Individual Assignment IA5 v3.1 Earned Value Virginia DAquila

PMAN 650
Session 5 Individual Assignment (v3.1)

Earned Value Management
Introduction
All of you have had at least an introduction to earned value management in the project management
fundamentals course. Many of you may have had the opportunity to use earned value management in
your professional careers. In practice, most EVM analysis results are generated by scheduling software or
other applications. As a project manager, you must have a good handle on the concepts and be able to
verify the accuracy of EVM analysis results.
In this assignment, you will have an opportunity to brush up and expand upon your EVM knowledge and
skills by applying EVM concepts to a practical problem. THIS ASSIGNMENT REQUIRES A MANUAL
ANALYSIS - DO NOT USE MICROSOFT PROJECT.
Problem Background
Your project consists of seven activities with planned start and finish dates shown in the chart below:
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PMAN 650
Activity budgets and earned value (EV) accrual rules from you project cost management plan are as
follows:
Assumptions
1. Assume a five-day work week with no holidays occurring during the work week.
2. For all activities (except activities 3 and 4), assume the expenditure rate is constant over the
duration of the activity, i.e., the amount planned to be spent each week is the same. See the
conceptual profile below.
PMAN 650
3. For activity 3, the planned expenditure profile is shown below:
4. For activity 4, the planned expenditure profile is shown below:
PMAN 650
The project sponsor wants you (the PM) to present a project cost and schedule performance assessment
using data through the end of week 8:
For activity 1, three equally-valued gates have been established and all gates are complete as of the end
of week 8.
For activity 3, five milestones have been established with the following values: (1) milestone 1 – 10%;
milestone - 20%; milestone 3 – 15%; milestone 4 -20%; milestone 5 – 35%. Four of the milestones are
complete as of the end of week 8.
For activity 4, four equally values gates (milestones) have been established. As of the end of week 8,
none of the gates have been reached but the activity owner estimates 30% of the work required to reach
the first gate has been accomplished.
Answer the questions that follow. Show all work. Round dollar values to the
nearest dollar. Calculate all other variables to three decimal places.
PMAN 650
1. Earned Value Measures
a. Calculate earned value measures for each activity and for the cumulative project as of
the end of week 8; fill in the table below:
Activity Planned Value (PV) Earned Value (EV) Actual Cost (AC)
Activity One $ 25,000.00 $ 25,000.00 $ 22,000.00
Activity Two $ 15,000.00 $ 20,000.00 $ 25,000.00
Activity Three $ 30,000.00 $ 32,500.00 $ 40,000.00
Activity Four $ 2,000.00 $ 4,500.00 $ 8,000.00
Activity Five $ - $ - $ -
Activity Six $ - $ - $ -
Activity Seven $ - $ - $ -
Entire Project $ 72,000.00 $ 82,000.00 $ 95,000.00
Excel spreadsheet is attached to show work.
2. Earned Value Performance Measures
a. Calculate earned value performance parameters for each activity and for the cumulative
project as of the end of week 8; fill in the table below:
PMAN 650
Excel spreadsheet is attached to show work.
Activity Schedule Variance (SV) Schedule Cost Variance (CV) Cost

Performance Performance
Index (SPI) Index (CPI)
Activity One $ - 1 $ 3,000.00 1.136
Activity Two $ 5,000.00 1.333 $ (5,000.00) 0.8
Activity Three $ 2,500.00 1.083 $ (7,500.00) 0.813
Activity Four $ 2,500.00 2.25 $ (3,500.00) 0.563
Activity Five $ - $ -
Activity Six $ - $ -
Activity Seven $ - $ -
Entire Project $ 10,000.00 5.67 $ (13,000.00) 0.863
b. Is the project ahead of schedule, on schedule, or behind schedule? What EVM

information are you using to make this assessment and why?
The entire project SPI of 5.67 tells us that to date, the project is ahead of schedule. A
project with SPI greater than 1 indicates ahead of schedule.
c. Is the project over budget, under budget, or on budget? What EVM information are you
using to make this assessment and why?
The entire project CPI of 0.863 tells us that to date, the project is over budget. A project
with a CPI lower than 1 indicates cost overruns.
3. Earned Value Forecasts

a. What is the value of the “Cumulative CPI” Estimate-at-Completion (EAC)?
Cumulative = .863
EAC = BAC / CPI
= 215000 / .863
= $249,085.00
b. Using the “Mathematical” or “Overrun to Date” Estimate-at Completion, what is the

value of the Estimate-to-Complete (ETC)?
ETC = EAC – AC
= $249,085.00 - $95,000
= $154,085.00
PMAN 650
c. Using the “Cumulative CPI times SPI” Estimate-At-Completion, how much more or less
money (other than the current budgeted amount) will you need to finish the project?
Estimate at Completion = Money spent to date + (Budgeted cost for the remaining work
– Earned Value) / (Cost Performance Index * Schedule Performance Index)
= $95,000 + ($120,000 - $82,000) / (.863 * 5.67)
= $95,000 + ($38,000 / 4.89)
= $95,000 + $7,769
= $102,769
d. How much would the Cost Performance Index (CPI) have to change in order to complete
the project within the original budget?
TCPI= (BAC – EV) / (EAC – AC)
= ($215,000 - $82,000) / ($249,085 - $95,000)
= $133,000 / $154,085
= .86
This means that we can continue with a Cost Performance Index of 0.86 to complete the
project
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PMAN 650

Session 5 Individual Assignment (v3.1)

3. For activity 3, the planned expenditure profile is shown below:

4. For activity 4, the planned expenditure profile is shown below:

1. Earned Value Measures

Excel spreadsheet is attached to show work.

2. Earned Value Performance Measures

Excel spreadsheet is attached to show work.

Activity Schedule Variance (SV) Schedule Cost Variance (CV) Cost

b. Is the project ahead of schedule, on schedule, or behind schedule? What EVM

3. Earned Value Forecasts

EAC = BAC / CPI

b. Using the “Mathematical” or “Overrun to Date” Estimate-at Completion, what is the

= $95,000 + ($120,000 - $82,000) / (.863 * 5.67)

= $95,000 + ($38,000 / 4.89)

TCPI= (BAC – EV) / (EAC – AC)

= ($215,000 - $82,000) / ($249,085 - $95,000)

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