Question

You are the Program Manager managing the construction of a new airport. Five project managers are directly reporting to you. Each project manager is assigned a part of the total scope of works to be executed independently. The total duration allowed to complete all works is 24 months and the total approved budget is $10,000,000. At the end of the first year, you should have completed $6,000,000 worth of work but the project is only 50% complete. Actual costs reported by each project manager for the first year are: Project manager 1: $200,000 Project manager 2: $1,200,000 Project manager 3: $1,800,000 Project manager 4: $500,000 Project manager 5: $900,000. Determine the current values for the entire program for each of the terms below: Budget At Completion, Planned Value Earned Value Actual Cost Cost Variance Schedule Variance Cost Performance Index Schedule Performance Index Estimate At Completion.

Answer 1

To calculate the current values for the entire program, you need to determine the Budget At Completion (BAC), Planned Value (PV), Earned Value (EV), and Actual Cost (AC). BAC is the total approved budget, PV is the planned completion value, EV is the percentage of work completed multiplied by the BAC, and AC is the sum of the actual costs reported by each project manager. Using these formulas, you can calculate each value and analyze the cost and schedule performance of the program.

Step-by-step explanation:

The key values needed to calculate the current values for the entire program are:

1. Budget At Completion (BAC)
2. Planned Value (PV)
3. Earned Value (EV)
4. Actual Cost (AC)

To determine the values, we can use the following formulas:

1. BAC = Total approved budget = $10,000,000
2. PV = Planned completion value = $6,000,000 (since $6,000,000 worth of work should have been completed at the end of the first year)
3. EV = (Percentage of work completed) x (BAC) = 50% x $10,000,000 = $5,000,000
4. AC = Sum of actual costs reported by each project manager = $200,000 + $1,200,000 + $1,800,000 + $500,000 + $900,000 = $4,600,000

Using the provided information and calculations:

• Budget At Completion: $10,000,000
• Planned Value: $6,000,000
• Earned Value: $5,000,000
• Actual Cost: $4,600,000
• Cost Variance: EV - AC = $5,000,000 - $4,600,000 = $400,000
• Schedule Variance: EV - PV = $5,000,000 - $6,000,000 = -$1,000,000
• Cost Performance Index: EV / AC = $5,000,000 / $4,600,000 = 1.087
• Schedule Performance Index: EV / PV = $5,000,000 / $6,000,000 = 0.833
• Estimate At Completion: BAC / CPI = $10,000,000 / 1.087 = $9,196,607