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Project Management Earned value Measures

EQUESTIONS

Question 1: Earned value Measures

  1. Calculating earned value measures on activities for the cumulative project.

Planned Value (PV) = BAC x (% Completed Planned)

Where; BAC- budget at completion since it involve what is planned to be spent on total completion of the project.( 100% completion.

Earned Value (EV)- BAC X (% Actual Completion)

Activity

Planned value (PV)

Earned Value (EV)

Actual Cost (AC)

Activity One

25,000

25,000

22,000

Activity Two

13,846

20,000

25,000

Activity Three

40,000

50,000

40,000

Activity Four

18,000

30,000

8,000

Activity Five

0

18,000

0

Activity Six

0

14,000

0

Activity seven

0

0

0

Entire project

96,846

157,000

95,000

Calculations on the PV

Activities; 1. Actual time/ Expected time

1 months/1 months x 25,000= 25,000

  1. 18 days/ 26 days x 20,000=13,846
  2. 100% completion x 50,000= 50,000
  3. 30% completion x 60,000= 18,000
  4. 0% completion x 30,000= 0
  5. 0% x 20,000= 0
  6. 0% completion x 10,000= 0

Earned Value;

Activities; 1. 100% x 25,000= 25,000

  1. 100% x 20,000= 20,000
  2. 100% x 50,000= 50,000
  3. 30% x 60,000= 18,000
  4. 60% x 30,000= 18,000
  5. 70% x 20,000= 14,000
  6. 0% x 10,000= 0

Question 2: Earned Value Performance Measures

  1. Calculation of the Earned Value Performance parameters.

Where;

SV= EV-PV

CV= EV-AC

CPI= EV/AC

SPI= EV/PV

Activity

Schedule Variance (SV)

Schedule performance index (SPI)

Cost Variance

(CV)

Cost performance

Index (CPI)

Activity one

0

1.000

3,000

1.136

Activity two

6154

1.444

-5000

0.800

Activity three

10,000

1.250

10,000

1.250

Activity four

12,000

1.667

22,000

3.750

Activity five

18,000

Infinity

18,000

Infinity

Activity six

14,000

Infinity

14,000

Infinity

Activity seven

0

Infinity

0

Infinity

Entire Project

60,154

5.361 +infinity

62,000

6.936 + infinity

  1. Determination of status of the project and the EVM in its determination

Following this, the project is above schedule. This determined by the Earned Value (EV) and the Present Value (PV). In this case, the EV is above the PV.

  1. Determination of the project’s budget status

In this case, the project is over budget. The EVM use is Earned Value (EV) and Actual Cost (AC). Since the EV is above the AC the project is over budget.

Question 3: Earned Value Forecasts

  1. The “Cumulative CPI” Estimate-at-Completion (EAC) value

The EAC is regarded as the amount of cash through which the project will cost upon its completion while the Cost Performance Index (CPI) is the the amount of costs spent on a project for every unit of work in the completion process of the same project (Colin & Vanhoucke, 2014). In this case, the CPI is obtained from the summation of individual activities’ CPI which is given as 6.936 based from the table. Therefore, EAC may be calculated as follows;

EAC= BAC/CPI

Activity

Budget at Cost

1

25,000

2

20,000

3

50,000

4

60,0000

5

30,000

6

20,000

7

10,000

Total

215000

EAC=215000/6.936

=30,997.693

  1. The value of the Estimate-to-Complete (ETC) using overrun.

Cost Overrun = Actual cost – budget provision

=95,000-96846

=-1,846

In this context, ETC refers to remaining cost of activities in a project.

ETC= performance factor x (cost overrun)

=6.936 x -1846

=-12, 803.856

  1. Estimate-At-Completion by the use of CPI times SPI

EAC = AC + [(BAC-EV) /CPI x SPI]

EAC= 95,000 +[(215,000-157000)/5.361 x 6.936)

= 96,560

Therefore, the project will need an extra $ 286 to meet the current budget. This involves; Current budget- EAC

96846- 96560

= 286

  1. The cost performance index (CPI) change so as to complete the project within the original budget.

EAC = AC + [(BAC-EV) /CPI x SPI]

96846= 95000+ [(215000- 157000)/ 5.361CPI1]

CPI1= 5.861

Thus, the CPI will change by;

6.936- 5.861

=1.075

References

Colin, J., & Vanhoucke, M. (2014). Setting tolerance limits for statistical project control using

earned value management. Omega, 49, 107-122.

Lee, J. S. (2015). Calculating cumulative inefficiency using earned value management in

construction projects. Canadian Journal of Civil Engineering, 42(4), 222-232.

De Marco, A., & Narbaev, T. (2013). Earned value-based performance monitoring of facility

construction projects. Journal of facilities Management, 11(1), 69-80.

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