Cost Management - Ex - Question 1

Given the following Information for a 1 year project, Answer the following Questions.

Planned Value (PV) =$23,000
Earned Value(EV) = $20,000
Actual Cost (AC) = $25,000
Budget At Completion = $120,000

Cost Variance (CV) = EV – AC = -5,000
Schedule Variance (SV) = EV – PV = -3,000

How is the Project doing?

Cost Variance = $20,000 - $25,000 = - $5,000 - Un Favourable
This means the project is not doing well, as the cost of work is more than planned.

Schedule Variance = $20,000 - $23,000 = -$3,000 – Un Favorable The Earned value was
$20,000 and the Planned value is $23,000. That means due to inflation or some other unforeseen factors,it took longer than planned to do the work.

Is the Project ahead or behind the schedule?
Schedule Performance Index (SPI) = EV/PV

0.869 ( < 1) 86.9%

Clearly the project is behind schedule by calculating the SPI < 1

Is the Project Under Budget?
Cost Performance Index (CPI) = EV/AC
0.8( < 1) <100%

Clearly the project is over budgeted as shown by calculating the CPI < 1

Estimated Cost and Time Calculations

Estimated Cost to complete this project based on given data.

Estimated at Completion = 120,000 / 0.8 = $150,000.00

Estimated Time to complete this project based on given data.

Estimated at Completion = 12 / .869 = 13.81 months (Just over 13 months)

Earn Value Chart