Exercise 7

Schwalbe P.281 - Chapter 7, Ex 1

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 = $23,000

EV = $20,000

AC = $25,000

BAC = $120,000

A. What is the cost variance, schedule variance, cost performance index (CPI), and schedule performance index (SPI) for the project?

Cost Variance (CV = EV - AC) 20,000 - 25,000 = -5,000

Schedule Variance (SV = EV - PV) 20,000 - 23,000 = -3,000

Cost Performance Index (CPI = EV / AC) 20,000 / 25,000 = 80%

Schedule Performance Index (SPI = EV / PV) 20,000 / 23,000 = 86.96%

B. How is the project doing? Is it ahead of schedule or behind schedule? Is it under budget or over budget?

As both CV and SV are negative numbers, the project is behind schedule and 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?

Estimate at completion (EAC = BAC / CPI) 120,000 / 80% = 150,000

D. Use the schedule performance index (SPI) to estimate how long it will take to finish this project.

Estimate time to complete (Original Time Estimate / SPI) 12/86.96% = 13.8 months

E. Sketch the earned value chart based for this project, using Figure 7-5 as a guide.

Reference
Schwalbe, K. (2006). Information Technology Project Management (4th ed.). Massachusetts: Thomson Course Technology.