PROJECT MANAGEMENT QUESTION Forecasted Actual Actual Quantity Quantity of Predec

Question

PROJECT MANAGEMENT QUESTION

Forecasted Actual Actual Quantity Quantity of Predecessor Forecast Activities Duration of Resources Duration (days) Resources per (days) per day day na na na If the budgeted resource price is $100/unit and theactual resource price is $80/unit, determine the following: (4 marks) a) Schedule Variance (SV) (4 marks) b) Cost Performance Index (CPI) (2 marks) c) Estimate to Complete (ETC) (3 marks) d) Resource Price Variance (RPV)per activity (3 marks) e) Resource Quantity Variance (RQV) per activity (4 marks) f) Cost Variance (CV) g) Comment on the progress of the project in terms of time, cost and resources used. (5 marks)

Explanation / Answer

As per the given table it is clear that all the activities are in series i.e A-B-C-D-E

A)

Schedule variance is the nothing but the value by which project is behind the scheduled value.

So Schedule variance is the actual value - planned value of resources .

As per the table actual quantity of resources produced by D activity and E activity are not available .

So we can consider the A, B, & C activity .

The planned value of ABC activities = quantities of resources planned * planned price = ( 5+ 2 + 3) * 100 = 1000

Actual value of ABC activities = quantities of resources actually produced * actual price = ( 6+ 2+2 ) *80 = 800

So Schedule variance = 800 - 1000 = -200 ( value behind schedule ) .

b) Cost Performance Index ( CPI ) is index to determine the performance of cost or cost utilization

CPI = earned value/ planned value of ABC activities = 800 /1000 = 80%

C) Estimate to complete is cost estimated to complete the balance activities i.e. D & E .

Estimate to complete (ETC) = total cost estimated for the project - actual cost tilll ABC

Total cost estimated for the project = Total forcasted units of all the activities * estimated price

ETC = (5+2+3+1+3) * 100 - (6 + 2 + 2)* 80 = 600

d) Resource price variance per activity can be calculated for A,B & C as actual price value is known for these activities

There are 3 activities .

Price variance =difference in prices * actual resources produced ]/number of activites = [(80-100) *10]/3 = -20/3= -6.67

e) Resource quantity variance = difference in quantities * actual price / ( number of activities )

difference in quanties estimated and produced both are same i.e = 10

So the difference in quantities = 0.

So the quantity variance = 0

f )

assume same number of units produced as estimated at the end of project i.e 14 ( 5+2+3+1+3)

cost variance = actual cost till date - value budgeted = 14 * 80 - 14 *100= 1120-1400 = -280

cost variance is used to estimate how much the project is behind the budgeted cost.

g) resources produced estimated till end of activity C are 10 units same as that produced .

time taken actually = (2+6+1) - ( 2+5+1) = 1 day extra till end of activity C

cost is $ 200 behind the the planned cost as per the scheduled variance. So project cost is lesser than the planned cost till end of activity C.

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