Question

Assume that you are the project manager for the construction of a 15-mile road. Further assume that the work is uniformly distributed over 12 weeks. The total approved budget for this project is $600,000. At the end of the first three weeks of work $160,000 has been spent and five miles of road have been completed. At the end of the first three weeks, what do you think of the current status of the project in terms of cost and schedule? Describe the earned value analysis terms that you use and their formulas, and then calculate each metric. Then interpret your results. Important: there are more than 3 earned value metrics to calculate.

Answer 1

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EV = BAC x (work completed/total work required)
EV = 600,000 x (5 mi/15 mi) = 200,000

PV = BAC x (time passed/total schedule time)
PV = 600,000 x (3weeks/12 weeks) = 150,000

CV = EV - AC
CV = 200,000 - 160,000 = 40,000

SV = EV - PV
SV = 200,000 - 150,000 = 50,000

The cost performance index (CPI) is a measure of the conformance of the actual work completed (measured by its earned value) to the actual cost incurred: CPI = EV / AC. The schedule performance index (SPI) is a measure of the conformance of actual progress (earned value) to the planned progress: SPI = EV / PV.

CPI = EV / AC = 200,000 / 160,000 = 1.25
SPI = EV / PV = 200,000 / 150,000 = 1.33

A CPI value of 1.25 and an SPI value of 1.33 for a project mean

The project is making faster progress and is costing less than planned.
CPI > 1 means cost performance is better than planned
SPI > 1 means schedule performance is better than planned

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