Running Case You and your team are continuing your work on the Global Treps Proj
ID: 2656948 • Letter: R
Question
Running Case You and your team are continuing your work on the Global Treps Project. Your project spon- sor, Dr. K., has asked you to refine the existing cost estimate for the project so you can evalu- ate supplier bids and have a solid cost baseline for evaluating project performance. Recall that your schedule and cost goals are to complete the project in six months for under $120,000. You planned to use up to $50,000 total to pay yourself and your team members, and your initial estimates were $30,000 for travel expenses, $20,000 for hardware and software, and $20,000 for organizing four events, including consultants, legal/business fees, etc.Explanation / Answer
Given:
PV = Planned Value = $60,000
EV = Earned Value = $55,000
AC = Actual Cost = $50,000
BAC = Budget at Completion = $120,000
Formula to be used:
Cost Variance = EV – AC
Schedule Variance = EV-PV
Cost Performance Index (CPI) = EV/AC
Schedule Performance Index (SPI) = EV/PV
EAC (Estimate at Completion) = BAC/CPI
a) Cost Variance = EV – AC = 55000-50000 = $5000
Schedule Variance = EV – PV = 55000-60000 = -$5000
CPI = EV/AC = 1.1
SPI = EV/PV = 0.92
b) Since SPI is less than 1, it means that less work has been completed till now than it was planned to be. So, the project is behind schedule
Since CPI is greater than 1, it means that the project is earning greater amount with respect to the amount spend on it. So, the project is under budget
c) Estimate at Completion (EAC) = BAC/SPI = 120000/0.92 = $130,434.78
The project is performing worse than it has been planned as it would take more than $120,000 to complete the project
d) Estimated time to complete = 6/SPI = 12/0.92 =6.5 months
(Here 6 denotes the total number of months that should be taken to complete the project)
Therefore, the project will take 0.5 months more to get completed
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