Project Management

This document provides guidance on project management and covers various metrics and calculations related to project performance and cost. It explains how to determine cumulative EV, SV, SPI, CV, CPI, EAC, VAC, TCPI, and interpret their results. The document also discusses the significance of the Cost Schedule Index and provides insights on calculating independent EACs. Additionally, it includes a conversation about EAC, EV, and ETC at project completion.

Running head: PROJECT MANAGEMENT 1
Project Management
Student’s Name
Institutional Affiliation

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Based on this information, determine the following:
1. Cumulative EV
Earned value = actual completion (%)* BAC = 19% * 387000
= $73,530
2. Schedule Variance (SV)
SV = EV – PV
EV = $73,530
PV = $68345
SV = $73,530 - $68,345 = $5,185
3. Schedule Performance index (SPI)
SPI = EV/PV = $73,530/$68,345 = 1.0757
4. Cost Variance
CV = EV – AC = $73,530 - $78,379 = -$4849
5. Cost Performance Index (CPI)
CPI = EV/AC = $73,530/$78,379 = 0.9381
6. EAC (bottom-up)
Estimation at Completion (EAC) = BAC/CPI = 387,000/0.9381
= $412535.977
7. VAC (bottom-up)
VAC = Total Budget cost – Estimate at Completion
VAC = BAC – EAC = 387,000 - 412535.977
= -$25535.977
8. TCPI
TCPI = (BAC-EV) / (BAC-AC)
= (387000-$73,530) / (387000-78,379)
= 313470 / 308621

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= 1.0157
Based on your calculations in question 1 above, respond to the following:
1. What is the status of the accomplishment performance through the current
reporting period? Why?
The cost variance of the project is negative, which means that the project is over-
budget.
2. What is the status of project cost performance through the current reporting
period? Why?
Since the project has a positive Schedule Variance, it means the project is ahead of
schedule.
3. Is the project projected to complete over or under-budget? Why?
Based on the project’s positive Schedule Variance it is projected that it will be
completed under-budget because of the positive Schedule Variance.
4. Interpret the TCPI metric.
The TCPI metric of the project means that the project cannot continue with the current
Cost Performance Index of 0.9381.
Based on your calculations in question 1 above, an inexperienced and arrogant project
analyst from the project management office has computed an additional metric: Cost
Schedule Index, which equals SPI*CPI. He wants you to report this metric to the
customer, instead of SPI and CPI separately. What should you do and why?
SPI*CPI is equal to Critical Ratio (CR) of the project. CR displays the entire project
performance in terms of both schedule and budget. If the project has a CR less than one it
means the project suffered from being behind schedule or over budget or even both. A CR
that is precisely one means the project realized the budget and timeline as made by the project

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manager (Zohoori, Verbraeck, Bagherpour, & Khakdaman, 2019). A CR that is more than
one means the project was completed ahead of schedule and under budget or both.
On the other hand, SPI ratio is used to compare the set budget cost of the work
accomplished (BC) against the budgeted cost of work scheduled (SC)When the SPI is less
than one, the set budget cost of work schedule is higher than the budget cost of the work
accomplished. Consequently, the project lags behind the schedule. In case the project has an
SPI equal to one, it means the project is on schedule (Xue, Liu, & Sun, 2018). However, if
SPI is more than one, it means the project is ahead of schedule.
The CPI ratio is used to measure the efficient deployment of resources utilized on the
project. The ratio is calculated based on the relationship between the budgeted cost of work
(BC) and the actual cost of the budgeted cost of work completed. When the CPI ratio is less
than one, it means that the cost of the project is more than the budgeted cost, hence the
project is over budget. When the CPI is equal to one, the project is on set a budget and if the
CPI is more than one, it means that the project is under budget.
The program manager doubts your numbers. In particular, he does not believe your
EAC number and requests you calculate two independent EACs. In particular, he
wants the following IEACs calculated from rows two and four in table 23-5 in Snyder
(2013).
1. Compute IEAC1 = ((BAC-EV)/CPI) + AC
= ((387000-73530) / 0.9381) + 78379
= (313470/0.9381) + 78379
334,154.1414 + 78379
$412,533.1414
2. Compute IEAC2 = ((BAC-EV)/ (SPI*CPI)) + AC

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= ((387000-73530) / (1.0757*0.9381)) + 78379
= ((313470) / (1.0091)) + 78379
= 310638.7853 + 78379
= $389,017.7853
3. Interpret IEAC1
The IEACI is greater than the projected budget at completion, which means that the
project would be completed over budget by $25,533.1414 more.
4. Interpret IEAC2
The IEAC2 is also greater than the projected budget at completion, which means that
the project would be accomplished over budget. However, the over-budget is smaller
compared to IEAC1 $2017.7853. The difference between IEAC1 and IEAC2 is
(25533.1414 – 2017.7853) = $23,515.3561
5. Based on items 1-4 above, what do you think the program manager will request
from you regarding the bottom-up EAC?
The program that the manager will request is IEAC2 because although it is over-
budget, it is only by a small amount as compared to bottom-up EAC, which is over-
budget by over by a difference of $$23,515.3561.
You are having a hallway conversation with the same project analyst from question 3,
who is realizing that he may not know as much about earned value management as he
thought when he joined the company. Still, he is convinced the following statements
below are correct. How would you respond to him on each statement (i.e., formulate a
specific response rationale for each statement below)?
1. EAC because of Cumulative AC at project completion.
EAC is $412533.98, and the AC is $78379, which means that at completion the
project will be over-budget.

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2. Cumulative EV can be higher than BAC at project completion.
When EV is higher than BAC at project completion, it means the project is under
budget meaning it was accomplished before the planned schedule.
3. EAC can be smaller than BAC at project completion.
When EAC is smaller than BAC at project completion, it means the project is under
budget.
4. ETC can be greater than 0 at project completion.
When ETC is greater than zero, it means that project is still under progress.

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References
Xue, B., Liu, B., & Sun, T. (2018). What Matters in Achieving Infrastructure Sustainability
through Project Management Practices: A Preliminary Study of Critical
Factors. Sustainability, 10(12), 4421.
Zohoori, B., Verbraeck, A., Bagherpour, M., & Khakdaman, M. (2019). Monitoring
production time and cost performance by combining earned value analysis and
adaptive fuzzy control. Computers & Industrial Engineering, 127, 805-821.

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