Q4b. Suppose you are the PM of a development project that is expected to be çeoa
ID: 383788 • Letter: Q
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Q4b. Suppose you are the PM of a development project that is expected to be çeoan years at a cost of $16,000 per month. After 9 months, you reali completed at a cost of $250,000. You are expected to conduct an eae.a ter months. Detemine view to ascertaining whether the project is on-time an and interpret the following: 3 ze that the ect is value analysis with a (3%) (a) Cost variation (CV) (b) Schedule variation (SV) (c) Cost performance index (CPI) (d) Schedule performance index (SPI (e) Estimate at completion (EAC) (D Estimated time to complete (ETC) (3%) (4%) (490) (3%) 3010Explanation / Answer
From the scenario:
Budget at Completion (BAC) =$16,000*36 =$576,000
Actual Cost (AC) = $250,000
Planned Completion = 9/36= 25%
Actual Completion = 30%
Planned Value = Planned Completion (%) * BAC = 25% * $576,000 = $144,000
Earned Value = Actual Completion (%) * BAC = 30% * $576,000 = $172,800
Cost Variance = EV – AC = $172,800 - $250,000 = -$77,200
Schedule Variance = EV – PV = $172,800 - $144,000 = $28,800
Since Cost Variance is negative, this means the project is over-budget. Since Schedule Variance is positive, the project is ahead of schedule
Cost performance index = EV/AC =$172800 / $250000 =0.6912
It means , project is getting 69 cents from each dollar.
Schedule performance index =EV/PV = $172800 / $144000 =1.2
It means that the project is progressing with 1.2 time of the rate originally planned.
Estimate at completion =BAC/CPI =$576,000/0.6912 =$83333.33
So the total is not likely to be $83333.33
Estimate to complete=EAC-AC = $83333.33 -$250,000=-$166666.67
Thus project is expected to be over budget by $166666.67
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