Project Management: Performance, Variance Analysis & Forecasting

This project management report assesses the current status of a construction project, revealing it is behind schedule with a schedule variance of ($42,732.21) but under budget with a cost variance of (-$5,675.14). Earned Value Management (EVM) is employed to forecast future performance, with calculations showing a Cost Performance Index (CPI) of 0.96 and a Schedule Performance Index (SPI) of 0.76. The analysis indicates that while the project is cost-effective, it lags in schedule completion. Recommendations include improved schedule control, scope planning, and risk management to mitigate potential errors. The report also provides Estimate at Completion (EAC) and Estimate to Complete (ETC) values, projecting a final cost of $242,022.9 and a remaining cost of $104,297.8, respectively. The Variance at Completion (VAC) is estimated at -$9972.87, suggesting potential overspending compared to the initial plan. The project manager is advised to focus on keeping the project on schedule to avoid future cost overages.

Running head: PROJECT MANAGEMENT
Project Management
Name of the Student:
Name of the University:

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Executive Summary
The findings of this based is that from the variance analysis, it is found that the project cost is
under the budget by calculating cost variance while the project is behind the schedule by
calculating schedule variance. Earned Value Management (EVM) calculations is done to
measure the future performance of the project by comparing its present situations. It helps the
project manager to measure its performance used to find the variances on basis of comparison
of the work performed and planned. EVM is utilized for cost as well as schedule control and
useful for project forecasting. Cost variance is to be calculated by difference of completed
work cost with planned cost. Similarly, the schedule variance is difference between
completed work and planned schedule. The recommendations on the project are that in order
to overcome with cost and schedule problems, it is suggested to control the project schedule,
scope planning and risk management planning so that there are less possibilities of errors in
the project.

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Table of Contents
Executive Summary...................................................................................................................1
Current status of the project.......................................................................................................3
Forecast future performance......................................................................................................8
Recommendations......................................................................................................................9
References................................................................................................................................10
Bibliography.............................................................................................................................11
Appendix..................................................................................................................................12
Supporting data....................................................................................................................12

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Current status of the project
The project is based on construction work. The current status of the project shows that
the construction project is behind the schedule. Schedule variance (SV) is calculated by
deducting the planned value subtracted from the earned value, and remaining value tells
whether the plan is ahead or behind the schedule. In this project, the value of SV is (-
$42,732.21), therefore it shows the construction project goes behind the schedule.
The cost variance (CV) is calculated by showing difference between baseline cost as
well as actual cost (Kerzner & Kerzner, 2017). In this project, the cost variance is also
negative with value of (-$5,675.14), therefore the cost of project tasks are under the budget or
baseline amount.
Schedule and cost variances are existed to assess the financial presentation of the
project work. The cost variances compare the budget set before starting of the project and
what was actually spent in the project (Fleming & Koppelman, 2017). Cost variance is
existed to determine difference between actual expenditure as well as expected expenditure.
Schedule variance is existed to determine the performance of the project on basis of project
schedule.
From the Ms project schedule, it is found wrong is that the project schedule goes
behind the schedule, therefore the project manager should manage the schedule by allocating
more resources or increasing the working hours of the resources so that they can meet with
the planned schedule of construction project. The project manager can plan proper steps to
manage changers into the baseline schedule (Heagney, 2016). They can determine the project
status, conduct review, determine that there is indeed any changes of the project schedule in
addition to manage actual changes. It is right that the cost is under the budget and therefore
there is no increasing in the budget.

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The Earned Value Management (EVM) data are as follows:
Task Name SV CV SPI CPI
Construction Example -$42,732.21 -$5,675.14 0.76 0.96
Permits & Site Prep $0.00 -$1,125.00 1 0.88
Construction Permits $0.00 -$325.00 1 0.86
Gather Required
Documents $0.00 -$175.00 1 0.83
Complete Permit
Applications $0.00 -$75.00 1 0.83
Submit Permit
Applications $0.00 $0.00 1 1
Post Construction
Permit $0.00 -$75.00 1 0.75
Site Preparation $0.00 -$800.00 1 0.88
Initial Site Survey $0.00 -$250.00 1 0.93
Develop Site Plan $0.00 -$250.00 1 0.9
Approve Site Plan $0.00 -$300.00 1 0.5
Construction -$42,732.21 -$4,550.14 0.74 0.96
Foundation $0.00 -$2,000.00 1 0.9
Dig Foundation
Footers $0.00 -$1,800.00 1 0.55
Pour Foundation
Footers $0.00 $0.00 1 1
Inspect Foundation
Footers $0.00 -$100.00 1 0.67
Build Foundation Wall $0.00 $0.00 1 1
Inspect Foundation
Wall $0.00 -$100.00 1 0.75
Framing $0.00 -$300.00 1 0.99
Order Framing
Materials $0.00 $0.00 1 1
Frame Floor & Walls
& Roof $0.00 $0.00 1 1
Install Widows &
Doors $0.00 -$300.00 1 0.91
Perform Framing
Inspection $0.00 $0.00 1 1
Rough - Ins $0.00 -$1,250.00 1 0.95
Perform HVAC Rough
In $0.00 $0.00 1 1
Perform Plumbing
Rough In $0.00 -$350.00 1 0.94

