Question

Q)

You are the manager of a project to build a data centre with the following characteristics:

• The project team has to install one server a week for three months.

• The project is scheduled to last for three months.

• The total budget for this project is SAR 60,000

• Each server is planned to cost SAR 5,000.

Answer the succeeding questions based on the following information:

• It is the beginning of the project's month two and your team has installed only three servers.
• Planned value = SAR 20,000
• Actual cost = SAR 22,000
• Earned value = SAR 15,000

1. Calculate the cost variance, schedule variance, cost performance index, and schedule performance index for the project.

2. Is the Project ahead of schedule or behind schedule? Is it under budget or over budget?

Answer 1

>>Answer

>.Given

Please refer to the detailed explanation.

Explanation:

Planned value to date = SAR 20,000

Actual cost to date = SAR 22,000

Earned value to date = SAR 15,000

Q.1) Cost Variance = Earned Value to date - Actual Cost to date

Cost Variance = 15000 - 22000

Cost Variance (CV) = -SAR 7000

Schedule Variance = Earned Value to date - Planned Value to date

Schedule Variance = 15000 - 20000

Schedule Variance (SV) = -SAR 5000

Cost Performance Index = Earned Value to date / Actual Cost to date

Cost Performance Index = 15000 / 22000

Cost Performance Index (CPI) = 0.682

Schedule Performance Index = Earned Value to date / Planned Value to date

Schedule Performance Index = 15000 / 20000

Schedule Performance Index (SPI) = 0.750

Q.2) If Schedule Variance > 0, the project is ahead of the schedule

If Schedule Variance < 0, the project is behind the schedule

If Schedule Variance = 0, the project is on the schedule

Similarly,

If SPI > 1, the project is ahead of the schedule

If SPI < 1, the project is behind the schedule

If SPI = 1, the project is on the schedule

Here, both Schedule Variance < 0 and SPI < 1.

Hence, the project is behind the schedule.

If CV > 0, the project is under budget

If CV < 0, the project is over budget

If CV = 1, the project is on budget

Similarly, If CPI > 1, the project is under budget

If CPI < 1, the project is over budget

If CPI = 1, the project is on budget

Here, both Cost Variance < 0 and CPI < 1.