hapter 7 Exercises Given the following information for a one-year project, answe

Question

hapter 7 Exercises 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 = $23,000 EV = $20,000 AC = $25,000 BAC = $120,000 What is the cost variance, schedule variance, cost performance index (CPI), and schedule performance index (SPI) for the project? How is the project doing? Is it ahead of schedule or behind schedule? Is it under budget or over budget? Use the CPI to calculate the estimate at completion (EAC) for this project. Is the project performing better or worse than planned? Use the SPI to estimate how long it will take to finish this project. the earned value chart for this project, using Figure 7-5 as a guide. c.

Explanation / Answer

Given Information :

PV=$23000 EV= $20000 AC=$25000 BAC=$120000

a) Cost variance CV= EV-AC = $20000-$25000= - $5000 (Negative value), cost performance is bad

Sheduled variance SV=EV-PV= $20000-$23000=-$3000 (Negative value), schedule performance is bad

Cost Performance Index CPI = EV/AC= $20000/$25000=0.8

   since the CPI is less than 1, this means that the project is costing above the budget. The project is not progressing as per the budgetted cost.

Schedule Performance Index= SPI= EV/PV=$20000/$23000=0.8695

b) The project is not doing well. It is bad project. It is behind the schedule. The budget is over budget

Since the schedule performance index is less than 1, it means the project is behind the schedule.

C). Estimate At completion= EAC=BAC/CPI= $120000/0.8=$150000

D) Time to complete the project using SPI = 12months/ SPI = 12months/ 0.8695=13.8 months

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