Project Performance Analysis Using Earned Value Management (EVM)

This assignment provides an analysis of project performance using Earned Value Management (EVM) techniques. The solution calculates and interprets key metrics such as Cost Variance (CV), Schedule Variance (SV), Cost Performance Index (CPI), and Schedule Performance Index (SPI) based on provided data. The analysis reveals that the project is over budget and behind schedule. The solution also includes the calculation of the Estimate at Completion (EAC) using CPI and estimates the time required to complete the project based on the SPI. The assignment concludes by referencing relevant academic sources.

Running head: EARNED VALUE MANAGEMENT
EVM Problems and Solutions
Name of the Student:
Name of the University:

1EARNED VALUE MANAGEMENT
Exercise 2
a. Cost variance, schedule variance, cost performance index (CPI), and schedule
performance index (SPI) for the project
Based on the provided data,
PV = $23,000
EV= $20,000
AC = $25,000
BAC = $120,000
Terms Formula Calculation
Cost Variance (CV) CV= EV – AC = $ (20,000 – 25,000) = - $5,000
Schedule Variance
(SV)
SV= EV- PV = $ (20,000 – 23,000) = - $3,000
Cost Performance
Index (CPI)
CPI = EV/ AC = $20,000 / $25,000 = 0.8
= 80%
Schedule Performance
Index (SPI)
SPI= EV/ PV = $20,000 / $23,000 = 0.8695
= 86.95%
b. Project progressing
The project is not progressing well at all. When the value of CV is negative, then it
means the actual cost is more than its planned value. If the value of SV is negative, then it
takes long time to perform planned work (Miguel, Madria, & Polancos, 2019).
When the value of CPI is less than 100%, then the project is to be over budgeted and
if SPI is less than 100%, then the project is behind the schedule (Chen, Chen, & Lin, 2016).

2EARNED VALUE MANAGEMENT
Based on the value of CV and SV, both are negative, therefore both time and budget
is more than its planned value.
Both SPI and CPI is less than 100%, means that the project is over budget as well as
behind the schedule.
c. Calculation of estimate at completion (EAC) for this project
Based on using CPI, the formula to calculate EAC = BAC / CPI
= $120,000 / 0.8 = $150,000
d. Use the SPI to estimate how long it will take to finish this project
Estimated time to complete = Original time estimate (12 months) / SPI
= 12 / 86.95% = 13.80 months
Therefore, it will take 13.8 months to finish the project work.

3EARNED VALUE MANAGEMENT
References
Chen, H. L., Chen, W. T., & Lin, Y. L. (2016). Earned value project management: Improving
the predictive power of planned value. International Journal of Project
Management, 34(1), 22-29.
Miguel, A., Madria, W., & Polancos, R. (2019, April). Project Management Model:
Integrating Earned Schedule, Quality, and Risk in Earned Value Management.
In 2019 IEEE 6th International Conference on Industrial Engineering and
Applications (ICIEA) (pp. 622-628). IEEE.