Chapter 10 Project Monitoring: Problems:

NOTE: Do this work on an MS Excel Spreadsheet - Include the

Questions.
1 (p. 466): Find the schedule and cost variances for a project that has
an actual cost as month 22 of $540,000, a scheduled cost of $523,000,
and an earned value of $535,000.
Show work and Answers on an Excel spreadsheet:
Please find the detailed answer as follows:
BCWP = Budgeted cost of work performed = (Earned Value)
ACWP = actual cost of work performed
BCWS = budgeted cost of work scheduled
Schedule Variance = BCWP - BCWS
CV = BCWP - ACWP
BCWP = $535,000
ACWP = $540,000
BCWS = $523,000
Schedule variance: 535,000 - 523,000 = $12,000
Cost variance: 535,000 - 540,000 = -$5,000
2 (p. 466): A sales project at mon5 had an actual cost of $34,000, a
planned cost of $42,000, and a value completed of $39,000. Find the
cost and schedule variances and the CPI and SPI.
Show work and Answers on an Excel spreadsheet:
Given actual cost or AC = 34,000, planned cost or PV = 42,000, and
value completed or earned value (EV) = 39,000
Cost Variance (CV)
CV = EV AC
CV = 39,000 34,000 = 5,000
Schedule Variance (SV)
SV = EV PV
SV = 39,000 42,000 = 3,000
Cost Performance Index (CPI)
The cost efficiency ratio of earned value to actual costs (CPI = EV/AC)
In PMPlan, the CPI is used to calculate Estimate at Completion (EAC)
(EAC = BAC/CPI)
CPI = EV/AC
CPI = 39,000/34,000 = 1.15
Schedule Performance Index (SPI)
The schedule efficiency ratio of earned value accomplished against
planned value (SPI = EV/PV). The SPI
describes what portion of the planned schedule was actually
accomplished.
SPI = EV/PV

SPI = 39,000/42,000 = 0.93

7 (p. 466): Given an activity in an advertising project whose planned
cost was $12,000 but actual cost to date is $10,000 so far and the
value completed is only 70 percent, calculate the cost and schedule
variances. Will the client be pleased or angry? Explain.
Schedule Variance = Earned Value - Planned Value = 12000*70% 12000 = -$3600
Cost Variance = Earned Value - Actual Cost = 12000*70% - 10000 = $1600
No, the client will not be please as the variances indicate "Overbudget"
for the client. At the same time, the actual value derived is less than
the valued planned,