10) Projcct managers must not only calcolate variances but also determmine the r

Question

10) Projcct managers must not only calcolate variances but also determmine the root canuse of the variance. Sorme variances may be allowable while others must be explained together with a corrective plan for recovery. In the table below, you must demonstrate your ability to calculate the cost und schedulke variances as well as determine the root cause of the variances, if possible. Consider the following table, which shows a partial status report fora packages (i.c, activitics): project composed of five work Activity $800 EV $1000 1000 1000 1000 1000 SV AC $1100 cV 1200 800 1200 1000 700 1100 800 a. Calculate the cost and schedule variances, in dollars, for cach activity. b. For cach activity, which of the following could be the root cause reason for the variances? Select as many as you think may apply .Accelerated schedule due to higher salaried personnel . Accelerated schedule due to overlapping of activities .Accelerated schedule due to overtime . Accelerated schedule due to additional resources . Slippage due to lack of resources . Slippage due to people working on other project:s . Slippage due to mistakes . People are working but progress is poor . On schedule . On budget : Over budget c. Management wants to know the status of the total project at level 1 of the WBS Add up all of the activity cost and schedule variances to determine the level I cost and schedule variances. What are your conclusions? d. Would your conclusions trom part c above change if activities B and D were the only two activities on the critical path

Explanation / Answer

(a)

(b)

By definiton, SV= (EV - PV); and CV= (EV - AC). This means a positive SV will denote that the project is within schedule and a positive CV will denote that the project is underbudget.

(c)

Overall, there is no schedule variance. he cost variance is also positive i..e the project is under budget

(d)

In this case, the conclusion would be: the project is having slippage and on budget.

Activity PV EV AC SV= (EV - PV) CV= (EV - AC) A $800 $1,000 $1,100 $200 ($100) B $1,200 $1,000 $900 ($200) $100 C $800 $1,000 $700 $200 $300 D $1,200 $1,000 $1,100 ($200) ($100) E $1,000 $1,000 $800 $0 $200

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