Following are data reporting progress on a project. Work on all tasks contained
ID: 430123 • Letter: F
Question
Following are data reporting progress on a project. Work on all tasks contained in the table is scheduled to be complete as of the day of the report.
Budget
Begun?
Complete?
Actual cost
Earned Value
Task A
3,100
Yes
Yes
3,100
Task B
4,000
Yes
Yes
4,500
Task C
2,500
Yes
Yes
2,250
Task D
4,000
Yes
No
3,500
Task E
3,500
Yes
Yes
4,000
Task F
2,500
No
No
0
Using the 50-50 Rule, what is earned value for this project?
Using the 0-100 Rule, what is earned value for this project?
Note the discrepancy of earned value figures when using the 50-50 Rule and 0-100 Rule. Why is there a discrepancy? Which Rule should we use? Explain your rationale.
Using the 50-50 Rule earned value computation, what is schedule variance for the project as reported?
What is the schedule performance index (SPI)?
Using the 50-50 Rule earned value computation, what is the cost variance for the project as reported?
What is the cost performance index (CPI)?
If the total budget for this project is 50,000, use CPI to compute estimate at complete (EAC).
Using the earned value information garnered from the above table, provide your boss a brief status report on project progress to date. Also, provide projections for future status.
Budget
Begun?
Complete?
Actual cost
Earned Value
Task A
3,100
Yes
Yes
3,100
Task B
4,000
Yes
Yes
4,500
Task C
2,500
Yes
Yes
2,250
Task D
4,000
Yes
No
3,500
Task E
3,500
Yes
Yes
4,000
Task F
2,500
No
No
0
Explanation / Answer
The 50/50 rule can be effective if you have work packages that are short in duration – not longer than two reporting periods, usually in sync with the company’s accounting period so that the completed work, planned budget, and actual costs can be compared easily. Most companies follow the standard of setting their accounting period to a month, but the definition of a “month” varies.However you define your reporting period, you need to follow a consistent process so that you can compare apples to apples as you evaluate project progress.
f the time difference when actual cost data is recognized for EV analysis and reporting purposes on the AWVSRP versus a typical project. The AWVSRP approach results in this data being available four to six weeks earlier than is normally the case
The simplest method is to apply just one earning rule, such as the 0/100 rule, to all activities. Using the 0/100 rule, no credit is earned for an element of work until it is finished. A related rule is called the 50/50 rule, which means 50% credit is earned when an element of work is started, and the remaining 50% is earned upon completion
The Schedule Performance Index tells you how efficiently you are actually progressing compared to the planned progress.The Schedule Performance Index (SPI) is a measure of schedule efficiency expressed as the ratio of earned value to planned value.The Schedule Performance Index gives you information about the schedule performance of the project. It is the efficiency of the time utilized on the project.
Cost variance (CV) which is calculated as BCWP minus ACWP. A result greater than 0 is favorable (an underrun), a result less than 0 is unfavorable (an overrun).
Cost performance index (CPI) is a ratio of the earned value (EV) to the actual costs (AC). If the CPI is less than one, it indicates that the project is over budget to-date whereas a CPI greater than one, indicates the project is running under-budget. A CPI of one indicates the project is exactly on budget.
EAC IS 0.5
The concept of work having a value has been around for over thirty-five years and has been known by a series of popular acronyms, for example: EVA (Earned Value Analysis), CS² (Cost/Schedule Control Systems Criteria), EVPM (Earned Value Performance Management). In spite of software tools being available that would carry out Earned Value computations, it was considered too complicated by most project managers. However with the increasing number of projects failing to meet time or budget expectations, the project management market is examining ways to improve project delivery. Having noted that those projects, which have utilised the EVA method, have actually been successful in delivering the project that the stakeholders expected, the project management community is beginning to make moves towards the use of Earned Value technique.