Given the following information for a one-year project, answer the following que

Question

Given the following information for a one-year project, answer the following questions. Planned Value (PV) = $30,000 Earned Value (EV) = $27,000 Actual Cost (AC) = $25,000 Budget at Completion (BAC) = $150,000 1. What is the cost variance, schedule variance, cost performance index, and schedule performance index for the project? 2. Is the project ahead of schedule or behind schedule? 3. Is the project under budget or over budget? 4. Use the cost performance index to calculate the estimate at completion (EAC) for this project. Is the project performing better or worse than planned? 5. Use the schedule performance index to estimate how long it will take to finish this project.

Explanation / Answer

(1). cost variance = (Earned value) - (Actual cost)

= 27000 - 25000

= $2000

->schedule variance = (Earned value) - (planned value)

= 27000 - 30000

= -3000 (-ve means project is behind schedule)

-> cost performance index = EV/AC

= 27000 / 25000

= 1.08

->Schedule performance index = EV/PV

= 27000 / 30000

= 0.9

(2).As the schedule variance is -3000 which represents negative value means that a project is behind schedule.

(3).Since the cost performance index is greater than 1 the project is under budget.

(4). Estimate of completion EAC = BAC/CPI

= 150000 / (1.08)

= 138888

(5).Using SPI, estimated time to finish the project = (Original time estimateed) / SPI

= 12/0.9

= 13.33

= 13.33 months

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