. That means the project is 25% behind schedule. The organization might consider making changes to their approach to lower the schedule variance over time.
Tips for using schedule variance calculations
There are many ways to incorporate schedule variance calculations into your project management approach. Here are some tips for using schedule variance.
Use the formula for project planning
You can use schedule variance calculations during the project planning phase to help you prepare for deviations between planned work and completed work and develop plans for bringing them into alignment. Making this calculation during the planning phase requires you to estimate what the budgeted cost of work performed, or the earned value might be at different times in the future. You can assume that the project won't stay exactly on schedule during each phase and prepare to make adjustments accordingly.
Consider project quality
Schedule variance helps demonstrate the progress of a project according to its overall budget, but it does not account for the quality of the work produced. The budgeted value of work performed indicates how much of the budget was used at a specific time, but it does not indicate if the work performed was adequate to ensure the final product does not go over budget at a later date. Try to remember that schedule variance is a single measurement and you might require additional metrics to make critical decisions about the overall project.
Use multiple assessment tools
Try to use multiple calculations and assessment tools in tandem with variance calculations to understand the overall state of a project. Variance calculations can be an excellent starting point for assessing the relationship between planned use of project budget and actual budgeted work completed at regular intervals, but there are many other dimensions to a successful project that require consideration in project planning and execution. Try to collect as much data as you can to come to an accurate understanding of the state of a project.
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