4. Rob, the project manager of Berwanger, Inc. has been executing a project. On

Question

4. Rob, the project manager of Berwanger, Inc. has been executing a project. On July 30, 2012 the project is 60% complete and he needs help with following measurements: Activity Completion Date PV (SM) EV (SM) AC (SM) January 31, 2012 February 27, 2012 March 30, 2012 April 30, 2012 May 30, 2012 June 30, 2012 July 30, 2012 August 30, 2012 September 30, 2012 20 20 25 a. What is the cost variance? b. What is the schedule variance? c. What is the cost performance index? d. What is the schedule performance index? e. What is the estimate at completion? f. What is the estimate to complete? 8. What is the variance at completion?

Explanation / Answer

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(a)

Cost variance (CV) = EV – AC = 73 – 83 = –10 (overbudget)

(b)

Schedule variance (SV) = EV – PV = 73 – 82 = -11 (delayed)

(c)

CPI = EV/AC = 73/83 = 0.8795

(d)

SPI = EV/PV = 73/82 = 0.8902

(e)

Estimate at completion (EAC)

Assumption 1: EAC = BAC / CPI = 122/0.8795 = $138.7 M

Assumption 2: EAC = AC + (BAC – EV) = 83 + (122 – 73) = $132 M

(f)

ETC = EAC – AC = 138.7 – 83 = $55.7 M or 132 – 83 = $49 M (depending on the assumption)

(g)

VAC = BAC – EAC = 122 – 138.7 = –$16.7 M or 122 – 132 = –$10 M (depending on the assumption)

Activity Completion date PV A 31-Jan-12 8 B 27-Feb-12 4 C 30-Mar-12 6 D 30-Apr-12 15 E 30-May-12 20 F 30-Jun-12 9 G 30-Jul-12 20 H 30-Aug-12 15 I 30-Sep-12 25 Total (BAC) 122

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