Question

Directions – Analyzing Performance: Answer the following questions. Must show all supporting work to receive full credit. Scenario: Suppose you just signed a contract with a consulting firm called Dr. Pete’s Consulting for developing an IS. Project Budget, Schedule, Tasks: $10,000 3 months 10 Tasks $1,000 per task -4 tasks 1st month -3 tasks 2nd month -3 tasks 3rd month At the end of Month 1, you receive the following invoice: Invoice: Dr. Pete’s Consulting Amount Due: $5,000 Payment Due: Immediately Work Completed for Month 1 Task 1: $2,000 Task 2: $1,000 Task 3: $2,000 Questions to answer: 1. How is the project doing regarding budget and schedule? 2. What is the estimate at completion (EAC) assuming variances encountered will likely continue for the remainder of the project?

Answer 1

The project is over budget by $1,000 and behind schedule after the first month. The EAC assuming current variances continue is approximately $16,670, which is $6,670 over the original budget.

Step-by-step explanation:

Analysis of Project Performance and Estimate at Completion

1. To assess how the project is doing regarding budget and schedule, we compare the initial plan with the current invoice. Based on the plan, four tasks were to be completed in the first month, each costing $1,000, totaling $4,000.

The invoice shows three tasks completed with a cost of $5,000. This indicates that the project is over budget by $1,000 and behind schedule by one task at the end of month one.

2. The Estimate at Completion (EAC) assuming the current variances continue is calculated by extrapolating the current cost performance. With $5,000 spent for three tasks, the average cost per task is approximately $1,667. Since there are ten tasks in total, we can estimate the total cost by multiplying this average cost per task by the total number of tasks (10 x $1,667 = $16,670).