Tutorial

1. What is meant by a sunk cost? Give examples of typical sunk costs for an IT project as well as examples from your personal life. Why is it difficult for people to ignore them when they should?

2. Explain what happens during the process to determine the project budget.

3. Given the following information for a one-year project, answer the following questions.

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 of schedule or behind schedule? Is it under budget or overbudget?

c. Use the CPI to calculate the estimate at completion (EAC) for this project. Is the projectperforming better or worse than planned?

d. Use the SPI to estimate how long it will take to finish this project.