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7 3 3 Cost Variance Analysis
7 3 3 Cost Variance Analysis
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Project Control
David Bolton
WBS 6.4.1: Solve Problem #3 found on page 467 of the Meredith and Mantel text.
$81,000. What are the cost and schedule variances and CSI? Estimate the time
variance.
AC = $78,000
PV = $84,000
EV = $81,000
AT = 70 days
This is good. The project is a little under budget (CPI = 1.03) and a little behind
schedule (SPI = 0.96). In theory, the PM could spend a little extra and make up that
minor schedule variance. In our PM shop, CPI and SPI between 0.95 and 1.05 is
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PMGT501; WBS 6.4
Project Control
David Bolton
WBS 6.4.2: Solve problem #4 found on page 467 of the Meredith and Mantel text.
planned cost of $475,000 and a value completed of $300,000. Find the cost and
AC = $350,000
PV = $475,000
EV = $300,000
AT = 17 months
This is bad. The project has spent more than scheduled and is still far behind where it
should be. CPI is yellow and SPI is red. Expect to be on the Director’s radar with
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PMGT501; WBS 6.4
Project Control
David Bolton
WBS 6.4.3: Solve problem #5 found on page 467 of the Meredith and Mantel text.
$17,000 and a value completed of $20,000. Find schedule and cost variances and the
three indices.
AC = $23,000
PV = $17,000
EV = $20,000
AT = 10 months
This one is a mixed bag. The PM has overspent (CPI=.87) and is over his earned value
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PMGT501; WBS 6.4
Project Control
David Bolton
WBS 6.4.4: Solve problem #13 found on page 468 of the text.
The following project is at the end of its sixth week. Find cost and schedule variances
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PMGT501; WBS 6.4
Project Control
David Bolton
Then the Plan Chart showing 50/50 EV reporting for the tasks.
Plan! Week:
Activity 1 2 3 4 5 6
a 150 150
b 100 0 100
c 125 125
d 300
e 200
Cum
250 400 925 1050 1250 1250
PV
Actual
0 400 180 300 0 600
Cost
Cum
0 400 580 880 880 1480
A/C
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PMGT501; WBS 6.4
Project Control
David Bolton
Plan! Week:
Activity 1 2 3 4 5 6
The project appears to be going OK during the first two weeks. Problems surface in the
third week when task D reports 50% of the planned $600 task value but only completes
20% of the work. The problem worsens in week 5 when task E starts and also reports
I think the critical input method of EV reporting might give a more accurate picture of the
project status but it is still going to show the obvious: The project is slipping schedule
(decreasing SPI) and overrunning budget (decreasing CPI, increasing ETC). Notice
EAC in week 6 is $83 and there are still two weeks to go in the program. Not good.
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