A project to build a new bridge seems to be going very well since the project is
ID: 443079 • Letter: A
Question
A project to build a new bridge seems to be going very well since the project is well ahead of schedule and costs seem to be running very low. A major milestone has been reached where the first two activities have been totally completed and the third activity is 68% complete. The planners were only expecting to be 54% through the third activity at this time. The first activity involves prepping the site for the bridge. It was expected that this would cost $1,429,000 and it was done for only $1,309,000. The second activity was the pouring of concrete for the bridge. This was expected to cost $10,509,000 but was actually done for $9,009,000. The third and final activity is the actual construction of the bridge superstructure. This was expected to cost a total of $8,509,000. To date they have spent $5,009,000 on the superstructure.
Calculate the schedule variance, schedule performance index, and cost performance index for the project to date. (Round your "performance index" values to 3 decimal places.)
A project to build a new bridge seems to be going very well since the project is well ahead of schedule and costs seem to be running very low. A major milestone has been reached where the first two activities have been totally completed and the third activity is 68% complete. The planners were only expecting to be 54% through the third activity at this time. The first activity involves prepping the site for the bridge. It was expected that this would cost $1,429,000 and it was done for only $1,309,000. The second activity was the pouring of concrete for the bridge. This was expected to cost $10,509,000 but was actually done for $9,009,000. The third and final activity is the actual construction of the bridge superstructure. This was expected to cost a total of $8,509,000. To date they have spent $5,009,000 on the superstructure.
Calculate the schedule variance, schedule performance index, and cost performance index for the project to date. (Round your "performance index" values to 3 decimal places.)
Explanation / Answer
Schedule Variance indicates the progress of the project in terms of adherence to it's planned schedule and is measured by comparing budgeted cost of work scheduled with budgeted cost of work performed.
Therefore for first activity, Scheduled Variance = (1429000-1309000) $120,000
for second activity, Scheduled Variance = (10509000-9009000) $1,500,000
The third activity is 68% completed as against scheduled planned expected level 54%
68% of third activity budgeted cost of work scheduled = (.68*8509000) $5,786,120 whereas
68% of third activity budgeted cost of work performed = $5,009,000
Hence Scheduled Variance for third activity (as of now) = (5786120-5009000) $777,120
Scheduled Performance Index = Earned Value / Planned Value where earned value is about work performed
=(1429000+10509000+5786120) / (1429000+10509000+4594860) =1.07205
Difference is about 68% and 54% of the partly completed third activity. Value greater than 1 shows project is ahead of its planned schedule.
Cost Performance Index = Earned Value / Actual cost
= (1429000+10590000+5786120) / (1309000+9009000+5009000) = 1.1563
As CPI is greater than 1 therefore earning value is more than the actual spending.
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