Earned Value Analysis for Chapter 7 Kathy Schwalbe 10 Edition

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Running Case
Wellness Intranet Project
Chapter 7 Project Cost Management
Case Task 3: Assume you have completed the three months project. The BAC was $200,000 for this six-month project. Also assume the following: PV = $ 120,000
EV = $ 100,000
AC = $ 90,000
a. What is the cost variance, schedule variance, cost performance index (CPI), and Schedule performance index (SPI) for the project? Answer a:
Cost variance (CV) = Earned Value (EV) – Actual Cost (AC)
CV = $100,000 - $ 90,000 = $ 10,000
CV = $10,000

Schedule variance (SC) = Earned Value (EV) – Planned Value (PV) SC = $100,000 - $120,000
SC = - $20,000
Cost performance index (CPI) = EV – Actual cost (AC)
CPI = $100,000 - $90,000
CPI = 1.11
Schedule performance index (SPI) = EV % PV
SPI = 100,000 % 120,000
SPI = 0.83

b: How is the project doing? Is it ahead of schedule or behind the schedule? Is it under budget or over budget? Answer b: As the cost variance (CV) is a positive number $10,000 therefore it is under budget and it means that performing the work cost less than planned. Schedule variance (SV) is is a negative number – $ 200,000 it means that it took longer time than planned to perform work. So the project is behind the schedule. The project is behind schedule and the budget is costing less than planned till this stage of the project.

c: Use the CPI to calculate the estimate at completion (EAC) for this project. Is the project performing better or worse than planned? Answer c: The Budge at completion (BAC) was = $200,000
Estimate to complete (ETC) = (BAC – EV) / CPI
= (200,000 – 100,000) / 1.11
= $ 90,090
EAC = AC + ETC
= 90,000 + 90, 90
= $180,090
As the EAC under budget at $19,910, the project will be completed under the budget.

d: Use the schedule performance index (SPI) to estimate how long it will take to finish this project? Answer d: Estimated time to complete = Original time estimate / SPI = 6 months / 0.83 (SPI)
= 7.2 months
It will take 7.2 months to...
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