Earned Value Analysis

1.A project manager learns that her project has an EV of 1200, AC of 1100 and PV of
1000. What can the project manager report regarding this project?
The project has a position CV of $100. This indicates that $100 less was spent on actual
work performed than what was planned. The project has a positive SV of $200. This
indicates that $200 worth of work has been completed that wasn't planned at this time. In
order to be sure that this work includes critical activities, the project manager must look
at the tracking Gantt chart. Efficiency indexes can also be reported and interpreted. CPI =
1.09 and the SPI is 1.2.

The earned value system starts with the time-phased costs that provide the project budget baseline,
which is called the planned budgeted value of the work scheduled (PV). Given this time-phased
baseline, comparisons are made with actual and planned schedule and costs using earned value. The
earned value approach provides the missing links not found in conventional cost-budget systems.

2.The earned value of a project is the Percent of the original budget that has been earned by
actual work
Earned value for a task is simply the percent complete times its original budget. Stated differently, EV is
the percent of the original budget that has been earned by actual work completed.

3.The cost variance for a project is calculated by EV - AC

The cost variance is the difference between the planned value of work actually done (EV) and the actual
cost of work actually done (AC). The cost variance for a project is calculated EV - AC.

4.The schedule variance for a project is calculated by: EV - PV

The schedule variance is the difference between the planned value of work actually done (EV) and the
planned value of work that was planned to be done (PV). The schedule variance for a project is
calculated EV - PV.

5.Which of the following methods will measure the cost efficiency of the work accomplished to
date? EV/AC

6.Which of the following methods will measure the scheduling efficiency of the work
accomplished to date? EV/PV

7.Which performance index is the most potentially misleading? SV

Many times it is determined that a positive SV indicates the project is ahead of schedule and a negative
SV indicates that a project is behind schedule. This is not always the case. Schedule variance does
indicate whether or not the work that was planned to be completed has been completed, but it doesn't tell
you if that work is critical or not. If more work than what was planned was completed, but this work was
noncritical, it is possible to have a positive SV and still be behind schedule.

8.Which of the following are required to assess the current status of a project using the earned-
value cost/schedule system? PV, EV, and AC

Assessing the current status of a project using the earned value cost/schedule system requires three data
elements—planned cost of the work scheduled (PV), budgeted cost of the work completed (EV), and
actual cost of the work completed (AC).

9.Which of the following methods will measure the cost efficiency of the work accomplished to
date? EV/AC

The CPI is the cost performance index that measures the cost efficiency of the project. Cost performance
index (CPI) = EV/AC.

10.Which of the following methods will measure the scheduling efficiency of the work
accomplished to date? EV/PV

The SPI is the schedule performance index that measures scheduling efficiency. Scheduling
performance index (SPI) = EV/PV.

11.A CPI or SPI value less than one indicates that the project is Over cost or behind schedule

An index of 1 indicates progress as planned. An index greater than 1 shows progress is better than
expected. An index less than 1 suggests progress is poorer than planned and deserves attention.

12.The value that tells you the planned value of work that has actually been completed is the EV

The value that tells you the planned value of work that has actually been completed is the earned value.
It is the percent complete multiplied by the original budget.

13.A project manager learns that the project is only earning $.90 of planned work for each dollar
spent by looking at the CPI

A CPI of .90 would indicate that the project is earning $.90 of planned work for each dollar spent

14.A project manager notices that $1,000 worth of work that was scheduled to be completed at this
time has not been accomplished. They know this by looking at the SV

A SV of -1000 would indicate that $1,000 worth of work that was scheduled to be completed at this time
has not been accomplished.
 15.Molly receives the following information on her project: PV = 100, AC = 75, EV = 100. How
well is the project doing in terms of budget? 25 under budget

To find out how well this project is doing in terms of budget, the CV will need to be calculated by
subtracting AC from EV. The result is a positive 25, which indicates that this project has spent $25 less
than planned on actual work completed.

16.Tom receives the following information on his project: PV = 1000, EV = 1200, AC = 800, BAC
= 2000, EAC = 1333. How is the project doing in terms of schedule? More work has been done
than planned

To find out how well this project is doing in terms of schedule, the SV will need to be calculated by
subtracting PV from EV. The result is a positive 200, which indicates that $200 more worth of work has
been completed than planned.

17.Carol notices that the current EV for her project is higher than both the PV and the AC. Carol
has reason to be concerned. False

When the EV is higher than the PV and the AC, this results in positive cost and schedule variances. This
indicates that the project is progressing well in terms of cost. Rachel should check her tracking Gantt
chart to make sure critical activities are progressing well.
18.Assume you have collected the following data for your project. Its budget is $75,000 and it
is expected to last 4 months. After two months, you have calculated the following information
PV = about$45,000
the project:
EV = $38,500
AC = $37,000

1. Calculate the SPI and CPI.

Solution:
SPI = EV/PV = $38,500/45,000 = .86
 
CPI = EV/AC = $38,500/37,000 = 1.04
 
Estimated Time to Completion = (1/.86) x 4 months = 4.65 months
 
Estimated Cost to Completion = (1/1.04) x $75,000 = $72,078
 
The findings are a bit of good news and a bit of bad. The good news is that your estimated cost
to completion is lower than the original budget; however, the bad news is that the project is
behind schedule and is likely to take 4.65 months to complete, rather than the originally planned
4 months