What it means
Schedule variance comes from earned value management, a project control method that puts a dollar value on progress. Two figures drive it: planned value, the budgeted cost of the work scheduled to be done by a given date, and earned value, the budgeted cost of the work genuinely finished by that date.
Expressing lateness in money sounds odd at first, but it solves a real problem. Saying a project is two weeks late tells you nothing about how much work is outstanding, whereas saying $200,000 of scheduled work has not been delivered is immediately comparable across projects and instantly meaningful to a finance team.
Alongside the variance, most teams calculate the schedule performance index, which is earned value divided by planned value. An index of 0.80 means the project is completing work at 80% of the planned rate, and dividing the planned duration by that index gives a rough forecast of how long the project will actually take.
The most common misreading is to confuse this with cost. Schedule variance says nothing about whether money is being spent efficiently; that is cost variance, which compares earned value with actual costs incurred, and the two can point in opposite directions.
There is one important quirk. As a project approaches completion, earned value converges on planned value, so schedule variance drifts towards zero even for a project finishing badly late, which is why teams stop relying on it near the end and switch to milestone tracking.
In practice
Real-world examples.
Example
A software implementation with a $900,000 budget reports earned value of $450,000 against planned value of $540,000 at the halfway point. The programme office flags a schedule performance index of 0.83 and reallocates two developers from a lower priority workstream.
Example
An engineering firm running twelve concurrent projects ranks them by schedule variance each month. Three projects showing a combined -$1,400,000 receive a joint recovery review, while projects within $50,000 of plan are left alone.
Example
A shipbuilder discovers a schedule variance of -$3,000,000 driven almost entirely by a late steel delivery rather than by productivity. Because the cause is external, management renegotiates the contract milestone dates instead of adding shifts that would raise cost without recovering time.
Think of it
“Schedule variance shows whether you're ahead or behind your timeline-project timing performance.
Formula
Calculation
Schedule variance = earned value - planned value. Schedule performance index = earned value / planned value.
A construction fit out project has a total budget of $2,000,000 and a twelve month plan with work spread evenly. At the end of month six the schedule says 50% of the work should be complete, so planned value = 50% x $2,000,000 = $1,000,000. An independent survey finds that only 40% of the work is genuinely finished, so earned value = 40% x $2,000,000 = $800,000.
Schedule variance = $800,000 - $1,000,000 = -$200,000, meaning $200,000 of scheduled work has not been delivered. The schedule performance index = $800,000 / $1,000,000 = 0.80.
Projecting forward, if the team continues at 80% of the planned rate, the twelve month project will take 12 / 0.80 = 15 months. That three month overrun is the number the client needs to hear now, not in month eleven when the delay becomes undeniable.Case study
Seen in the real world.
The following is an illustrative and fictional example. Beacon Ridge Infrastructure, an invented civil engineering contractor, was six months into a $2,000,000 depot refurbishment and reporting the project as broadly on track. The site manager's confidence rested on the fact that spending was close to budget.
When the newly appointed project controller applied earned value discipline, the picture changed. Planned value at month six was $1,000,000, but a physical survey put genuine completion at 40%, giving earned value of $800,000 and a schedule variance of -$200,000. Spending had matched the plan precisely because the crew had been busy, just not on the critical path.
Beacon Ridge's fictional leadership presented the schedule performance index of 0.80 and the implied fifteen month duration to the client in month seven. The client agreed a revised handover date and a reduced penalty in exchange for early transparency, an outcome the team estimated saved roughly $260,000 in liquidated damages.
Watch out
Common mistakes.
- Reading schedule variance as a cost overrun, when it measures work delivered against work planned and says nothing about spending efficiency.
- Calculating earned value from the percentage of budget spent rather than the percentage of work genuinely completed, which makes every project look on schedule.
- Continuing to rely on schedule variance in the final weeks of a project, when the measure naturally converges towards zero regardless of lateness.
Questions
People also ask.
Why is schedule variance measured in money?
Because it uses the budgeted value of work as a common unit, which makes progress comparable across tasks, teams and whole portfolios.
What is a meaningful schedule performance index?
Anything below 0.95 usually warrants investigation, and below 0.85 typically means the completion date needs to be formally reforecast.
How does it relate to cost variance?
Cost variance is earned value minus actual cost, so a project can be behind schedule and under budget at the same time, which is a very common combination on understaffed work.
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