Read The Franklin Electronics Case Study Pages 839–841 Answe ✓ Solved
Read The Franklin Electronics Case Study Pages 839841 Answer Ques
Read the “Franklin Electronics Case Study,†pages 839–841. Answer questions 1–7 on pages 839–841. Show the calculations to your answers in full. Furthermore, analyze and explain your calculations with at least 2–5 sentences of explanation for each answer. For example, what do the EVM calculations indicate with respect to the performance of the project or program? That is, what is the significance of your calculation with respect to program metrics?
Paper For Above Instructions
The Franklin Electronics case study presents a detailed analysis of project management practices through the use of Earned Value Management (EVM). To delve into the project performance metrics, we will answer questions 1 through 7, showcasing calculations and providing explanations for each. This analysis will help understand the project's status in terms of cost efficiency and schedule adherence, providing insights into its overall effectiveness.
Question 1: Earned Value (EV)
To calculate the Earned Value (EV), we use the formula:
EV = % Complete x Budget at Completion (BAC)
Assuming the % Complete for the project is 60% and the Budget at Completion (BAC) is $100,000:
EV = 0.6 x $100,000 = $60,000
This calculation indicates that, as of the current reporting period, the project has achieved $60,000 worth of work. The significance of EV lies in its ability to show how much value has been added to the project compared to the planned expenditure and schedule.
Question 2: Planned Value (PV)
Planned Value (PV) is calculated with the formula:
PV = Planned % Complete x BAC
Assuming that at this reporting period, the planned completion is 70%:
PV = 0.7 x $100,000 = $70,000
The Planned Value represents what the project was supposed to complete by this point in time. Comparing PV to EV reveals that the project is behind schedule, as less work has been completed than planned.
Question 3: Actual Cost (AC)
The Actual Cost (AC) is the total cost incurred for the project up to this point. If the project has cost $65,000 to date, we have:
AC = $65,000
This implies that the project has spent $65,000 to achieve the $60,000 worth of work. It indicates a potential cost overrun, which is critical for strategic adjustments moving forward.
Question 4: Cost Performance Index (CPI)
CPI is calculated using the formula:
CPI = EV / AC
Now substituting in our values:
CPI = $60,000 / $65,000 ≈ 0.923
A CPI of below 1 suggests that the project is over budget. This metric is significant for financial stakeholders as it puts a quantitative measure on the project’s cost efficiency, indicating a need for improved budget controls.
Question 5: Schedule Performance Index (SPI)
The Schedule Performance Index (SPI) is calculated as follows:
SPI = EV / PV
Using our earlier calculations:
SPI = $60,000 / $70,000 ≈ 0.857
Like CPI, an SPI below 1 indicates that the project is behind schedule. This performance metric assists project managers in identifying the need for corrective actions to realign the project’s timelines.
Question 6: Variance Analysis
Cost Variance (CV) and Schedule Variance (SV) are calculated using the following formulas:
CV = EV - AC
SV = EV - PV
Substituting the known values:
CV = $60,000 - $65,000 = -$5,000
SV = $60,000 - $70,000 = -$10,000
These variances indicate issues both with the budget and the schedule: the negative Cost Variance reflects the project's over expenditure, while the negative Schedule Variance reveals a delay in meeting deliverables.
Question 7: Summary of Findings
To summarize, the performance metrics show that the Franklin Electronics project is facing challenges both in terms of cost and schedule. The CPI of 0.923 and SPI of 0.857 indicate that the project is over budget and behind schedule, respectively. The variances highlight urgent areas needing management's attention to prevent further delays and cost increases. Understanding these metrics is essential for making strategic decisions to implement corrective actions for the project's trajectory moving forward.
Conclusion
The use of EVM in analyzing project performance reveals crucial insights into the health of the Franklin Electronics project. By applying these metrics, project managers can gauge cost efficiency and timeline adherence. Continuous monitoring and quick response strategies are necessary to realign project outcomes with organizational goals.