Saturday, October 6, 2007

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?
b. How is the project doing? Is it ahead of schedule or behind schedule? Is it under budget or 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?
d. Use the schedule performance index (SPI) to estimate how long it will take to finish this project.
e. Sketch the earned value chart based for this project, using Figure 7-5 as a guide.



a.

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.

As both CV and SV are negative numbers, the project is behind schedule and over budget.

c.

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

d.

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

e.


Reference


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

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