Question

Spot Construction builds roads, bridges, and other infrastructure. The following is the budget for a road project along with the actual results in thousands of dollars) for the last fifteen months. Month 1 2 3 Budget Cost Complete 0.0% $ 510 5.0% $ 1,020 10.0% $ 1,530 15.0% $ 2,040 20.0% $ 2,550 25.0% $ 3,060 30.0% $ 3,570 35.0% $ 4,080 40.% $ 4,590 45.0% $ 5,100 50.0% $ 5,610 55.0% $ 6,120 60.0% $ 6,630 63.3% $ 7,140 66.7% $ 7,650 70.0% $ 8,160 73.3% $ 8,670 76.7% $ 9, 180 80.0% $ 9,690 83.3% $10,200 86.7% $10,710 90.0% $11,220 93.3% $11,730 96.7% $12,240 100.0% Actual Cost Complete 0.0% $ 700 5.5% $1,160 11.2% $ 1,820 13.4% $ 2,270 21.6% $ 2,810 27.5% $ 3,190 34.% $ 3,870 36.5% $ 4,200 45.0% $ 4,710 48.8% $ 5,400 53.4% $ 5,920 56.7% $ 6,300 62.3% $ 7,190 70.0% $ 7,600 74.3% $ 8,120 80.0% 10 12 13 14 15 16 17 18 22 24 Required: a. At this time, what is the current cost over (under) run on the project? (Enter your answer in dollars and not in thousands of dollars.) b. At this time, by how far ahead or behind schedule is the project in terms of percentage of completion? a. Current cost b. Percentage of completion %

Answer 1

a)At this time, The current cost over(under) on the project is calculated below:

The current cost over(under) on the project = Actual Cost - Budgeted Cost

= $8,120 - $7,650

= $470

At this time, The current cost over on the project is in Dollar = $470*1000 = $470,000

b)At this time, far ahead or behind schedule is the project in the terms of percentage of completion is calculated below:

far ahead or behind schedule is the project in the terms of percentage of completion = Project's Current percentage of completion - Project's Budgeted percentage of completion

= 80.0% - 70.0% = 10.0%

So,the project is ahead the schedule in terms of percentage of completion by 10%

Answer 2

A. Current cost = 80% budgeted cost - 80% actual cost

    = 9,180-8,120 = 1,060 (remember that these costs are written in thousands of $)

     The project is currently under budget because the budgeted cost is greater         than actual cost.

    Answer: Current Cost is $1,060,000 under budget

B. Percentage of Completion = Project's Actual Percentage of Completion - Project's Budgeted Percentage of Completion

    In this case, we are at 15 weeks so we will subtract Project Actual Percentage     at 15 weeks (80%) from Budgeted Percentage at 15 weeks (70%)

    =80%-70% = 10%

So,the project is ahead the schedule because Actual Percentage Complete is greater than Budgeted Percentage Complete.

   Answer: Percentage of Completion 10% ahead of schedule