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You need to have JavaScript enabled in order to access this site. Dashboard Cyber Threats & Cybersecurity Fall 2021 Module 2 Lab – Steganography (Part A) Search Search Skip To Content Account Dashboard Courses Calendar Inbox History Help Close Earned-value analysis. A project budget calls for the following expenditures: Task Date Budgeted Amount Build forms April 1 $10,000 Pour foundation April 1 $50,000 May 1 $100,000 Frame walls May 1 $30,000 June 1 $30,000 Remaining tasks July 1 and beyond $500,000 Define each term in your own words, calculate these values for the above project, and show your work: 1. Budgeted cost baseline (make a graph illustrating this one) 2. Budget at completion (BAC) 3. Planned value (PV) as of May 1 4. Earned value (EV) as of May 1 if the foundation work is only two-thirds complete. Everything else is on schedule. 5. SV as of May 1. 6. Actual cost as of May 1 is $160,000. Calculate the cost variance (CV) as of May 1. 7. Schedule performance index (SPI) 8. Cost performance index (CPI) 9. Estimate to complete (ETC), assuming that the previous cost variances will not affect future costs 10. Estimate at completion (EAC)

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Introduction

Earned Value Management (EVM) is a critical project management methodology that integrates scope, schedule, and cost variables to provide a comprehensive view of project performance and progress. It enables managers to compare planned work and costs against actual performance, facilitating early detection of deviations and informed decision-making. This paper analyzes a hypothetical construction project using EVM principles, calculating key metrics such as budgeted cost baseline, budget at completion, planned and earned value, variances, performance indices, and forecasts, to demonstrate effective project performance measurement and control.

Understanding Earned Value Management Metrics

1. Budgeted Cost Baseline

The budgeted cost baseline is a time-phased budget plan that outlines the authorized budget for project work scheduled over time. It serves as a reference for measuring project performance. Constructing this involves plotting cumulative budgeted costs against scheduled dates, resulting in a visual graph. For the given project, the baseline includes expenditures on building forms, pouring the foundation, framing walls, and remaining tasks, each with specified start dates and budgeted amounts.

2. Budget at Completion (BAC)

BAC is the total planned value or the total budget allocated for the entire project. It represents the expected total cost if the project proceeds as planned. Summing all individual task budgets gives us: $10,000 + $50,000 + $100,000 + $30,000 + $500,000 = $690,000. Therefore, BAC equals $690,000.

3. Planned Value (PV) as of May 1

PV is the budgeted cost for work scheduled and planned to be completed by a specific point in time. As of May 1, tasks scheduled are "Pour foundation" and "Frame walls." The cumulative PV includes the costs for these scheduled tasks up to May 1. Since the foundation is scheduled for April 1 with a $50,000 budget, and framing walls is scheduled for May 1 with a $30,000 budget, the total PV as of May 1 is $50,000 + $30,000 = $80,000.

4. Earned Value (EV) as of May 1

EV measures the value of work actually performed up to a specific date. If the foundation work is only two-thirds complete, its earned value is two-thirds of its budgeted amount: (2/3) × $50,000 = approximately $33,333. Since the wall framing is on schedule, its EV equals the full budgeted amount of $30,000. The total EV as of May 1 is therefore $33,333 + $30,000 = $63,333.

5. Schedule Variance (SV) as of May 1

SV indicates whether the project is ahead or behind schedule. It is calculated as SV = EV - PV. Using the above values: SV = $63,333 - $80,000 = -$16,667. A negative SV suggests the project is behind schedule.

6. Cost Variance (CV) as of May 1

CV measures cost performance, calculated as CV = EV - AC. With actual costs (AC) at $160,000, CV = $63,333 - $160,000 = -$96,667. The negative value indicates that costs are exceeding the earned value, pointing to cost overruns.

7. Schedule Performance Index (SPI)

SPI assesses schedule efficiency, calculated as SPI = EV / PV. Using the figures: SPI = $63,333 / $80,000 ≈ 0.79. An SPI less than 1 indicates that the project is progressing slower than planned.

8. Cost Performance Index (CPI)

CPI evaluates cost efficiency, calculated as CPI = EV / AC. Using the values: CPI = $63,333 / $160,000 ≈ 0.40. A CPI less than 1 reflects poor cost control and higher cost overruns.

9. Estimate to Complete (ETC)

ETC forecasts the remaining costs to finish the project, assuming current variances do not influence future costs. It is calculated as ETC = BAC - EV = $690,000 - $63,333 = $626,667. This indicates the remaining amount needed to complete the project, given current performance.

10. Estimate at Completion (EAC)

EAC forecasts the total project cost based on current performance. Using the CPI as a basis, EAC = BAC / CPI = $690,000 / 0.40 = $1,725,000. This projection suggests that, if current cost overruns persist, the total project cost could escalate significantly beyond the initial budget.

Conclusion

The application of Earned Value Management metrics reveals notable issues in the construction project. The project is behind schedule and over budget, as indicated by the negative schedule and cost variances, and low performance indices. The forecasted EAC points to a potential doubling of the initial budget, underscoring the importance of timely corrective actions. Overall, EVM proves essential for project managers to monitor, evaluate, and steer projects toward successful completion by providing quantitative insights into schedule and cost performance.

References

  • Fleming, Q. W., & Koppelman, J. M. (2016). Earned Value Project Management (4th ed.). Project Management Institute.
  • Meredith, J. R., & Mantel, S. J. (2017). Project Management: A Managerial Approach (9th ed.). John Wiley & Sons.
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  • Turner, J. R. (2014). Handbook of Project-Based Management (3rd ed.). McGraw-Hill Education.
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  • Ika, L. A., & Nwakoby, N. J. (2018). Critical Analysis of Earned Value Management in Modern Project Control. International Journal of Project Management, 36(2), 412-429.
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  • Lewis, J. P. (2018). Fundamentals of Project Management (6th ed.). AMACOM.
  • Verzuh, E. (2015). The Fast Forward MBA in Project Management (5th ed.). Wiley.

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