Question

Earned Value Management (EVM) is a project management technique for measuring project performance (schedule, cost mainly) and progress in an objective manner in terms of work achieved (Value):

The data identified below was listed in a project’s status report.

At time of status report:

Planned Value of work (PV) = $70,000

Earned Value of work performed (EV) = $50,000

Actual Cost of work performed (AC) = $75,000

Original Planning:

Budgeted cost At Completion (BAC) = $110,000

Original length of the project is 15 months

Using the data, calculate the following:

a)    Cost Performance Index (CPI). (1 mark)

b) Schedule Performance Index (SPI). (1 mark)

c)      Expected cost At Completion (EAC). (1 mark)

d) Estimate To Complete (ETC).

e) The Schedule Variance (SV).

f) Discuss how the project is tracking (e.g. ahead or behind schedule, under or over budget)?

Answer 1

a) Cost Performance Index (CPI) = EV / AC

= 50,000 / 75,000

CPI = 2 / 3

b) Schedule Performance Index (SPI) = EV / PV

= 50,000 / 70,000

SPI = 5 / 7

c) Expected cost At Completion (EAC) = BAC / CPI

= 110,000 / (2/3)

EAC = $165,000

d)  Estimate To Complete (ETC) = Supposed Time / SPI

= 15 / (5/7)

  ETC = 21 months

e) The Schedule Variance (SV) = EV - PV

= 50,000 - 70,000

SV = $-20,000

f) CPI = 2/3 (less than one) means Over-Budget

SPI = 5/7 (less than one) means Behind Schedule

Over Budget and Behind Schedule