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Earned Value Management

Introduction

All of you have had at least an introduction to earned value management in the project management fundamentals course. Many of you may have had the opportunity to use earned value management in your professional careers. In practice, most EVM analysis results are generated by scheduling software or other applications. As a project manager, you must have a good handle on the concepts and be able to verify the accuracy of EVM analysis results.

In this assignment, you will have an opportunity to brush up and expand upon your EVM knowledge and skills by applying EVM concepts to a practical problem. THIS ASSIGNMENT REQUIRES A MANUAL ANALYSIS - DO NOT USE MICROSOFT PROJECT.

Problem Background

Your project consists of seven activities shown in the table below, along with: (1) planned start and finish dates; (2) activity budgets; and (3) earned value (EV) accrual rules from you project cost management plan.

Assumptions

  1. Assume a five-day work week including holidays occurring during the work week.
  2. For all activities (except activities 3 and 4), assume the expenditure rate is constant over the duration of the activity, i.e., the amount planned to be spent each week is the same.
  3. For activity 3, the planned expenditure profile is shown below: Earned Value Management Image 1
  4. For activity 4, the planned expenditure profile is shown below: Earned Value Management Image 2

The project sponsor wants you (the PM) to present a project cost and schedule performance assessment using data through Friday, July 29, 2016. You have collected the following information:

Earned Value Management Image 3

For activity 1, three equally-valued gates have been established and all gates are complete as of July 29, 2016.

For activity 3, five milestones have been established with the following values: (1) milestone 1 – 10%; milestone - 20%; milestone 3 – 15%; milestone 4 -20%; milestone 5 – 35%. Four of the milestones are complete as of July 29, 2016.

For activity 4, four equally values gates have been established. As of July 29, 2016 none of the gates have been reached but the activity owner estimates 30% of the work required to reach the first gate has been accomplished.

Show all work. Round dollar values to the nearest dollar. Calculate all other variables to three decimal places.

  1. Earned Value Measures
    1. Calculate earned value measures for each activity and for the cumulative project as of July 29, 2016; fill in the table below:
  2. Activity

    Planned Value (PV)

    Earned Value (EV)

    Actual Cost (AC)

    Activity One

    22,000

    Activity Two

    25,000

    Activity Three

    40,000

    Activity Four

    8,000

    Activity Five

    0

    Activity Six

    0

    Activity Seven

    0

    Entire Project

    1. Earned Value Performance Measures
      1. Calculate earned value performance parameters for each activity and for the cumulative project as of July 29, 2016; fill in the table below:

        Activity

        Schedule Variance (SV)

        Schedule Performance Index (SPI)

        Cost Variance (CV)

        Cost Performance Index (CPI)

        Activity One

        Activity Two

        Activity Three

        Activity Four

        Activity Five

        Activity Six

        Activity Seven

        Entire Project

      2. Is the project ahead of schedule, on schedule, or behind schedule? What EVM information are you using to make this assessment and why?
      3. Is the project over budget, under budget, or on budget? What EVM information are you using to make this assessment and why?
    2. Earned Value Forecasts
      1. What is the value of the “Cumulative CPI” Estimate-at-Completion (EAC)?
      2. Using the “Mathematical” or “Overrun to Date” Estimate-at Completion, what is the value of the Estimate-to-Complete (ETC)?
      3. Using the “Cumulative CPI times SPI” Estimate-At-Completion, how much more or less money (other than the current budgeted amount) will you need to finish the project?
      4. How much would the Cost Performance Index (CPI) have to change in order to complete the project within the original budget?

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