Chapter 7 Discussion Question 6

1. Explain how earned value management (EVM) can be used to control costs and measure project performance and speculate as to why it is not used more often. What are some general rules of thumb for deciding if cost variance, schedule variance, cost performance index, and schedule performance index numbers are good or bad?

2. Given the following information for a one-year project, answer the following questions. Recall that PV is the planned value. EV is the earned value, AC is the actual cost, and BAC is the budget at completion.

PV = $23,000

EV = $20,000

AC = $25,000

BAC = $120,000

a. What is the cost variance, schedule variance, cost performance index (CPI),

and schedule performance index (SPI) for the project?

b. How is the project doing? Is it ahead or schedule or behind schedule? Is it under

budget or over budget?

c. Use the CPI to calculate the estimate at completion (EAC) for this project. Is the

project performing better or worse than planned?

d. Use the schedule performance index (SPI) to estimate how long it will take to

finish this project.

e. Sketch the earned value chart based for this project, using Figure 7-5 as a guide.