Question

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

Is the project over or under budget? How can you tell? 20. Is the project ahead of or behind schedule? How can you tell?

2. 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?

Answer 1

1. i. To determine if the project is over the budget or under the budget, we need to find the cost variance

Cost variance = EV - AC

Cost Variance = 75000 - 82000

Cost variance = - $7000

The project is over the budget since the value of the cost variance is negative, which is a bad indication of business.

ii. To determine if the project is ahead or behind the schedule, we can find out by calculating the Schedule Variance

Schedule variance = Earned value(EV) - Planned Value(PV)

Schedule variance = 75,000 - 65000

Schedule variance = $10,000

Since the value of the Schedule variance is positive, it means that the project is ahead of schedule and we have earned $10,000 more than the planned budget.

2. The Given information:

PV = $10,000

SPI = 0.92

CPI = 0.90

Step 1:

the formula for Schedule Performance Index (SPI) = EV/PV

Therefore, EV = PV * SPI

EV = 10000 * 0.92

EV = $9200

Step 2:

The formula for CPI = EV/ AC

Therefore, AC = EV / CPI

AC = 9200 / 0.90

AC = $10,222.22

EV =$9200 and AC = $10,222.2