Question 4. If the plan value (PV) value for an activity in this project during

Question

Question 4.

If the plan value (PV) value for an activity in this project during the first month of implementation is $ 11,000, Budget at Completion (BAC) at $ 40,000 and 75% of the o work planned to date was accomplished at an actual cost of 12,000 determine :

Earned Value (EV )

Cost Variance (CV)

Schedule Variance (SV)

Schedule Performance Index (SPI)

Cost Performance Index (CPI)

Estimate at Completion (EAC)

Variance at completion (VAC)

Based on the calculations above what can you say about the performance of the project in terms of scope, schedule and cost.                                                                             

Explanation / Answer

4.

A.

Earned value = PV*RP = 11000*75% = $8250

B.

Cost variance = EV – AC = 8250-12000 = -$3750

C.

Schedule variance = EV – PV = 8250-11000 = -$2750

D.

SPI = EV/PV = 8250/11000 = 75%

E.

CPI = EV/AC = 8250/12000 = 68.75%

F.

EAC = BAC/CPI = 40000/68.75% = $58181.82

G.

VAC = BAC – EAC = 40000 - 58181.82 = -$18181.82

On the basis of the above analysis as a part of earned value management, the project is running behind the schedule as in the first month only 75% of the planned work is done. Further, the project is having cost overrun as actual cost as well as EAC is higher than the Planned cost and BAC. It has resulted, into the negative cost variance of the project. Scope of the project is also negatively affected as the project demand additional investment.

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