# Earned Value Analysis for Chapter 7 Kathy Schwalbe 10 Edition

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...

Please join StudyMode to read the full document