In: Operations Management
A project to build a new bridge seems to be going very well since the project is well ahead of schedule and costs seem to be running very low. A major milestone has been reached where the first two activities have been totally completed and the third activity is 60 percent complete. The planners were only expecting to be 50 percent through the third activity at this time. The first activity involves prepping the site for the bridge. It was expected that this would cost $1,420,000 and it was done for only $1,300,000. The second activity was the pouring of concrete for the bridge. This was expected to cost $10,500,000 but was actually done for $9,000,000. The third and final activity is the actual construction of the bridge superstructure. This was expected to cost a total of $8,500,000. To date they have spent $5,000,000 on the superstructure. Calculate the schedule variance, schedule performance index, and cost index for the project to date. How is the project going?
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The following are the detailed specifications of a project to build a new bridge which was going ahead of schedule and incurring low costs.
Activity 1:
Activity 2:
Activity 3:
Using the specifications of the activities, calculate the budgeted cost of the Work Scheduled as shown below:
Calculate the budgeted cost of the Work Performed.
Activity 1:
Activity 2:
Activity 3:
The actual cost of the project is as shown below:
The calculation of schedule variance, schedule performance index, and cost performance index is as shown below:
Therefore, the project looks good because it is both ahead of schedule and within the budgeted cost.
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