Earned Value Analysis and Project Performance Assessment: Cost and Schedule Variance Evaluation
Overview
This paper analyzes project performance metrics on day 51 using earned value management techniques. It calculates cost variance, schedule variance, and cost performance index to assess project status and identifies critical issues with budget overruns and cost-completion misalignment that require corrective action.
What this coursework covers
- Earned Value Calculations: Computation of CV, SV, and CPI metrics using provided project data
- Performance Assessment: Interpretation of negative cost variance and positive schedule variance indicators
- Risk Analysis: Discussion of over-budget conditions and resource shortage implications
- Recommendations: Emphasis on integrated improvement across budget, schedule, and cost components
Preview
Project Planning
On day 51, a project has an earned value of $600, an actual cost of $650, and a planned cost of $560. Compute the SV, CV, and CPI for the project. What is your assessment of the project on day 51?
CV (Coefficient of Variation) = 600 – 650 = -50
SV (Stochastic Volatility) = 600 – 560 = 40
CPI (Consumer Price Index) = 600/650 = 0.92
The negative coefficient variation, -50, is an indication that the project has been over-budgeted. However, the stochastic volatility, 40, is positive, implying that the execution of the project is right on schedule. The consumer price index, 0.92, shows that the cost for the completion of the project is higher than the planned cost. Budgeting, cost of completion, and completing as scheduled are vital tenets for successfully implementing the project. The project must be correctly budgeted for by preventing the problems of under or over budget. The cost of completion of the project also needs to match the planned cost. Therefore, though the project is currently on schedule, if the problem of over-budget and imbalance between the cost of completion and planned are not addressed, then it might be impossible for it to be successfully implemented. Over-budget might promote fraudulent activities during the implementation of the project, which subjects it to the risk of consequent failure.