Question

A project to build a new bridge seems to be going very well since the project is well ahead of schedule and costs seem to be running very low. A major milestone has been reached where the first two activities have been totally completed and the third activity is 64% complete. The planners were expecting to be only53% through the third activity at this time. The first activity involves prepping the site for the bridge. It was expected that this would cost $1,423,000 and it was done for only $1,303,000. The second activity was the pouring of concrete for the bridge. This was expected to cost $10,503,000 but was actually done for $9,003,000. The third and final activity is the actual construction of the bridge superstructure. This was expected to cost a total of $8,503,000. To date, they have spent $5,003,000 on the superstructure.

Calculate the schedule variance, schedule performance index, and cost performance index for the project to date.

Answer 1

The schedule variance is 11%, the schedule performance index is 1.208, and the cost performance index is 0.588.

Step-by-step explanation:

The schedule variance (SV) measures the difference between the planned progress and the actual progress of a project. To calculate the SV, you subtract the planned completion percentage from the actual completion percentage: SV = Actual Completion - Planned Completion.

In this case, the planned completion of the third activity was 53%, but the actual completion is 64%, so the SV is:

SV = 64% - 53% = 11%.

The schedule performance index (SPI) measures how efficiently the project is progressing in relation to the planned schedule. To calculate the SPI, you divide the actual completion percentage by the planned completion percentage: SPI = Actual Completion / Planned Completion.

In this case, the SPI is:

SPI = 64% / 53% ≈ 1.208 (rounded to three decimal places).

The cost performance index (CPI) measures how efficiently the project is using its budget. To calculate the CPI, you divide the earned value (actual cost) by the planned value (budgeted cost): CPI = Earned Value / Planned Value.

In this case, the earned value for the superstructure is $5,003,000 and the planned value is $8,503,000, so the CPI is:

CPI = $5,003,000 / $8,503,000 ≈ 0.588 (rounded to three decimal places).