Question

Given the following information for a one-year project, answer the following questions. Recall that PV is the planned value, EV is the earned value, AC is the actual cost, and BAC is the budget at completion.

PV = $65,000
EV = $58,000
AC = $68,000
BAC = $155,000
a. What is the cost variance, schedule variance, cost performance index (CPI), and schedule performance index (SPI) for the project? 
b. How is the project doing? Is it ahead of schedule or behind schedule? Is it under budget or over budget?
c. Use the CPI to calculate the estimate at completion (EAC) for this project. Is the project performing better or worse than planned?
d. Use the SPI to estimate how long it will take to finish this project.

Answer 1

A) cost variance = -10,000, schedule variance = -7,000, cost performance index = 0.853, schedule performance index = 0.892.

B) The project is behind schedule and it is over budget.

C) Estimate at completion = 181712 . worse than planned.

D) It will take 13.45 to finish this project.

Step-by-step explanation:

a) Cost variance = EV - AC ==> 58000 - 68000 = -10000

Schedule variance = EV - PV ==> 58000 - 65000 = -7000

CPI = EV / AC ==> 58000 / 68000 = 0.853

SPI = EV / PV ==> 58000 / 65000 = 0.892

b) Since Scheduled Performance Index is less than 1, the project is behind schedule and if CPI is less than 1, the project is over budget .

c) EAC = BAC / CPI ==> 155000 / 0.853 = 181712

Project is expected to exceed budget , therefore it is performing worse than planned.

d) Expected time to complete 12/.892 = 13.45