qso 420 4-2

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Southern New Hampshire University *

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400

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Industrial Engineering

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Apr 3, 2024

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docx

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Southern New Hampshire University 4-2 Final Project Milestone Two Prof. Smith Soucie, Joseph 3-31-2024

Calculations Next, I am going to demonstrate how to Earned Value (EV), Planned Value (PV), and Actual Cost (AC) are used to calculate Earned Value Management (EVM) measures: Cost Variance (CV), Cost Performance Index (CPI), Scheduled Variance (SV), Scheduled Performance Index (SPI), Estimated to Complete (ETC), Estimate at Completion (EAC) and finally Variance at Completion (VAC). Cost Variance has a direct relationship with the project budget. CV is the amount of the project’s budget deficit/surplus at any given time during the project duration. CV helps in the forecasting of the project completion. An example if the project EV is 150,000 times thirty five percent equals 52,500 dollars, the AC is 40,000 dollars, there for CV equals EV-AC so 52,500 dollars - 40,000 dollars come out to 12500 dollars which means the CV is positive and the project is under budget ( Planned Value, Earned Value & Actual Cost in Project Cost Management , 2021) . The Cost Performance Index is the measurement of the project’s cost efficiency of budgeted resources; this is expressed as the ratio of earned value to the actual cost of the project. CPI is considered to be one of the most vital metrics for the cost efficiency of the work that is completed. An example of CPI, CPI=EV/AC so 52500 divided by 40000 equals 1.31 with the projects CPI being >1 the project has cost underrun and the project is underbudgeted ( Planned Value, Earned Value & Actual Cost in Project Cost Management , 2021) .

Scheduled Variance analyzes the project performance in terms of how the project is going to be scheduled. This helps the project manager to understand whether the project is ahead of schedule or behind schedule during the duration of the project. An example of SV is the project that has been planned for 15 months with a budget of 150,000 dollars. The planned value is 150,000 dollars times twenty percent which comes out to 30,000 dollars and the Earned Value is 150,000 dollars times fifteen percent which equates to 22,500 dollars there for SV equals EV-PV which comes to -7500 dollars, which means the project is behind schedule and the project timeline will need to be extended ( Planned Value, Earned Value & Actual Cost in Project Cost Management , 2021) . Schedule Performance Index is the measurement of the project scheduled efficiency and is expressed by the ratio of EV to PV, this measurement also the efficiency of the project team and the accomplishment on the project. From the graph and the last example, 22,500 dollars divided by 30,000 dollars which equates to 0.75 with the variant <1, which means that the project is behind schedule ( Planned Value, Earned Value & Actual Cost in Project Cost Management , 2021).

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