The schedule performance index (SPI) is a measure of how close the project is to being completed compared to the schedule.
As a ratio it is calculated by dividing the budgeted cost of work performed, or earned value(EV), by the planned value(PV).
SPI = EV / PV
A project has a budgeted cost of £120,000.
According to the schedule, 15% of the project should have been completed after one month (planned value). That is £120,000 x 15 / 100 = £18,000.
But after a month, only 12% of the project has actually been completed (earned value). That is £120,000 x 12 / 100 = £14,400.
SPI = EV / PV = 14,400 / 18,000 = 0.8
This means that for every estimated hour of work, the project team is only completing 0.8 hours (just over 45 minutes).
If the ratio has a value higher than 1 this indicates the project is progressing well against the schedule. If the SPI is 1, then the project is progressing exactly as planned. If the SPI is less than 1 then the project is running behind schedule.