Question

When looking at the life of a project plan, it is useful to graph and outline the cost variance (CV), and schedule variance (SV). Determining progress, or lack of progress, provides essential information to assess a given project. Execise#2: 2. On day 51 a project has an earned value of $600, an actual cost of $650, and a planned cost of $560. Compute the SV, CV, and CPI for the project. What is your assessment of the project on day 51? Complete exercise 2 Given the data provided, in an excel spreadsheet, PowerPoint, or other appropriate method of delivery, determine the following: 1. Schedule Variance (SV) 2. Cost Variance (CV) 3. Schedule Performance Index (SPI) 4. Cost Performance Index (CPI) In 250-300 words, answer the questions provided with the exercise. Reflect on the assessment of this project assessment. Should the project continue to improve?

Answer 1

The Schedule Variance (SV) and Schedule Performance Indicator (SPI) are the measures for the Project's delivery progress. On the other hand, the Cost Performance Indicator (CPI) and Cost Variance (CV) are the measure of the cost incurred. Both are point estimates i.e. can be used at any point during the project life cycle to know the status. The measures are defined in such a manner that the delivery performance and cost performance remain independent of each other. A positive SV (and CV) and greater than one SPI (and CPI) will indicate that the project is ahead of the planned schedule (and under budget).

In this particular case, the SV is positive and SPI is greater than one. This indicates that the project is ahead of its planned schedule. However, the CV is negative and CPI is less than one indicates that it is running over budget. The conclusion is that the project is consuming more than required resources and trying to finish ot off before the schedule. This is also abnormal. The project manager should not use more resources to complete the project before schedule because in that case, the client will (presumably) not pay extra for the earlier finish and as a result, the project will not remain profitable ( or lose out some part of the profit). So, instead of improving at the same rate, the project manager should provide slacks with the resources in certain areas to keep things within budget.