Question

Problem #1

You have a construction project that requires 12,000 man-hours at a rate of $60 per hour. The estimated duration of the project is 7 months and the total cost of the materials was estimated at $250,000. The scheduled percent complete (PC) of the work and the material consumption for each month is as follows:

Month	1	2	3	4	5	6	7
Monthly Scheduled PC	10%	10%	20%	25%	15%	15%	5%

This means on month 1, 10% of the work and materials is supposed to be used, on month 2 another 10% and so on and on.     

At the end of month #5, earned value analysis is performed and it is found that only 35% of the work has been completed. The other available information is as follows:

• 60% of the man-hours were spent by the end of the 5^th month.
• 40% of the materials were consumed by the end of the 5^th month.
• A change order estimated at $30,000 was issued and approved at the end of month # 6^.
• The material costs escalated by 35% after the 5^th month.
• 30% of the cost of material consumed by the end of the 4^th month was escalated by 20%.
  

Using the above-mentioned information, calculate the following:

1. Original BAC
2. BCWS
3. BCWP
4. ACWP
5. SV
6. CV
7. DCWP
8. Expenditure variance
9. SPI
10. EAC considering the same rate of progress

Answer 1

1. Original BAC (Budget At Completion)

BAC
Particulars	Amount	Basis
Labour Cost	$ 720,000.00	(12000*60)
Material	$ 250,000.00
	$ 970,000.00

2. BCWS (Budgeted Cost of Work Scheduled)

Work Scheduled to be completed till the time Earned Value Calculation is Made i.e, end of 5th Month

Month	Scheduled PC
1	10%
2	10%
3	20%
4	25%
5	15%
	80%

For 80% Work Scheduled to be completed Budgeted Cost was

Original BAC * Scheduled Percentage Completion

$ 970,000.00 * 80%

$ 776,000.00

3. BCWP (Budgeted Cost of Work Performed)

Till the End of 5th Month only 35% of Worked has been performed as analysed through Earned Value Calculation.

Therefore BCWP :

Original BAC * Actual Percentage Completion

$ 970,000.00 * 35%

$ 339,500.00

4. ACWP (Actutal Cost of Work Performed)

It means actual cost incurred in performing the Actual Percentage Completion

Therefore as per Question:

60% of the man-hours were spent by the end of the 5th month : 12,000 * 60% * 60 = $ 432,000.00

40% of the materials were consumed by the end of the 5th month : 250,000 * 40% = 100,000.00

Total ACWP = $ 532,000

5. SV (Schedule Variance)

BCWP - BCWS

$ 339,500.00 - $ 776,000.00

($ 436,500.00)

6. CV (Cost Variance)

BCWP - ACWP

$ 339,500.00 - $ 532,000

($ 192,500.00)

7. SPI (Schedule Performance Index)

BCWP / BCWS

$ 339,500.00 / $ 776,000.00

43.75 %