Earned Value Road Problem

Earned Value Road Problem
July 1, 2019
Table of Contents
1. Cumulative Cost, CPI and SPI ................................................................................................ 3
2. Plotting Quantities ................................................................................................................... 3
a. Planned vs Actual vs Earned................................................................................................ 3
b. CPI vs SPI ............................................................................................................................ 4
3. Cost Estimation .................................................................................................................... 4
4. Letter ........................................................................................................................................ 6
5. References ............................................................................................................................... 8
Earnd Value Road Problem 3
1. Cumulative Cost, CPI and SPI
Month Miles Completed Cost Cumulative Cost CPI SPI
Planned Earned Planned Actual Earned Planned Actual Earned

1 0.77 $147,000 $147,000 $173,531 $147,000 $147,000 $147,000 $173,531 0.85 1.00
2 0.77 $147,000 $118,364 $161,171 $118,364 $294,000 $265,364 $335,242 0.79 0.90
3 0.77 $147,000 $122,182 $154,089 $122,182 $441,000 $387,545 $489,331 0.79 0.88
4 0.77 $147,000 $137,455 $199,213 $137,455 $588,000 $525,000 $688,544 0.76 0.88
2. Plotting Quantities
a. Planned vs Actual vs Earned
Fig.1: Planned vs Actual cs Earned (Cost)

Fig.2: Planned vs Actual cs Earned (Cumulative Cost)
b. CPI vs SPI
Fig.3: SPI vs CPI
3. Cost Estimation
In order to estimate the cost, estimation will be performed at completion and the first method
used for cost estimation is calculating EAC for each month
EAC = Budget/CPI
EAC (1) = $147,000/0.85 = $172,941
EAC (2) = $147,000/0.79 = $186,075
EAC (3) = $147,000 /0.79 = $186,075
EAC (4) = $147,000/0.76 = $193,421
So, the budget estimate at 4th month will be $193, 421 which means the project will be $46,421
overbudget and 26.5% budget will be overrun.
Other method is used to plot the value of the budget and EAC in the graph to trach the progress
and performance of the budget.
Fig.4: Estimating Final Budget
The above graph shows that value EAC is rising which mean current value of EAC will be
considered as an optimistic value and cost of project will be likely to cost more than predicted
EAC.
Letter
Nexus Construction
July 1, 2019
The Honorable Marty Walsh
Boston Mayor
Royal Albert Hall, Office 157
Boston
Re: Update for Road Project for Route I93
Dear Sir,
Hope you’re doing well I am writing this letter in the response of your request which I want
to present in detail, update along with the honest assessment of project where we are standing now.
Fourth month of our project is complete out of 10 months of planned project and ultimately,
the performance of the company will be less than the stellar on both cost and schedule progress of
the project. We have planned 0.77 miles per month for re-pavement and till 4th month we have to
complete 3.08 miles but our team have just completed 2.75 miles
Cost planned to spend on the project is $147,000 per month so we have $558,000 for four
months to spend. Hence, cumulative actual cost is $688,544 and Cumulative Earned Value is $525,
001 and that result in the negative cost variance and project is $163,543 will be over budget after
four months. This indicate that efficiency of project is very poor and SPI indicates that 89%
efficiency will be advanced at schedule. CPI indicate the cost efficiency is desirable.
Some projections are made to determine the project and current estimate at completion
(EAC) is $193,421 and I would like to information you that improvement in efficiency can help
us to get back on the track but there will be need of improvement in efficiency of cost which is
substantial. Therefore, this will be the sad state of the project, hopefully you cannot find this as
poor time management when I can remind you about the earlies disapproval for the contractor of
our choice. This method can be used to emphasis the ability to verify the commitment of petitioners
during process of biding. Choosing the most reliable individual for the team over low-rate bidder
can surely result in the better performance overall.
My calculation indicate that project is in trouble after the 2nd month also I have alerted you
in the start and I am really sorry for the inconvenience. So, I would recommend and request you
that we can arrange the meeting with engineers and contractors as soon as possible when you’re
free in order to review that how we can correct the mistake in project
Best Wishes,
Nexus, Corp.
References
Heerkens, G. R. (2015). Project management. Place of publication not identified: Mcgraw-Hill
Education.
Kerzner, H. (2017). Project management: A systems approach to planning, scheduling, and
controlling.
PROJECT, M. A., & Project Management Institute (U.S.). (2018). GUIDE TO THE PROJECT
MANAGEMENT BODY OF KNOWLEDGE.

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Earned Value Road Problem

1. Cumulative Cost, CPI and SPI ................................................................................................ 3

2. Plotting Quantities ................................................................................................................... 3

a. Planned vs Actual vs Earned................................................................................................ 3

b. CPI vs SPI ............................................................................................................................ 4

3. Cost Estimation .................................................................................................................... 4

1. Cumulative Cost, CPI and SPI

Month Miles Completed Cost Cumulative Cost CPI SPI

Planned Earned Planned Actual Earned Planned Actual Earned

a. Planned vs Actual vs Earned

Fig.1: Planned vs Actual cs Earned (Cost)

Fig.2: Planned vs Actual cs Earned (Cumulative Cost)

Fig.3: SPI vs CPI

used for cost estimation is calculating EAC for each month

EAC (1) = $147,000/0.85 = $172,941

EAC (2) = $147,000/0.79 = $186,075

EAC (3) = $147,000 /0.79 = $186,075

EAC (4) = $147,000/0.76 = $193,421

overbudget and 26.5% budget will be overrun.

and performance of the budget.

Fig.4: Estimating Final Budget

The Honorable Marty Walsh

Royal Albert Hall, Office 157

Re: Update for Road Project for Route I93

can surely result in the better performance overall.

Heerkens, G. R. (2015). Project management. Place of publication not identified: Mcgraw-Hill

Kerzner, H. (2017). Project management: A systems approach to planning, scheduling, and

MANAGEMENT BODY OF KNOWLEDGE.

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