ISP640 COMPUTING PROJECT MANAGEMENT

PROJECT MANAGEMENT CONTROL AND MONITORING

CHAPTER 8 : EARNED VALUE

Submission date: 17 December 2021 through ufuture

Tutorial : EARNED VALUE Name: NURUL NADERA QISTINA BINTI

AHMAD SANUSI

Group: CS2404A

TUTORIAL EARNED VALUE

Damai Sdn Bhd has awarded a contract for the production of LED Advertising Screen to company
Gembira Sdn Bhd .

The contract calls for Gembira Sdn Bhd to produce:

-500 LED Screen for Advert A and

It further states that Gembira Sdn Bhd will produce:

- LED Screen for Advert A at the rate of 100 per month and

-Production of LED Screen for Advert A is to start on January 1, and

The project plan for LED Screen for Advert A as follows:

Activity Start End Elapsed Time Number of Total Cost

Item
LED Screen Jan 1 May 31 5 months 500 RM100,000
for Advert A

A quick glance reveals that you budgeted RM200 a copy for LED Screen for Advert A (RM100,000 /
500 LED screen)

Suppose it’s the end of March, and you’re three months into the project. Here’s what has happened
as of March 31:

Activity Start Elapsed Time Number of Item Total Cost

LED Screen for Jan 1 3 months 150 RM45,000

Advert A

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ISP640 COMPUTING PROJECT MANAGEMENT

Your job is to figure out your schedule and cost performances to date and to update your forecast of
the total amount you’ll spend for LED Screen for Advert A. Follow these steps:

1. Determine the planned value (PV), earned value (EV), and actual cost (AC) for LED Screen for
advert A

PV = RM200 per LED Screen × 100 LED Screen per month × 3 months = RM60,000

EV = RM200 per LED Screen × 150 LED Screen = RM30,000

AC = RM45,000

2. Determine the schedule variance (SV), cost variance (CV), schedule performance index (SPI),
and cost performance index (CPI) for the production of LED Screen for Advert A. Explain your
results

SV = EV – PV = RM30,000 – RM60,000 = –RM30,000 (BEHIND SCHEDULE)

CV = EV – AC = RM30,000 – RM45,000 = –RM15,000 (OVER BUDGET)

SPI = EV / PV = RM30,000 / RM60,000 = 0.50 (BEHIND SCHEDULE)

CPI = EV / AC = RM30,000 / RM45,000 = 0.67 (COST OVERRUN)

3. Use SPI to estimate the completion time and how much longer it will take to finish this project.

(budgeted time / SPI)

Estimate completion time , 5 months/ 0.50 = 10 months

Thus, 10 months – 3 months = 7 more months to finish the product

QUESTION 1

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ISP640 COMPUTING PROJECT MANAGEMENT

Given the information for eight-months project, answer the following questions. The total
planned cost of the project is RM200,000. The table below shows the data collected to date. The
plan is for the project to be completed after eight months. The earned value report in the table
below shows the data that been collected for the first four months of the project.

The figures shown in the table are cumulative.

Month Planned Value (PV) Actual Cost (AC) Earned Value (EV)
1 10,000 10,000 10,000
2 30,000 20,000 25,000
3 50,000 50,000 60,000
4 70,000 90,000 70,000
5 130,000
6 170,000
7 190,000
8 200,000

a) What is the schedule performance index (SPI) and cost performance index (CPI) for month 3? In
month 3 is the project ahead or behind schedule? Is it under or over budget?

schedule performance index (SPI)

= EV/ PV
= 60,000/ 50,000
= 1.2 (AHEAD OF SCHEDULE

cost performance index (CPI)

= EV/ AC
= 60,000/ 50,000
= 1.2 (AHEAD OF SCHEDULE)

b) What is the cost variance (CV) and schedule variance (SV) for month 4? In month 4 is the project
ahead or behind schedule? Is it under or over budget?
cost variance (CV)
= EV – AC
= 70,000 – 90,000
= - RM20,000 (OVER BUDGET)

schedule variance (SV)

= EV – PV
= 70,000 – 70,000
= RM0 (RIGHT ON SCHEDULE)

c) What is the estimate at completion (EAC) at month 4 if the cost performance index will remain
the same for the remaining part of the project?

estimate at completion (EAC)

= 90,000 + ((200,000 – 70,000) / (70,000/90,000))
= 90,000 + (130,000/0.78)
= 90,000 + 166,666.67

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ISP640 COMPUTING PROJECT MANAGEMENT

= 256,666.67

d) During month 5, it is found that some of the work that was reported complete in month 2 was
considered unacceptable. It will require RM5,000 to fix the problem and make this work
acceptable. The work is scheduled to be done in month 6. No other work is reported to be
completed during month 5. What is the EV for month 5?

EV = 130,000 x 0 = 0

e) What factors need to be known in order to be able to calculate the Estimate to Complete (ETC)?

▪ Budget at completion (BAC)

▪ Earned value (EV)
▪ Actual Cost (AC)

f) Explain what happens during the process to determine the project budget.
The project budget can be either right on budget, over budget or under budget

QUESTION 2

Assume you have to complete project ABC within 6 months. Given the following information as part
of the payment received for one particular phase of a project ABC.

Planned Actual Earned

Value (RM) Cost (RM) Value (RM)
Phase 3 :Integration Testing

Test Integration of all modules 600.00 600.00 600.00

Identify components that do not meet specifications 300.00 500.00 225.00
Modify code 1,400.00 1,400.00 700.00
Retest integration of modules 400.00 400.00 300.00
Verify components meet standards 200.00 200.00 160.00

Payment 3 :

a) Perform the following and explain your results.

i. Cost Variance (CV)

= EV - AC
= RM1,985 - RM3,100
= - RM1,115 (OVER BUDGET)

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ISP640 COMPUTING PROJECT MANAGEMENT

ii. Schedule Variance (SV)

= EV – PV
= RM1,985 – RM2,900
= - RM915 (BEHIND SCHEDULE)

iii. Cost Performance Index (CPI)

= EV/ AC
= 1,985/ 3,100
= 0.64 (COST OVERRUN)

iv. Schedule Performance Index (SPI)

= EV/ PV
= 1,985/ 2,900
= 0.68 (BEHIND SCHEDULE)

v. Use the schedule performance index (SPI) to estimate the completion time and how much
longer it will take to finish this project.
= 6/ 0.68
= 8.82 months / 9 months

QUESTION 3

Given the following information on work break down structure project progress. Calculate the earned
value of each task and total.

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ISP640 COMPUTING PROJECT MANAGEMENT

Task Duration % task Rate Earned Value

completed (per week)
Identify 10 weeks 60 RM1200.00 7200
Requirement
System Design 3 weeks 9 RM300.00 81
Prototype 12 weeks 0 RM400.00 0
development
System 3 weeks 100 RM1000.00 3000
Testing
10281
Total Earned Value

i. Identify Requirement

= PV : 10 x 1200 : 12,000

= EV : 12,000 x (60/100)

= RM7,200

ii. System Design

= PV : 3 x 300 : 900

= EV : 900 x (9/100)

= RM81

iii. Prototype Development

= PV : 12 x 400 : 4,800

= EV : 4,800 x (0/100)

= RM0

iv. System Testing

= PV : 3 x 1,000 : 3,000

= EV : 3,000 x (100/100)

= RM3,000

Total Earn Value:

= 7,200 + 81 + 0 + 3,000

= RM10,281