1.You are preparing a project to lay fiber optic cable. The first task is to mob

Question

1.You are preparing a project to lay fiber optic cable. The first task is to mobilize the team. You estimate this will take one week and cost $2000. The second task is to lay the cable. This will take three weeks and will cost $30,000. The total length of the cable is 15 miles. The last task, which will take one week, is to terminate and test the cable. You budget $3000 for this. At the end of the first week, you have completed mobilization, but it cost a total of $4500. At the end of the third week, you have completed five miles of cable at a total cost of $28,000 (installation only). It takes you a total of 10 weeks to complete the entire project, for a total cost of $65,000.

At the end of week 1:

i.What is your SPI?

ii.What is your CPI?

iii.What is your EAC?

At the end of week 3:

i.What is your SPI?

ii.What is your CPI?

iii.What is your EAC?

At the end of the project:

i.What is your SPI?

ii.What is your CPI?

iii.What is your EAC?

Explanation / Answer

For all calculations, we assume that the past performance of the project will mirror the future performance.

1. At the end of week one

Estimate : one week with cost $2000.

Earned value is the budget assigned for the work and so earned value is $2000. Budget at completion(BAC) is equal to the earned value since the task of mobilization was completed at the estimated time of one week.

Now, since in the first week, mobilisation is complete, the planned value is equal to the actual cost.

At the end of the first week, Actual cost is $4500

CPI = Earned Value / Actual Cost = $2000 / $4500 = 0.44.  A value of above 1 means that the project is doing well against the budget. Here, since CPI is 0.44, the project is not doing great with respect to utilisation of budget.

SPI = Earned Value / Planned Value = $2000 / $2000 = 1.0

SPI represents how close actual work is being completed compared to the schedule. For task one, the actual work got over at exactly one week estimated in the beginning. Hence SPI=1.

Estimate At Completion(EAC) is the estimate of the project's final cost.

EAC = BAC / CPI, where BAC is budget at completion.

EAC = $2000/0.44 = $4500

2. At the end of week three

Estimate : three weeks and will cost $30,000. The total length of the cable is 15 miles.

At the end of the third week, you have completed five miles of cable at a total cost of $28,000 (installation only). This means that after the first week for mobilisation, another 2 weeks were spent on the second task of installation of the cable.

Therefore

CPI = Earned Value / Actual Cost = $10,666.67 / $28,000 = 0.3809

SPI = Earned Value / Planned Value = $ 10,666.67 / $ 21,333.33 = 0.50

Estimate At Completion(EAC) = BAC / CPI, where BAC is budget at completion.

EAC = $32,000 / 0.3809 = $84,011.551

3. At the end of the project

Estimate: will take one week. You budget $3000 for this.

It takes you a total of 10 weeks to complete the entire project, for a total cost of $65,000.

Now, analysing the data, we know that one week was taken for mobilization task, another 2 weeks to complete one third of the second task of laying the cable. This means, under the assumption that the same rate of progess is expected in future, it would take 2*3=6 weeks to complete the second task (since 30% was completed in 2 weeks). The data shows that it took a total of 10 weeks to complete the entire project. Now, since 1 week is used for task one, 6 weeks for task two, they must have taken 3 weeks to complete the third and final task. (10weeks-1week-6weeks = 3weeks)

Therefore

CPI = Earned Value / Actual Cost = $35,000 / $65,000 = 0.53846

SPI = Earned Value / Planned Value = $ 35,000 / $70,000 = 0.50

Estimate At Completion(EAC) = BAC / CPI, where BAC is budget at completion.

EAC = $35,000 / 0.53846 = $65,000

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