EQUESTIONS
Question 1: Earned value Measures
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
Earned Value;
Activities; 1. 100% x 25,000= 25,000
Question 2: Earned Value Performance Measures
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 |
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.
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
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
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
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
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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