Calculate the earned value and cost variance

Assignment Help Project Management

Reference no: EM131026784

Question 1

Earned Value Management

Question 1 (a) - Project 1

You are managing a project that is scheduled to take 12 months to complete and has a budgeted actual cost (BAC) of $1,000,000.

At the Status Date, the project has the following characteristics:

Planned value (PV) $300,000

Actual cost (AC) $350,000

Percentage of work completed 25%

Calculate the following quantities:

Earned Value (EV)

Cost Variance (CV)

Schedule Variance (SV)

Cost performance index (CPI)

Schedule performance index (SPI)

Using your results, apply the three (3) formulae listed in Section 7.4.2.2 of the text to the calculation of the Estimate at Completion (EAC) of the project.

These formulae are as follows:

- EAC = AC + (BAC - EV)
- EAC = BAC/CPI
- EAC = AC + [(BAC-EV) / (CPI x SPI)].

For each of these calculations, calculate the To-Complete Performance Index (TCPI).

Question 1 (b)

You are managing a second project that has the same time and cost specifications as those in Question 1 (a), but which is 40% complete at the Status Date, when Actual Costs are $350,000.

Its specifications are below

Budgeted Actual Cost (BAC): $1,000,000.

Schedule time to complete: 12 months

At the Status Date, the project has the following characteristics:

Planned value (PV)                  $300,000
Actual cost (AC)                     $350,000
Percentage of work completed   40%

Calculate the following quantities:

Earned Value (EV)
Cost Variance (CV)
Schedule Variance (SV)
Cost performance index (CPI)

Schedule performance index (SPI)

Using your results, apply the three (3) formulae listed in Section 7.4.2.2 of the text to the calculation of the Esti mate at Completion (EAC) of the project.

These formulae are as follows:

- EAC = AC + (BAC - EV)
- EAC = BAC/CPI
- EAC = AC + [(BAC-EV) / (CPI x SPI)].

Calculate the To-Complete Performance Index TCPI.

Question 1 (c)

Comment on each of these projects from the point of project performance, paying particular attention to the following:

Cost Variance (CV)

Schedule Variance (SV)

Cost performance index (CPI)

Schedule performance i ndex (SPI)

Estimated Actual Cost (EAC) of the project

A brief assessment of the overall project performance, including any necessary measures required to successfully complete the project

Question 1 (d)

Briefly discuss two (2) advantages and two (2) disadvantages of Earned Value Project Management.

Advantages

Disadvantages

Question 2

Developing a Revised Project Management Plan and Report to Management

Background

You have recently been appointed as a project manager in a large engineering organisation. Some examples of such an organisation include, but are not limited to:

Consultant
Government organisation
Construction company
Installation company
Asset management provider
Maintenance services provider
Other.

The organisation may be operating in one or more engineering disciplines, such as civil, mechanical, electrical, environmental, mechatronic, biomedical, or other discipline, or in construction or surveying.

Your organisation has asked you to review the management of a medium sized project (up to $5 million in value), which is to be completed within two (2) years of its commencement. The project has at least 20 main activities and at least two (2) critical paths.

The project commenced eight (8) months ago. The first six (6) weeks were spent developing the project charter and preparing the original project management plan. Project execution (carrying out the work) commenced immediately the project management plan was completed and approved.

There will be a one (1) month project closing period at the end of the project. During this time, equipment will be tested and commissioned (if relevant to your project), and the project will be finalised.

The project deadline is firm, subject to any justifiable contingencies.

The existing business case and project charter are not detailed. Similarly, the project management plan, including a basic Gantt chart and high level budget is not well detailed or described.

There are a number of issues with the project:

1. To date, the project is two (2) months behind schedule. Part of this delay has resulted from poor understanding of lead times for delivery of particular project components. There are no other significant factors that should impact on project delivery.

2. Because there is only a quite basic project plan and time schedule, there is poor sequencing of critical activities. They do not have clear scheduled completion dates.

3. There have been delays in procuring some critical project resources. There may be alternative suppliers.

4. While there were a number of specialised personnel for particular aspects of the project available at the start of the project, they were not booked ahead of when they were required. Most of these resources are now booked for several months ahead. Few alternatives are available.

5. As a result of the influence of a number of stakeholders, there has been significant scope creep, which with the current rate of progress will delay delivery by one (1) month. This scope creep also threatens to impact on the project's business case.

6. Some components of the project have not been delivered or built to the required quality specification. Consequently, there have been delays while defects have been rectified.

7. Communication between project manager, project sponsor, stakeholders, contractors, consultants and other key personnel has not been good. There are therefore a number of cases where key information has not been communicated well. This poor communication has impacted on project progress.

You have been charged with delivering a revised project management plan to deliver the project on time; and with providing a report to the Project Sponsor explaining the actions you have taken.

Your Task

Part A

1. Define your organisation and project.

Nominate an organisation of your choice, and the engineering discipline or disciplines in which it is operating.

Nominate a suitable project (for example, road development, subdivisional development, power station, mobile phone network, mining, provision of industrial equipment, installation, maintenance, surveying) to use as an example.

2. Prepare a revised project charter, including an updated business plan.

3. Prepare an updated project management plan for completing the project within its original timeline.

The project management plan should include the following:

Definition, preparation and definition of subsidiary plans
Identification and description of stakeholder needs
Work Breakdown Structure (WBS)
Plans for the project management Knowledge Areas of:
project integration management
project scope management
project time management
project cost management
project quality management
project human resource management
project communications management
project procurement management
Definition and sequencing of the main project activities
Main activity resources and durations
Project schedule, costs and budget Notes:
The project charter should include a revised business case for the project and link the project with your organisation's strategic plan. On the basis of this business case, the project sponsor will make a decision about the future of the project.
You may assume that the project sponsor has allowed the project timeline to be increased by one (1) month to allow for the scope creep already approved. However, further scope creep is not permitted.
The project scope management plan should include a section on controlling scope creep
The project time management plan should include a Gantt chart showing the major project activities.
The project cost management plan should include all costs reasonably expected to be incurred in delivering the project. These costs may include estimates for ensuring completion of the project.

4. Prepare a plan for executing, monitoring and controlling the project

5. Prepare a plan for any testing and commissioning, and for closing the project

Part B

Write a report to your Project Sponsor that:

succinctly outlines the steps you have taken to deliver the project within its original timeframe (as extended by permitted scope creep of one (1) month)
explains why they have been taken
demonstrates how they will enable the project to be completed within its original timeframe
discusses the additional costs that will be incurred to achieve this target

Part C (Written Communication)

Abstract and table of contents

Structure

Language, style, spelling

Completion in within word count

Setting out and referencing

Reference no: EM131026784

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