Question

Q4 Maria is a project manager for a company that produces two types of appliances each year for local suppliers. The project requires 200 appliances to be produced per month for Appliance A with a cost of RM 50 each, and 100 appliances to be produced per month for Appliance B with a cost of RM 100 each. Maria receives a project budget of RM 200,000 for 10 months to produce both appliances. After Maria's project team into six months of the project, they have produced 800 Appliance A with actual cost of RM 45,000 and 400 Appliance B with actual cost of RM 50,000. (a) Formulate the problem to determine whether the project is on-time and on- budget after six months using the Earned Value Analysis (EVA) method. (14 marks) (b) Generate the expected “cost at complete” and “time at complete” to complete the project at this pace. (4 marks) (c) Present two initiatives to be undertaken by Maria to improve the situation based on Q4(b). (2 marks)

Answer 1

	Units Per Month	Cost per Unit	Total Cost
		(RM)	(RM)
Appliance A	200	50	10000
Appliance B	100	100	10000
Total	300		20000
1.)
	Months	PLAN	ACTUAL	EV	Planned time
		Units	Cost	Units	Cost		for Actual Units
			(RM)		(RM)
Appliance A	6	1200	60000	800	45000	40000	4 Months
		(200*6)	(1200*50)	(Given)	(Given)	(Actual Units * Planned Cost per Unit)	(800/200)
						(800*50)
Ans:- NO, the Project is not on time. 800 Units should have been completed by the end
of 4 Months(800/200).Therefore the Production of Appliance A is late by 2 Months.
The Project has also exceeded the budget by 5000RM (45000-40000) RM
	Months	PLAN	ACTUAL	EV	Planned time
		Units	Cost	Units	Cost		for Actual Units
			(RM)		(RM)
Appliance B	6	600	60000	400	50000	40000	4 Months
		(100*6)	(600*100)	(Given)	(Given)	(Actual Units * Planned Cost per Unit)	(400/100)
						(400*100)
Ans:- NO, the Project is not on time. 400 Units should have been completed by the end
of 4 Months(400/100).Therefore the Production of Appliance B is late by 2 Months.
The Project has also exceeded the budget by 10000RM (50000-40000) RM
2.)
		Appliance A			Appliance B
Units Produced	800			400
Time Taken		6 Months			6 Months
Total Units to be produced	2000			1000
Expected Time at complete	15			15	ANS
		(6*2000/800)		(6*1000/400)
Actual Cost Per Unit	56.25			125
		(45000/800)			(50000/400)
Total Cost at Complete	112500			125000	ANS
c.)
Two Initiatives to be taken:-
1.) Maria can employ excess variable resources which would in turn lead to reduced time and lower
per unit of fixed cost
2.) Maria can compare the planned and actual costs to know which expensehead is exceeding the planned and
how it can be reduced. The more synergies between factor of production will lead to lower cost.