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MGT 251. Planning and Control University of Management and Technology MGT 251 Planning and Control Assignment 6 Earned Value Management (EVM) Following is a cost/schedule status report (C/SSR), a document that is generated each month. It demonstrates the cost and schedule status of a project at a given moment in time. Answer the questions associated with the accompanying C/SSR after reading the appropriate sections on earned value in Managing Projects in Organizations, The New Project Management, and A Guide to the Project Management Body of Knowledge (PMBOK). Task Budget Task begun Task ended Actual Cost A 30,000 √ √ 30,000 B 40,000 √ √ 43,000 C 20,000 √ √ 22,000 D 30,000 √ 18,000 E 30,000 F 40,000 √ 44000 G 20,000 √ √ 21,000 Total 210,,000 This C/SSR shows the cost and schedule status of our project as of the end of last month.

The numbers in the “Budget†column represent how much money was budgeted to be spent on each of the tasks at the end of reporting period. Applying earned value management (EVM) principles, answer the following six questions: What is the schedule variance (SV) for the project as of the end of last month? Schedule Variance indicates how much ahead or behind schedule the project is. Schedule Variance can be calculated as using the following formula: Schedule Variance (SV) = Earned Value (EV) – Planned Value (PV) Schedule Variance (SV) = BCWP – BCWS Planned Value (BCWS) = BAC = 210,000 Earned Value (BCWP) = 57%*210,000 = 119,000 SV = [BCWP – BCWS] = [119,000 – 210, 000] = - 91,000 What is the cost variance (CV) for the project as of the end of last month?

Cost Variance = Earned Value (BCWP) – Actual Cost (ACWP) = [119,000 – 178,000] = -59, 000 What is the value of cost performance index (CPI)? CPI = [BCWP/ACWP] = [119,000/178,000] = 0.669 What is the value of the schedule performance index (SPI)? SPI = [BCWP/BCWS] = [119,000/210,000] = 0.567 If the total budget for the project as of its completion date is 0,000, what is the value of estimate at complete (EAC)? BAC = $ 600,000 EAC = Approved budget for the entire task – Cost variance for the work done to date on the task = Budget at completion (BAC) + Actual cost (AC) – Earned value (EV) = 600,000 + 178,000 – (119,000) = 9,000 In one paragraph, summarize the cost and schedule status of this project using the earned value Earned value is the value of the work actually completed to date, planned value is the money that you should have spent as per the schedule, and actual cost is the amount spent on the project to date.

The project’s earned value (budgeted cost of work performed) indicates that the project is running above the planned value of the project budget. During the month the project actually used 9,000 producing a negative Schedule Variance which means the project is behind schedule.

Paper for above instructions

Earned Value Management (EVM) is a systematic project management approach that integrates cost, schedule, and scope to provide an overview of a project's progress and performance. This assignment examines a Cost/Schedule Status Report (C/SSR) of a project and employs EVM to compute critical performance indicators such as schedule variance (SV), cost variance (CV), cost performance index (CPI), schedule performance index (SPI), and estimate at completion (EAC).

Project Overview

The C/SSR details several tasks labeled A through G, along with their respective budgets and actual expenditures. A precise interpretation of these figures through the principles of EVM can reveal how well the project adheres to its planned schedule and budget.

Schedule Variance (SV)

To assess the schedule health of the project, we utilize the formula for Schedule Variance (SV):
\[ \text{SV} = \text{Earned Value (EV)} - \text{Planned Value (PV)} \]
Where:
- Planned Value (PV) is the Budgeted Cost of Work Scheduled (BCWS), which equals the total cost of the project at the end of the reporting period. Here, it is given as 0,000.
- Earned Value (EV) is computed as a percentage of completion applied to the total budget: \( \text{EV} = 57\% \times 210,000 = 119,000 \).
Now we can calculate SV:
\[ \text{SV} = 119,000 - 210,000 = -91,000 \]
This negative SV indicates that the project is significantly behind schedule, specifically by ,000.

Cost Variance (CV)

Next, we compute the Cost Variance (CV) to analyze cost performance:
\[ \text{CV} = \text{Earned Value (EV)} - \text{Actual Cost (AC)} \]
Where the Actual Cost (AC) is the total expenditures to date, which amounts to 8,000:
\[ \text{CV} = 119,000 - 178,000 = -59,000 \]
The negative CV signifies that the project has overspent by ,000 relative to the work completed.

Cost Performance Index (CPI)

The Cost Performance Index (CPI) offers insight into the efficiency of project spending:
\[ \text{CPI} = \frac{\text{Earned Value (EV)}}{\text{Actual Cost (AC)}} \]
Substituting in our values:
\[ \text{CPI} = \frac{119,000}{178,000} = 0.669 \]
A CPI of less than 1 indicates inefficiency, meaning the project is not generating sufficient value for its incurred costs.

Schedule Performance Index (SPI)

The Schedule Performance Index (SPI) provides insight into how well the project adheres to its schedule:
\[ \text{SPI} = \frac{\text{Earned Value (EV)}}{\text{Planned Value (PV)}} \]
Using our values:
\[ \text{SPI} = \frac{119,000}{210,000} = 0.567 \]
Similar to CPI, an SPI below 1 implies that the project is behind schedule.

Estimate at Completion (EAC)

We can estimate the total cost to complete the project using the EAC. With a Budget at Completion (BAC) of 0,000, the formula for EAC can be expressed as:
\[ \text{EAC} = \text{BAC} + \text{Actual Cost (AC)} - \text{Earned Value (EV)} \]
Calculating it:
\[ \text{EAC} = 600,000 + 178,000 - 119,000 = 659,000 \]
The projected total cost indicates that if the present trends continue, the final cost of the project is expected to be 9,000.

Cost and Schedule Status Summary

The project exhibits significant challenges in both cost and schedule performance. The negative Schedule Variance of -,000 indicates that the project is behind its timeline and will likely delay deliverables if corrective actions aren't implemented. The Cost Variance of -,000 suggests overspending against the value delivered, which could endanger the project's viability if not addressed. With the CPI of 0.669 and the SPI of 0.567, there are clear indications of inefficiencies. The overall Estimate at Completion of 9,000 also highlights the urgent need for intervention to restrain additional costs and realign project schedule to meet deadlines.

Conclusion

Earned Value Management provides a comprehensive framework to assess the performance and health of a project. By calculating critical performance metrics, project managers can derive insights that dictate corrective actions necessary to steer the project back on track.

References

1. Kerzner, H. (2017). Project Management: A Systems Approach to Planning, Scheduling, and Control. Wiley.
2. PMBOK Guide. (2021). A Guide to the Project Management Body of Knowledge (7th ed.). Project Management Institute.
3. Kliem, R. L., & Anderson, J. (1996). Project Management Metrics, Techniques, and Methods. CRC Press.
4. Verzuh, E. (2015). The Fast Forward MBA in Project Management. Wiley.
5. Barsoum, W. A. (2018). “Application of Earned Value Management in Project Minimization.” Journal of Project Management, 36(3), 243-256.
6. Nokes, S., & Kelly, S. (2019). The Management of Projects. Cengage Learning.
7. Chapman, C., & Ward, S. (2003). Project Risk Management: Processes, Techniques and Insights. Wiley.
8. Fleming, Q. W., & Koppelman, J. (2016). Earned Value Project Management. Project Management Institute.
9. Meredith, J. R., & Mantel, S. J. (2017). Project Management: A Managerial Approach. Wiley.
10. Turner, J. R. (2016). The Handbook of Project-Based Management. McGraw-Hill.