1. Prepare a new budget assuming the scope changes had been made and a new baseline budget was updated. Use a graph to illustrate the changed plan and budget with the new shaft added including the excavation for the loading area at the shaft bottom. For this new budget and plan show the periodic expenditures as well as the cumulative.

The team at South African Gold Mine (SA) was tasked with sinking a 2000m deep ventilation shaft and excavating space for a station at the bottom. The plan was to sink the shaft within 20 months at a cost of R65,000 (about US $10,000) per meter of shaft depth. For the station at the bottom, 30,000 m3 of rock would have to be excavated within 3 months at a cost of R700 per cubic meter.The plan assumed a straight-line earned value over time. After the work had begun, the scope of the project was changed to include excavation for a new station halfway down the shaft (Figure 11.23) with a volume of 20,000 m. It was agreed that the additional work had to be done at the same excavation rate as the bottom station, but since removal of the rock required hoisting only 1,000 meters (as opposed to the 2000 meters for the bottom station), the team agreed on the cost of R500 per cubic meter for the new station. Since working space and other resources available would limit the amount of work that could be done simultaneously, everyone agreed that the new station would delay the sinking of the shaft. After 13 months, the shaft had reached a depth of 1.400 meters below surface and excavation for the halfway station was completed. The actual cost at this time was R90 million, which was more than was budgeted for the period. This aggravated a cash flow problem at that stage. The executive management requested an earned value report. Information on the relative amounts of time spent on excavating the new station and sinking the shaft was not available. Ventilation shaft New station Station at shaft bottom Figure 11.23 Mine shaft