Earned Value Analysis: A Project Budget Call For The Followi

Earned Value Analysis A Project Budget Calls For The Following Expend

Define each term in your own words, calculate these values for the above project, and show your work: Budgeted cost baseline (make a graph illustrating this one) Budget at completion (BAC) Planned value (PV) as of May 1 Earned value (EV) as of May 1 if the foundation work is only two-thirds complete. Everything else is on schedule. SV as of May 1. Actual cost as of May 1 is $160,000. Calculate the cost variance (CV) as of May 1. Schedule performance index (SPI) Cost performance index (CPI) Estimate to complete (ETC), assuming that the previous cost variances will not affect future costs Estimate at completion (EAC)

Paper For Above instruction

Introduction

Earned Value Management (EVM) is a project management technique that integrates scope, schedule, and cost measures to assess project performance and progress. It provides project managers with quantitative data to determine whether a project is on track, over budget, or behind schedule. This paper analyzes a hypothetical construction project using fundamental EVM terms, calculating key metrics such as the Budgeted Cost Baseline, BAC, PV, EV, Schedule Variance, Cost Variance, SPI, CPI, ETC, and EAC based on given data.

Definitions of Key Terms

• Budgeted Cost Baseline (BCB): This is the approved version of the work schedule and budget, serving as a benchmark for measuring project performance. It represents the planned expenditure over the scheduled timeline.
• Budget at Completion (BAC): The total projected cost of the entire project when it is complete, based on the original estimates.
• Planned Value (PV): The authorized budgeted cost of work scheduled to be completed by a specific date.
• Earned Value (EV): The budgeted cost of the work actually completed by a specific date.
• Schedule Variance (SV): The difference between EV and PV, indicating whether the project is ahead or behind schedule.
• Actual Cost (AC): The actual expenditure incurred for work performed by a specified date.
• Cost Variance (CV): The difference between EV and AC, measuring cost performance.
• Schedule Performance Index (SPI): The ratio of EV to PV, showing schedule efficiency.
• Cost Performance Index (CPI): The ratio of EV to AC, indicating cost efficiency.
• Estimate to Complete (ETC): The forecasted cost required to complete remaining work, considering current performance trends.
• Estimate at Completion (EAC): The forecasted total cost of the project at completion, often calculated as BAC divided by CPI if current trends continue.

Calculations

1. Budgeted Cost Baseline (BCB)

The budgeted costs are provided for specific tasks and dates, creating a schedule of planned expenditures:

• April 1: Build forms ($10,000) and Pour foundation ($50,000)
• May 1: Pour foundation ($100,000) adding the previous foundation cost, totaling $150,000 already scheduled to be completed by May 1.
• May 1: Frame walls ($30,000)
• June 1: Remaining wall framing ($30,000)
• July 1 and beyond: Remaining tasks ($500,000)

Graphical illustration of the baseline (not shown here) would plot cumulative costs over time, starting with April at $60,000, May at $160,000, June at $190,000, and July at $690,000.

Calculated Data

2. Budget at Completion (BAC)

Sum of all planned expenditures:

Build forms: $10,000

Pour foundation: $50,000 + $100,000 = $150,000

Frame walls: $30,000 + $30,000 = $60,000

Remaining tasks: $500,000

Total BAC = $10,000 + $150,000 + $60,000 + $500,000 = $720,000

3. Planned Value (PV) as of May 1

As of May 1, work scheduled includes foundation work and framing (since everything else is on schedule). So PV includes:

• Build forms (April 1): $10,000
• Pour foundation (April 1 and May 1): $50,000 + $100,000; but only two-thirds of foundation work is complete by May 1.
• Frame walls (May 1): $30,000

PV for foundation as of May 1 = $50,000 + (2/3 of $100,000) = $50,000 + $66,667 = $116,667

PV for build forms = $10,000

PV for framing = $30,000

Total PV as of May 1 = $10,000 + $116,667 + $30,000 = $156,667

4. Earned Value (EV) as of May 1

Since foundation work is only two-thirds complete, its EV is two-thirds of its budgeted amount:

• Foundation EV = 2/3 × $150,000 = $100,000
• Build forms EV = $10,000 (assuming completed as scheduled)
• Frame walls EV = $30,000 (on schedule)

Total EV = $100,000 + $10,000 + $30,000 = $140,000

5. Schedule Variance (SV) as of May 1

SV = EV - PV = $140,000 - $156,667 = −$16,667

The negative value indicates the project is behind schedule.

6. Cost Variance (CV) as of May 1

AC = $160,000

CV = EV - AC = $140,000 - $160,000 = −$20,000

This negative CV indicates the project is over budget.

7. Schedule Performance Index (SPI)

SPI = EV / PV = $140,000 / $156,667 ≈ 0.895

An SPI less than 1 indicates less work completed than planned.

8. Cost Performance Index (CPI)

CPI = EV / AC = $140,000 / $160,000 = 0.875

A CPI less than 1 indicates that cost efficiency is below expectations.

9. Estimate to Complete (ETC)

Assuming current trends continue and previous variances won't affect future costs, and continuing with the CPI for remaining costs:

Remaining work's budgeted cost (from BAC):

Total BAC = $720,000

Less EV (work completed): $140,000

Remaining budgeted work = $580,000

ETC = (Remaining work's budget) / CPI = $580,000 / 0.875 ≈ $662,857

10. Estimate at Completion (EAC)

EAC = Actual Cost (AC) + ETC = $160,000 + $662,857 ≈ $822,857

This is higher than the original BAC, reflecting current performance trends.

Conclusion

In this case study, the project is experiencing both schedule delays and cost overruns, as evidenced by the negative SV and CV. SPI and CPI scores indicate less efficient progress and higher costs than planned. Continuous monitoring using EVM metrics is essential for project control and implementing corrective actions to bring the project back on track.

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