Question

In: Operations Management

Answer the following questions. Show your calculations used to get the answer. If calculations are not...

Answer the following questions. Show your calculations used to get the answer. If calculations are not provided, then you will not receive full credit for your answer.

Scenario 1: You have a project that is scheduled to be completed in 8 days at a budgeted cost of $200,000. At the end of day 5 you do an analysis and you determine the job is 70% complete and you have spent $130,000. At the end of day 5:

  1. What is the project’s PV?
  2. What is the project’s EV?
  3. What is the project’s AC?
  4. What is Cost Variance??
  5. What is the Schedule Variance?
  6. What is the project’s CPI?
  7. What is the project’s SPI?
  8. Based on your answers in questions 3-6, is the project on budget, under budget or over budget?
  9. Based on your answers in questions 3-6, is the project on schedule, behind schedule or ahead of schedule?

Scenario 2: You are the project manager of a project to install stone fireplaces at an new condo development. A total of 24 fireplaces are planned to be installed over a 4-month period. The total budget for the project is $144,000. The project is at the end of the 1st month and 5 fireplaces have been installed and $28,000 has been spent.

  1. What is the project’s PV?
  2. What is the project’s EV?
  3. What is the project’s AC?
  4. What is Cost Variance??
  5. What is the Schedule Variance?
  6. What is the project’s CPI?
  7. What is the project’s SPI?
  8. Based on your answers in questions 3-6, is the project on budget, under budget or over budget?
  9. Based on your answers in questions 3-6, is the project on schedule, behind schedule or ahead of schedule?

Scenario 3: A project has a PV of $65,000, an EV of $75,000 and an AC of $82,000.

  1. Is the project over or under budget? How can you tell?
  2. Is the project ahead of or behind schedule? How can you tell?

Scenario 4: A project has a PV of $10,000, a SPI of 0.92 and a CPI of 0.90.

  1. What is the project’s EV?
  1. What is the project’s AC?

Solutions

Expert Solution

Scenario 1

Planned completion = 5/8 = 62.5 %

1.

Planned Value, PV = Budgeted cost * Planned completion

= 200000*62.5%

= $ 125,000

---------------------------------

2.

Expected Value, EV = 200000*70%

= $ 140,000

---------------------------------

3.

Actual Cost, AC = $130,000

---------------------------------

4.

Cost Variance = EV - AC

= 140000 - 130000

= $ 10,000

---------------------------------

5.

Schedule Variance = EV - PV

= 140000 - 125000

= $ 15,000

---------------------------------

6.

CPI = EV / AC

= 140000 / 130000

= 1.077

---------------------------------

7.

SPI = EV / PV

= 140000 / 125000

= 1.12

---------------------------------

8.

Based on the answers to above questions, the project is under budget

because Cost Variance is positive and CPI is greater than 1

---------------------------------

9.

Based on the answers to above questions, the project is ahead of schedule

because Schedule Variance is positive and SPI is greater than 1


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