NOTE: type answer on computer do not attach picture Assume that ABC Company has

Question

NOTE: type answer on computer do not attach picture

Assume that ABC Company has invested a budget of 10 million riyals for XY project and planned to complete it in 10 months. Let’s also assume that the company planned to spend the budget equally in each month. However, when the first two months has passed, the project manager has found out that the total of one million riyals spent. Suppose RP=0.25
Based on the above scenario, answer the following:
a) What is the cost variance, schedule variance, cost performance index (CPI), and schedule performance index (SPI) for the project?

b) How much will it actually cost the company to complete this project, and how long will it really take to complete it based on the performance to date?

c) What do you think of the project performance? over/under the budget? behind /ahead the schedule? Justify your answer.

Explanation / Answer

Budget = 10 million
Time = 10 months
In first 2 months 1 million spent
RP(Rate of Performance) = 0.25
Cost distributed equally over period.

PV is the planned value
EV is the earned value
AC is the actual cost
BAC is the budget at completion

a.
For first 2 months :
PV = 2000000
AC = 1000000
EV = PV*RP = 2500000
Cost variance = EV-AC = 1500000
Schedule variance = EV-PV = 500000
CPI = EV/AC = 2500000/1000000 = 25/10 = 2.5
SPI = EV/PV = 2500000/2000000 = 25/20 = 1.25

b.
Actual cost of the project = (1000000/2)*10 = 5000000

25% completed in 2 months
Actual time to complete the project = 2*4 = 8 months

c.
The project is under budget as it will be completed less than the planned value.
The project is ahead of schedule as it will be completed before scheduled time.

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