Project Management: Earned Value Measures, Performance Parameters, CPI and EAC

This article explains the computation of earned value measures, earned value performance parameters, cumulative cost performance index (CPI), estimate at completion (EAC), and estimate to completion (ETC) in project management. It includes tables and formulas used for the computation of these parameters. The article also discusses how to determine if a project is ahead of schedule or over budget based on earned value and planned value or earned value and actual cost, respectively.

Project Management
STUDENT NAME/ID
[Pick the date]

Question 1
(a) Computation of earned value measures for each of the given activity
Formula used:
Planned Value=Budget at cost∗Percentage completed planned
Percentage completed planned =100 %
Earned Value ( EV )=Budget at cost∗Actual percentage completed
Computation table
Final table
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Question 2
(a) Earned value performance parameter for each of the given activity
Formulae used
Schedule Variance = Earned value – Planned value
Schedule performance Index = Earned value / Planned cost
Cost Variance = Earned value – Actual cost
Cost performance Index = Earned value / Actual cost
(b) It can be said that project is “ahead of schedule.” It is concluded based on the earned value
and planned value. In present scenario, the earned value is higher than planned value.
(c) It can be said that project is “over budget.” It is concluded based on the earned value and
actual cost. The over budget has been determined based on the fact that earned value is
higher than actual cost and hence, the project would be termed as over budget.
Question 3
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(a) Cumulative Cost performance Index (CPI) and Estimate at completion (EAC)
CPI would be computed based on the CPI of each of the activity whereby, EAC has been
computed based on CPI and budget at cost.
Computation for CPI
CPI = Sum of CPI of all the activities
Hence, Cost performance Index (CPI) = 6.936
Computation for EAC
Estimate at completion (EAC) = Sum of BAC / CPI
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Hence, EAC = 215000/6.936 = 30,997.693
(b) Estimate to completion (ETC)
ETC can be determined with the help of CPI and cost overrun. Here, cost overrun would be
calculated with the help of budget provisions and actual cost.
Cost Overrun=Actual cost – budget provision=95000−96846=−1,846
Now,
Estimate to completion (ETC) = Cost Overrun * CPI = -1846*6.936 = -12,803.85
(c) Estimate At Completion (EAC)
EAC= AC+ {BAC −EV
CPI∗SPI }
Where,
AC=95000
BAC=215000
EV =157000
CPI=6.936
SPI=5.361
Now,
EAC= AC+ {BAC −EV
CPI∗SPI }=95000+ {215000−157000
5.361∗6.936 }=96,560
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The budget provision of the project is 96846 whereas. The EAC comes out to be 96,560 which
implies that project would require additional $286 in order to meet the current budget
requirement.
(d) The changed cost performance index (CPI0) as to complete the project with the help of
original budget has been computed as shown below.
EAC= AC+ { BAC−EV
CPI '∗SPI }
Where,
AC=95000
BAC=215000
EV =157000
CP I'=?
SPI=5.361
EAC=96846
Now,
EAC= AC+ {BAC −EV
CPI∗SPI }
96846=95000+ { 215000−157000
5.361∗CP I ' }
CP I'=5.861
The change in CPI is computed as given below.
CPI0= CPI – CPI’ = 6.936 – 5.861 = 1.075
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