Examine the following EVM data for the Acme project, a hypothetical construction

Question

Examine the following EVM data for the Acme project, a hypothetical construction project, to view

information on the past and future performance:

*Cumulative planned value (PV) = 550

*Cumulative earned value (EV) = 475

*Cumulative actual cost (AC) = 525

*Budget at completion (BAC) = 1000

After evaluating the Acme project, do the following:

1. Calculate the cost variance (CV), schedule variance (SV), cost performance index (CPI), and

schedule performance index (SPI). Using these four metrics, briefly explain whether the

project is ahead or behind for cost and schedule performance.

2. Using the results from the first question, calculate the Estimate at Completion (EAC) and

Variance at Completion (VAC). Analyze the results and explain whether the project is likely to

overrun or underrun the baseline plan and by how much.

*Make sure that you include formulas in the spreadsheet so that calculations can be checked!

Thanks!

Explanation / Answer

1. cost variance= earned value- actual cost= 475- 525

                       = - 50

This means the project is over budget

schedule variance= earned value - planned value

                              = 475- 550 = - 75

That means the project is behind the schedule.

cost performance index= earned value/ actual cost

                                   = 475/525 = 0.905

That means the earnings are less than the spending or over budget.

schedule performance index= earned value/ planned value

                                               = 475/ 550 = 0.86

That means less work has been completed than the planned.

2. Estimate at completion (EAC)= Budget at completion/ cost performance index

                                               = 1000/ 0.905 = 1104.97

It means the project continues to progress with CPI= 0.905 until the end, and 1104.97 will have to be spend to complete the project.

variance at completion(VAC)= budget at completion- estiamte at completion

                                             = 1000- 1104.97= - 104.97

This indicates that the project actual cost exceeds the budget.

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