MGT 251 Planning and Control

  

1. Earned Value Management (EVM)

Following is a cost/schedule status report (C/SSR), a document that is generated each month. It demonstrates the cost and schedule status of a project at a given moment in time. Answer the questions associated with the accompanying C/SSR after reading the appropriate sections on earned value in Managing Projects in Organizations, The New Project Management, and A Guide to the Project Management Body of Knowledge (PMBOK).

  

Task

Budget

Task begun

Task ended

Actual Cost

 

A

30,000

√

√

30,000

 

B

40,000

√

√

43,000

 

C

20,000

√

√

22,000

 

D

30,000

√

18,000

 

E

30,000

 

F

40,000

√

44000

 

G

20,000

√

√

21,000

 

Total

210,000

178,000

This C/SSR shows the cost and schedule status of our project as of the end of last month. The numbers in the “Budget” column represent how much money was budgeted to be spent on each of the tasks at the end of reporting period. Applying earned value management (EVM) principles, answer the following six questions:

a) What is the schedule variance (SV) for the project as of the end of last month?

Schedule Variance indicates how much ahead or behind schedule the project is. Schedule Variance can be calculated as using the following formula: 

Schedule Variance (SV) = Earned Value (EV) – Planned Value (PV) 

Schedule Variance (SV) = BCWP – BCWS

Planned Value (BCWS) = BAC = 210,000

Earned Value (BCWP) = 57%*210,000 = 119,000

SV = [BCWP – BCWS] 

= [119,000 – 210, 000]

= - 91,000

b) What is the cost variance (CV) for the project as of the end of last month?

Cost Variance = Earned Value (BCWP) – Actual Cost (ACWP)

= [119,000 – 178,000]

= -59, 000

c) What is the value of cost performance index (CPI)?

CPI = [BCWP/ACWP]

= [119,000/178,000]

= 0.669

d) What is the value of the schedule performance index (SPI)?

SPI = [BCWP/BCWS]

= [119,000/210,000]

= 0.567

e) If the total budget for the project as of its completion date is $600,000, what is the value of estimate at complete (EAC)?

BAC = $ 600,000

EAC = Approved budget for the entire task – Cost variance for the work done to date on the task

= Budget at completion (BAC) + Actual cost (AC) – Earned value (EV)

= 600,000 + 178,000 – (119,000)

= $659,000

f) In one paragraph, summarize the cost and schedule status of this project using the earned value

Earned value is the value of the work actually completed to date, planned value is the money that you should have spent as per the schedule, and actual cost is the amount spent on the project to date. The project’s earned value (budgeted cost of work performed) indicates that the project is running above the planned value of the project budget. During the month the project actually used $119,000 producing a negative Schedule Variance which means the project is behind schedule