CPI and SPI Formula: Cost and Schedule Performance in Construction

CPI measures cost efficiency. SPI measures schedule efficiency. Two ratios, two questions answered. The formulas take 30 seconds to learn. Knowing what to do when CPI drops to 0.85 on a £60M infrastructure package - that's the part that actually matters.

If you need a refresher on the three base inputs (PV, EV, and AC), the earned value formulas page covers those first.

What Are CPI and SPI?

Cost Performance Index (CPI) tells you how much value you're getting for every pound spent. A CPI of 1.0 means you're spending exactly what you planned. Above 1.0, you're under budget. Below 1.0, you're burning cash faster than you're delivering work.

Schedule Performance Index (SPI) tells you how fast work is progressing against the baseline programme. Above 1.0, you're ahead. Below 1.0, you're behind. Simple as that.

On a £40M rail electrification package at the time midpoint, imagine you've earned £18M of value but spent £19.6M. That's a CPI of 0.92 - and a £1.6M cost overrun already baked in, with half the project still to go. That's not a rounding error. That's a conversation with the project director, and probably a difficult one.

The CPI Formula

Where EV is the budgeted cost of work actually completed, and AC is what you've actually spent to complete that work.

CPI Interpretation Table

The CPI stability rule: Once a project's cumulative CPI drops below 0.90 by the 20% completion mark, it almost never recovers to 1.0. Research across hundreds of projects shows final CPI rarely deviates more than 10% from CPI at the 20% point. Construction is messier than that data suggests, but the principle holds. Early CPI predicts final CPI with uncomfortable accuracy. If your CPI is 0.85 at month 6 of a 30-month programme, don't plan your recovery around getting it back to 1.0. Plan around 0.88 at best.

The SPI Formula

Where EV is the budgeted cost of work completed, and PV is the budgeted cost of work scheduled to be completed by now.

SPI Interpretation Table

The SPI Convergence Problem

SPI has a flaw. A big one. And it catches out teams who don't know about it.

As a project approaches completion, SPI always converges towards 1.0 - even if the project finishes 6 months late. Why? Because by the end, all planned work has been scheduled (PV = BAC) and all work has been completed (EV = BAC). So EV/PV = BAC/BAC = 1.0. Always.

This makes SPI most useful in the first 60-70% of a project. After that, it's increasingly misleading. If you need schedule performance data in the final third, use schedule variance in time units - SV(t) - or look directly at the programme. Sometimes the simplest tool is the right one.

Worked Example: £35M Highway Resurfacing Programme

A contractor wins a £35M highway resurfacing contract. The programme runs 24 months. At the end of Month 8, the commercial team runs the numbers.

Calculating CPI: CPI = EV / AC = £10,920,000 / £13,100,000 = 0.834. For every £1 spent, the project is only delivering £0.834 of value - a 20% cost overrun rate.

Calculating SPI: SPI = EV / PV = £10,920,000 / £12,600,000 = 0.87. The project has only completed 87% of the work it should have done by this point.

Both indicators are below 1.0. The project is over budget and behind programme. At this rate, EAC = £35,000,000 / 0.834 = £41,987,179 - that's a £7M overrun. The commercial team now has a clear picture: without intervention, this project overshoots its budget significantly and finishes late. Time to dig into the cost drivers and separate what's recoverable (compensation events, remeasurable quantities) from what's a genuine cost overrun.

Worked Example 2: £8M School Refurbishment

Not every project is a megascheme. Here's CPI and SPI on a smaller job. A contractor is 12 weeks into a 40-week, £8M secondary school refurbishment. The project uses NEC4 Option A.

CPI = £2,640,000 / £2,520,000 = 1.05. SPI = £2,640,000 / £2,400,000 = 1.10. This project is in good shape - £1.05 of value delivered for every £1 spent, and 10% ahead of programme.

But the commercial team shouldn't relax yet. The strip-out was the easy part. Mechanical and electrical installation starts in Week 14, and that's where school refurbishments get complicated: restricted working hours, asbestos finds, service clashes. A CPI of 1.05 at Week 12 doesn't guarantee a CPI of 1.05 at Week 30. I've seen projects go from top-right quadrant to bottom-left in two reporting periods once M&E kicks in.

Using CPI and SPI Together: The Four-Quadrant Health Check

Individually, CPI and SPI are useful. Together, they're powerful. Plot CPI on one axis and SPI on the other and you get four quadrants that describe project health at a glance - and tell you which conversation to have next.

Projects don't sit in one quadrant forever. They move. And the direction matters far more than the snapshot. A project at CPI 0.95, SPI 0.97 that was at CPI 0.91, SPI 0.93 last month is recovering. A project at CPI 1.02, SPI 1.01 that was at CPI 1.08, SPI 1.06 last month is deteriorating - even though the numbers still look healthy on paper.

Watch the trend. Plotting PV, EV, and AC on an S-curve makes these directional shifts visible at a glance.

The critical path warning: SPI doesn't distinguish between critical and non-critical activities. A project can show SPI = 1.05 while the critical path is actually 3 weeks behind - because the team blitzed through non-critical activities with float. Always cross-reference SPI with your critical path analysis.

Reporting CPI and SPI Effectively

Calculating the numbers is straightforward. Getting people to act on them? That's the hard part.

Most EVM reports are terrible. Forty pages of tables, no narrative, buried in a monthly pack that nobody reads past page 3. The best ones follow this structure:

1. Dashboard - CPI and SPI as headline numbers with traffic light colours (green > 0.95, amber 0.85-0.95, red < 0.85)
2. Trend chart - CPI and SPI plotted monthly since project start. The trend matters more than the snapshot.
3. Work package breakdown - CPI and SPI by package, sorted worst-first
4. Forecast - EAC using CPI, with a narrative explaining the main cost drivers
5. Actions - What's being done about any indices below threshold

Different stakeholders need different things. A project director wants the CPI trend plus EAC forecast on one page. A commercial manager wants CPI by work package plus recovery actions. A project manager wants SPI by work package plus programme comparison. See the earned value report template for a worked-up version of this structure.

Common Mistakes

1. Measuring EV by spend instead of progress - The most common error. If your valuation team reports EV based on what's been valued in interim applications rather than physical progress, your CPI and SPI will look fine while the project bleeds money underneath.
2. Ignoring the baseline - CPI and SPI are only meaningful against a realistic baseline. If the programme was sandbagged with excessive float, SPI will always look good. Ask: was the baseline credible?
3. Reporting without context - A CPI of 0.94 means different things at different stages. At 10% complete, it's a yellow flag. At 70% complete, it's almost certainly the final outturn. Always report alongside percentage complete and the 3-4 period trend.
4. Treating SPI as gospel in the final third - SPI converges to 1.0 regardless of actual schedule performance. Use cost and schedule variance metrics or time-based SPI(t) for late-stage reporting.
5. Forgetting CPI and SPI are lagging indicators - Both indices tell you what has happened. Use CPI to inform your EAC and ETC forecasts, but don't use it as a crystal ball.
6. Not breaking down by work package - A project-level CPI of 0.95 can mask a substructure package at 1.10 and an M&E package at 0.78. Always report at work package level, not just project level.

For a deeper dive into these and other measurement pitfalls, see the guide to common earned value mistakes in construction.

Quick Reference Table

Threshold guidance: CPI below 0.90 at 25% completion almost certainly won't recover to 1.0. SPI below 0.85 typically requires acceleration - budget the cost of recovery. Both below 0.90 should trigger a formal project review with the project director.

Try the calculations yourself with the earned value calculator.