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Perform Electrical
Rough In $0.00 -$800.00 1 0.91
Rough In Inspections $0.00 $0.00 1 1
Insect Rough In by
PM $0.00 $0.00 1 1
Inspect Rough In by
Code Officer $0.00 $0.00 1 1
Wall & Floor
Insulation $0.00 -$100.00 1 0.97
Install Wall & Floor
Insulation $0.00 $0.00 1 1
Perform Insulation
Inspection $0.00 -$100.00 1 0.75
Exterior Siding & Trim $0.00 -$750.00 1 0.98
Apply Foundation
Siding $0.00 -$400.00 1 0.96
Lay Brick & Rock
Siding $0.00 $0.00 1 1
Install Exterior Trim $0.00 $0.00 1 1
Inspect Exterior Siding
& Trim $0.00 -$100.00 1 0.75
Paint Exterior Trim $0.00 -$250.00 1 0.95
Interior Finishes -$16,807.21 -$250.14 0.41 0.98
Interior Drywall -$2,500.13 -$250.14 0.79 0.97
Hang Interior
Drywall $0.00 -$250.00 1 0.94
Finish Interior
Drywall -$2,500.13 -$0.14 0.69 1
Interior Trim -$5,357.08 $0.00 0.28 1
Install Interior Doors
& Locks -$899.94 $0.00 0.57 1
Install Interior
Molding -$4,457.14 $0.00 0.17 1
Interior Cabinetry -$7,200.00 $0.00 0 0
Install Kitchen
Cabinets -$2,400.00 $0.00 0 0
Install Bath Cabinets -$2,400.00 $0.00 0 0
Install Countertops -$2,400.00 $0.00 0 0
Interior Flooring $0.00 $0.00 0 0
Install Pre-finished
hardwoods $0.00 $0.00 0 0
Install Ceramic Tile $0.00 $0.00 0 0
Install Interior
Carpeting $0.00 $0.00 0 0
Interior Painting -$150.00 $0.00 0 0
Order Interior Paint -$150.00 $0.00 0 0

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Prep Walls & Trim $0.00 $0.00 0 0
Prime Walls & Trim $0.00 $0.00 0 0
Apply Finish Coat $0.00 $0.00 0 0
Clean-up Jobsite $0.00 $0.00 0 0
Rough In Finishes -$1,600.00 $0.00 0 0
Perform HVAC
Finishes $0.00 $0.00 0 0
Perform Plumbing
Finishes $0.00 $0.00 0 0
Perform Electrical
Finishes $0.00 $0.00 0 0
Apply Roof
Insulation -$1,600.00 $0.00 0 0
Exterior Finishes -$25,925.00 $0.00 0 0
Perform Final Grading -$3,600.00 $0.00 0 0
Driveways & Patios -$10,300.00 $0.00 0 0
Pour concrete
driveway -$5,500.00 $0.00 0 0
Install concrete patio
pavers -$4,800.00 $0.00 0 0
Exterior Decking -$7,025.00 $0.00 0 0
Build Exterior Deck -$6,400.00 $0.00 0 0
Stain Exterior Deck -$625.00 $0.00 0 0
Install Exterior
Landscaping -$5,000.00 $0.00 0 0
Final Inspections $0.00 $0.00 0 0
Perform Building Code
Inspections $0.00 $0.00 0 0
Perform Client
Inspections $0.00 $0.00 0 0
Cost variance (CV): It is calculated by showing difference between baseline cost as
well as actual cost (Chen, Chen, & Lin, 2016).
Schedule variance (SV): It is designed by deducting the planned value deducted from
the earned value.
CPI (Cost performance index): It is a amount of financial competence of the project.
It is represented by amount of finalized work for each unit per cost consumed (Willems &

