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)

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

2. 100% x 20,000= 20,000
3. 100% x 50,000= 50,000
4. 30% x 60,000= 18,000
5. 60% x 30,000= 18,000
6. 70% x 20,000= 14,000
7. 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

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

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.