Project comparison After evaluating

Running head: PROJECT MANAGEMENT
PROJECT MANAGEMENT
Name of the Student
Name of the University
Author Note

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Table of Contents
Question 1 Earned value management............................................................................................2
Question 1(a) - Project 1..............................................................................................................2
Question b- Project 2...................................................................................................................2
Question 1 (c) Project comparison..............................................................................................3
Question 1 (d)..............................................................................................................................4
Question 2 project development......................................................................................................6
Question 2 (a)..............................................................................................................................6
Bibliography..................................................................................................................................20

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Question 1 Earned value management
Question 1(a) - Project 1
Given details,
Budget at Completion (BAC) of $4,500,000
Planned value (PV) $1,100,000
Actual cost (AC) $900,000
Percentage of work completed 26%
Earned value (EV) = Budget at completion * actual% completed= 1,170,000
Cost variance (CV) = EV-AC= 270,000
Schedule Variance= EV- PV= 70,000
Cost performance Index (CPI) = EV/AC= 1.3
Schedule Performance Index = EV/PV= 1.063
Question b- Project 2
Budget at Completion (BAC): $4,500,000
Schedule time to complete: 24 months
Planned value (PV) $1,650,000
Actual cost (AC) $1,800,000
Percentage of work completed 36%

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Earned value (EV) = 1,620,000
Cost variance (CV) = -180,000
Schedule Variance= -50,000
Cost performance Index (CPI) = 0.9
Schedule Performance Index = 0.98
Question 1 (c) Project comparison
After evaluating both the project components it has been observed that with the use of
Earned value management it becomes easy to determine the project execution details. After
comparing both projects, the conclusions that can be drawn are listed below:
 Cost variance: cost variance is referred to the indicator that helps in monitoring the
financial progression associated with the business. With lower cost variance it becomes
east to ensure that the project risks are controlled effectively. In case of Project 1 the cost
variance was in positive range that states the project has been executed within the budget
and around 270,000 have been saved. On the other hand it has been observed that in case
of project 2 the cost variance is in negative. This means that the project has run out of
money. Negative value of cost variance is considered as an indicator of over budget.
 Schedule variance: With the use of schedule variance it becomes easy to determine the
schedule that is maintained by a project. Schedule Variance for project 1 was estimated to
be around 70,000. This states that the project is on track and will be executed within the
estimated time period. On the other hand the schedule variance for the project 2 is in
negative. This means that project is running behind the schedule. Thus it will take more
time to get completed.

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 Cost performance index: CPI is used for the purpose of measuring the financial
effectiveness and efficiency associated with a project. This is used for representing the
amount of work that is completed per unit of the cost that is spent. Project 1 has a CPI
value of 1.3; this means that the project is maintaining its budget ad will deliver the
product within the estimated time with proper results. Whereas the CPI value for the
project 2 is below 1 that means the total budget is 90% to every financed dollar.
 Schedule performance index: This is referred to the measure that is used for
determining the project status. It helps in determining how close the project is from being
completed. The project 1 has SPI value 1.063, which means the work, has been executed
more than it was planned. On the other hand the 2 project has a SPI value less than 1 that
means the estimated works have not been executed within the estimated time. The
schedule for the project 2 is running behind. This can cause impact over the project
execution rate.
Question 1 (d)
Earned value management is considered to be one of the most efficient methods for
assessing the project performance. There is a need to identify the essential components so that it
can offer better data results towards the customers (Khesal et al. 2019). There are several risks
that may impact a project. The possible risk that comes along with the use of earned value
management within a project is that it works on an assumption that the future performance can
be estimated on the basis of past performance. However it is very difficult to ensure that the
assumption will work out by the end of the project.

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Second risk that is identified with the use of EVM method is that EVM assessment does
not includes measuring the impact of a number of project performance factors that are the
outcomes of complexity in consecution projects.
Third factor, the cost of earned value method for a project is expensive and requires
efficient implementation of EVA software.
Lastly, lack of proper management of schedule, budget and goal will lead to impacting
the overall performance of the project. Thus it will become difficult to calculate the EVM for the
project (Miguel et al. 2019).
Beside this with the use of earned value method it becomes easy to calculate the overall
project components. For successfully executing a project it is important to calculate certain
factors that are the cost variance, schedule variance, cost performance index and schedule
performance index. Once the project manager implements EVM, then it is important to use the
method after each phase. If the earned value for the project is calculated wrong, then the project
budget and schedule will also become wrong (Babar, Thaheem and Ayub 2017). This will
eventually lead to hampering the project execution phase. Thus it can be stated that, the main risk
that is faced is with wrong calculation of the earned value for a project.
Let’s take an example off construction project. For construction project it is important to
calculate the external factors and the environmental factors that may hamper the performance.
With proper analysis it will become easy to manage the project. If any error causes within the
earned value calculation then the complete project may get hampered. It is important for every
project managers to estimate the scope, schedule and budget related to the project effectively for
gaining proper results.