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Vanhoucke, 2015). The ratio is calculated by dividing budgeted cost of completed work and
earned value, by actual cost of work performed.
Schedule performance index (SPI): It is degree of how the project is completed as
compared to the schedule (Webb, 2017). The ratio is calculated by means of dividing
budgeted cost of work performed and earned value by planned value.
From the entire variance analysis, it is found that the project manager is required to
determine if the project is on track or not by management the schedule besides cost. The total
planned period of the project is 134.13 days and planned budget is $237,725. The project
manager keeps in mind that the project cost is required to baselined to calculate if there are
any variances between actual and planned cost and budget. ACWP is displayed the actual
cost incurred for the construction work performed by the project resources on the project
task, till the project status date. BCWS shows how the budget is spent in provided actual
duration of the project task. In this project, the value is $174,782.14. At the initial stage,
when a task is created, then value of BCWP is 0. As the project baseline is saved and the
progress of task is reported, then it calculates BCWP. It is based on percentage completed of
the each task as compared to the baseline duration. The construction project then calculates
cumulative baseline cost as well as it provides what is the actual cost with the task progress in
baseline duration. In this project, the BCWP is $132,049.93. There is total of 61% completion
of entire project tasks.
In this project, there is cost variance of (-$5,675.14), therefore the project is $5,675
cost under budget. Cost variance = Cost- Baseline cost. The schedule is negative shows that it
is behind the schedule and it has time to complete the project work on schedule time if the
project manager can control the project schedule based on project requirements. As SPI is

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0.76, it means that less than 100% of the schedule work is completed to date. CPI of 0.96
means that the project is currently under budget with some small amount.
Following are the formulas used to calculate Earned value calculations and it is
provided so that the reader can understand the entire variance exists in the project effectively.
Planned value = Budgeted amount throughout current reporting period
Actual cost = Actual cost of the project to date
Earned value = total budget which is multiplied by percentage of the work
completion.
SPI = EV/PV; it measures progress against the progress planned. When value of
SPI<1.0 it states the less work is completed as per the planned. SPI>1.0 states that more work
is completed as per planned.
CPI = EV/AC; it measures work value against the actual cost. When value of CPI<1.0
it states the cost is higher as compared to budgeted. CPI>1.0 states that cost is less than
budgeted.
Forecast future performance
Based on the analysis from Ms Project, the project plan heads that the project is
behind the schedule and cost is under budget. EVM is measure of the presentation of project
against the project baseline. It is the best practice to monitor project performance based on
cost as well as schedule perspectives (Batselier & Vanhoucke, 2015). Both the project
performance provides a direct impact on entire project cost. The project is behind the
schedule but the cost is under budget than expected.
Estimate at completion (EAC) is the forecasted cost of project as the project is
progressed. It is intended by dividing budgeted at conclusion by cost performance index.

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ETC is the expected cost required to complete the development. It permits the plan
director to determine funding required to finish the work with availability of funding. It is
calculated by dividing EAC by actual cost (Prayogi et al., 2019).
There are various ways to determine the future performance of this project using
EVM techniques such as:
I. The future performance is based on budgeted cost. In this project calculated EAC is
$242022.9, therefore it is the expected amount of money that the project is cost for
completion of this construction plan.
II. The future performance is based on expected cost. In this project calculated ETC is
$104297.8, therefore it is the expected amount of money required to spend to
complete remaining project work.
III. The future performance is also based on variance at completion (VAC), and the value
is -9972.87. It estimated that the project manager spends more than planned.
Recommendations
Based on the variance analysis, the possible areas of the concerns are schedule and
cost variance. It is key important areas for winning present and future projects. Therefore, it
is required to keep the project on schedule besides in budget. The variance shows the project
manager what is the current position of the project plan. Following are the recommendations
which are suggested to get a better project plan:
Control the schedule: It should beneficial to keep the project on schedule from time
standpoint while to avoid future cost overages. As this project is behind the schedule,
therefore the project manager can take proper steps to correct scheduling problems and
present schedule solutions with a status report to the project client.

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Scope planning: A scope baseline should require with approved version of the scope
statement and work breakdown structure. The scope statement file helps the project manager
to review prior information from previous project phases to make sure that the project plan is
to be completed to meet with its objectives.
Risk management planning: It should be used to identify the problems which could
trouble the project and analyze how it is likely to occur and provide effect on the project plan.
References
Batselier, J., & Vanhoucke, M. (2015). Evaluation of deterministic state-of-the-art forecasting
approaches for project duration based on earned value management. International
Journal of Project Management, 33(7), 1588-1596.
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.
Fleming, Q. W., & Koppelman, J. M. (2016, December). Earned value project management.
Project Management Institute.
Heagney, J. (2016). Fundamentals of project management. Amacom.
Kerzner, H., & Kerzner, H. R. (2017). Project management: a systems approach to planning,
scheduling, and controlling. John Wiley & Sons.
Lock, D. (2017). The essentials of project management. Routledge.
Prayogi, R., Pratami, D., Puspita, I. A., & Bermano, A. R. (2019, March). Measuring
Schedule Performance of Fiber to The Home Project Using Earned Value
Management. In 2018 International Conference on Industrial Enterprise and System
Engineering (IcoIESE 2018). Atlantis Press.

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Webb, A. (2017). Using earned value: a project manager's guide. Routledge.
Willems, L. L., & Vanhoucke, M. (2015). Classification of articles and journals on project
control and earned value management. International Journal of Project
Management, 33(7), 1610-1634.