Question

to chapter 1. Given the following information for a one-year project, answer the following questions. Recall that PV is the planned value, EV is the earned value, AC is the actual cost, and BAC is the budget at completion. PV = $22,000 EV = $20,000 AC = $25,000 BAC = $120,000 a. What is the cost variance, schedule variance, cost performance index (CPI), and schedule performance index (SPI) for the project? b. How is the project doing? Is it ahead of schedule or behind schedule? Is it under budget or over budget? c. Use the CPI to calculate the estimate at completion (EAC) for this project. Is the project performing better or worse than planned? d. Use the SPI to estimate how long it will take to finish this project.

Answer 1

1)

Cost variance=Earn value-Actual Cost=20000-25000=-5000

Schedule variance=Earn value-Plan value=20000-22000=-2000

Cost performance index or CPI=20000/25000=0.8

Schedule performance index or SPI=20000/22000=0.909

2)

Based on CPI, we can conclude that we are getting $80 worth of work out of every $100 spent on the project.

Cost variance is negative means, project is over budget.

Based on SPI, we can conclude that we are progressing at 90.90% of the rate that we have originally planned.

Schedule variance is negative means project is behind schedule.

3)

EAC using CPI=BAC/CPI=120000/0.8

EAC= 150000

Variance at completion=BAC-EAC=120000-150000=-30000

VAC is negative means project will be over budget at the end. So, project is performing worse than planned.

4)

Using SPI let me estimate the time to finish that project=1/0.909=1.10 year or almost 13.20 months.