Question

Assume that operations on a work package were expected to cost $1500 to complete the package....

Assume that operations on a work package were expected to cost $1500 to complete the package. They were originally scheduled to have been finished today. At this point, however, we have actually expended $1350, and we estimate that we have completed two-thirds of the work. What are the Cost and Schedule variances? Calculate CPI, SPI, ETC & EAC. Interpret the results (what does it all mean).

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Answer #1

1. Cost Variance = Earned Value - Actual Cost

Earned Value = Actual Completion(%) * Budgeted at completion cost

Earned Value = 2/3 * 1500 = $1000

Cost Variance = $1000 - $1350 = - $350

Schedule Variance = Earned Value - Planned Value

Planned Value = Planned completion(%) * Budget at completion cost

Planned Value = 100% * $1500 = $1500

Schedule Variance = $1000 - $1500 = -$500

Interpretation: Since the project cost varianc and project schedule variance both are negative this means that project is over-budget and is behind schedule.

CPI = Earned Value/Actual cost

= $1000/$1350 = 0.74

SPI = Earned Value/Planned Value

= $1000/$1500 = 0.67

  

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