You are managing an eight-month project with a BAC of $100K. On Friday afternoon

Question

You are managing an eight-month project with a BAC of $100K. On Friday afternoon, at the end of the fourth month (half way through the project), your EVM system provides the following values: BCWP = $50K ACWP = $75K and your boss asks you to present the EAC at the Monday morning status meeting. You have been an attentive project manager and you have been especially pleased that the BCWP has been tracking quite well to the BCWS. Below are listed three possible answers one might provide as the EAC. For each possible answer, first list any assumption(s) necessary regarding future performance and then provide the rationale which would justify or explain it. $100K: $125K: $150K:

Explanation / Answer

BCWP = $50K ie. Budgeted Cost of Work Performed

ACWP = $75K, ie. Actual Cost of Work Performed

BAC= $100K, ie. Budget At Completion

EAC = BAC/CPI = (BACxACWP/BCW) where CPI=Cost Perfromance Index

= 100*(75/50)= $150k Thus EAC= $150K

Justification

BCWS= Budgeted Cost of Work Scheduled, now much populary termed as the Planned Value.

At the same time BCWP has been tracking quite well to the BCWS. So in this case CPI can be considered into factor, where CPI is the ratio between BCWP & ACWP.So earned value make more sense in realisitc approach , thats why BCWP considered to be more accurate in tracking those real time projects.

EAC= $150K is the justifiable one.

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