Assume you have completed three months of the project. The budget at completion

Question

Assume you have completed three months of the project. The budget at completion (BAC) was $200 000 for this six month project. Also assume the following:                           

Planned value (PV) =$120,000
Earned value (EV) =$100,000
Actual cost (AC) = $90,000

a) What is the cost variance, schedule variance, cost performance index (CPI), and schedule performance index (SPI) for the project?

b). How is the project doing? Is it ahead of schedule or behind schedule? Is it under budget or over budget?

c). Use the cost performance (CPI) to calculate the estimate at completion (EAC) for this project. Is the project performing better or worse than planned?

Explanation / Answer

given detaila are Planned value (PV)=$120,000

Earned value (EV)=$100,000

Actusl cost (AC)=$90,000

a) The cost variance (CV)= EV-AC

=$100,000-$90,000

=$ 10000

Schedule variance =EV-PV

=$100,000-$120000

=$-20000

Cost perfomance index (CPI) = (EV)/(AC)

=($100,000)/($90,000)

=1.11111

Schedule perfomance index (SPI) =(EV)/(PV)

=($100,000)/($120,000)

=0.833

b) Since the schedule perfomance index (SPI) is less than one little amount of work is finished than the planned work.otherwise the project is behind schedule.

and also since the cost perfomance index(CPI) is greater than one the project is under budget.

c) Estimate at completion (EAC) = BAC/CPI

=200,000/1.1111111

=180000

Therefore the project perfomance is worse than the project.

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