APA Styles, double spacing.
Project Performance
Monitoring and controlling a project including preparing project performance reports, are some of the
most important tasks a project manager will perform. The requirements for performance reporting will be
determined by the stakeholders and should be documented in the project plan. Earned value analysis is
one technique for determining how a project is performing. The results of earned value analysis are key
inputs to stakeholder reporting which, in turn, are used to make decisions about the project.
Scenario for the Discussion
Refer to question #27 on page 266 of the Mantel text.
After considering the scenario, post by Day 3 your response to the following questions:
�What is your assessment of the performance of the project?
�What metrics did you use to come to your conclusion about the performance of the project?
�What do you think should be communicated to the stakeholders? Why?
BUSINESS 2
Business
Name
Institution
Date
- The following project is at the end of its sixth week. Find the cost and schedule variances.
Also find the CPI and SPI. Then find the critical ratio of the project using earned value
calculations. Finally, calculate the ETC and EAC for the project
Activity Predecessors Duration (wks) Budget ($) Actual Cost ($) %Complete
a — ———– 2 300 400 100
b — 3 200 180 100
c a 2 250 300 100
BUSINESS 3
d a 5 600 400 20
e b, c 4 400 200 20
The Cost Variance (CV) is arrived at by finding the difference between the Earned Value
(EV) and the Actual Cost (AC). The Earned Value (EV) is a sum of the Actual Completion
(AC) (in percentage) and the Budget at Completion (BAC) (Bible, Bivins & Susan, 2011)
Activity‘d’ CV = EV – AC; Therefore EV = Actual Completion (%) X BAC
= 20% X 400
= 80
Activity‘d’ CV = 80 – 400
= -320
Activity‘e’ CV = EV – AC; Therefore EV = Actual Completion (%) X BAC
= 20% X 200
= 40
Activity‘e’ CV = 40 – 200
= -160
The Scheduled Variance (SV) is calculated by getting the difference between the
Expected Value and the Planned Value (PV). On its part the PV is a sum of the Planned
Completion (in percentage) and the BAC (Bible, Bivins & Susan, 2011)
Activity‘d’ SV = EV – PV; Therefore PV = Planned Completion (%) X BAC
= 20% X 600
= 120
Activity‘d’ SV = 120 – 600
BUSINESS 4
= -480
Activity‘e’ SV = EV – PV; Therefore PV = Planned Completion (%) X BAC
= 20% X 400
= 80
Activity‘e’ SV = 80 – 400
= -320
Cost Performance Indicator (CPI) is an index that reveals the efficiency in resource
utilization on the project (Bible, Bivins & Susan, 2011). The CPI is the value of dividing the
Earned Value (EV) with the Actual Cost (AC)
CPI (Activity d) = EV / AC
= 80 / 400
= 0.2
CPI (Activity e) = EV / AC
= 40 / 200
= 0.2
The Scheduled Performance Indicator (SPI) is an index that is used to show the efficiency
of the time utilized of the project (Sanchez, & Robert, 2010). It is a result of dividing Earned
Value with the Planned Value
SPI (Activity d) = EV / PV
= 80 / 600
= 0.13
SPI (Activity e) = EV / PV
= 40 / 400
BUSINESS 5
= 0.1
Estimate to Complete (ETC) refers to the estimated cost required to complete the
remainder of the project (Sanchez, & Robert, 2010). ETC = Budget at Completion (BAC) –
Actual costs to date (AC)
Activity d= 600 / 400 = 1.5
Activity e= 400 / 200 = 2.0
Estimate at Completion (EAC) refers to the present day estimate of the total cost of the
project. It is arrived at by getting the difference between the approved budget for the whole task
and the cost variance of the work done to date (Sanchez, & Robert, 2010)
Activity d = Budget at completion (BAC) + Actual Cost (AC) – Earned Value (EV)
= 600 + 400 – 80
= 920
Activity e = Budget at completion (BAC) + Actual Cost (AC) – Earned Value (EV)
= 400 + 200 – 40
= 560
The project is experiencing very poor performance. For starters, the projects is running
over budget and behind schedule. This makes the project more expensive in the long run. In
addition to having the project over budget and behind schedule, the project has not gained the
expected value thus the value of project thus far is below the expectations.
The stakeholders need to know the current state of the project. They need to internalize
their exposure to project risk. Additionally, the stakeholders need to know the value of their
investment so that they can judge whether the management is generating the best value for their
investment and if they are using the available scarce resources efficiently (Eden, Ackermann &
BUSINESS 6
Williams, 2005). To the stakeholders the information accessible to them assists them make
informed decision about the organization.
BUSINESS 7
References
Bible, Michael J., Bivins, Susan S. (2011). Mastering Project Portfolio Management: A Systems
Approach to Achieving Strategic Objectives. Fort Lauderdale, Florida. J Ross Publishing,
Inc.
Eden, C., Ackermann, F. and Williams, T. (2005) The amoebic growth of project costs. Project
Management Journal, Vol. 36, No. 2, pp.15–27.
Sanchez, H., & Robert, B. (2010). Measuring portfolio strategic performance using key
performance indicators. Project Management Journal, Vol. 41 No. 5, 64-73
