Resource Leveling Using AIB's Tutorial
This kind of problem almost always finds its way onto the quiz and final. The topic is not well
covered in our reading, and is covered in a complex way in our Week-4 lecture, so I've created
this supplementary material and exercises to help explain the problem space and to introduce
some simple tools and procedures to handle them.
The idea of resource leveling is to handle resource conflicts in such a way as to minimize their
impacts on the project schedule and budget. In actual practice, this can be a complex and
multifaceted problem. In this course, we will boil it down to its essentials and simplify the
problem by constraining the possible solution sets.
In our study here, the solution to resource conflicts is to:
1) Increase resources (staff or equipment). This usually has impacts on the budget.
2) Serialize the conflicted tasks. That is, instead of doing two tasks at the same time with
the same resources, do one then the other. This usually has impacts on the schedule.
3) Split the conflicted task(s) up into multiple pieces to eliminate the conflict. Frequently
this is the lowest cost solution in terms of both budget and schedule (if allowed and
doable).
Let's review some sample problems and you will see what I mean
Problem #1
We are building an equity trade allocation system. The sponsor has made it clear that
we need to minimize project duration and (in order to provide continuity throughout the
project) the same individual must handle all activities under his or her discipline.
Activities on this project cannot be split.
So we need to find a solution that doesn't require new resources, doesn’t split tasks and
minimizes schedule increases. That suggests (or the author is trying to nudge you toward)
serializing the conflicted tasks (option 2 above).
DP George Integrated Cost and Schedule Control in Project Management
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Resource Leveling Using AIB's Tutorial
Here are the task details for this scenario.
Task
A
B
C
D
E
F
Duration
3 Weeks
2 Weeks
4 Weeks
2 Weeks
2 Weeks
1 Week
Predecessors
A
A
A
B
D
Resources/Rate
1 Database Specialist (Rate:$5000 a wk)
1 Prototype Builder (Rate:$4500 a wk)
1 Open Server Engineer (Rate:$4000 a wk)
1 Open Server Engineer (Rate:$4000 a wk)
1 GUI Developer (Rate:$3900 a wk)
1 QA Engineer (Rate:$3700 a wk)
The first thing we need to do is create an AIB and find the CP(s).
It looks like we have two Critical Paths ABE and AC. A quick review of the resources column
above shows that the only possible resource conflict is with the Open Server Engineer (since
that is the only resource used more than once). So Task C and Task D may be in conflict.
Task C starts on Week-3 and ends at the start of Week-7. Task D also starts on Week-3 and
ends at the start of Week-5. So we do have a problem! Clearly, the Open Server Engineer can't
be doing both tasks, full time, at the same time during weeks 3 and 4 . Our approach is to
serialize the tasks (make Task-D dependent on Task-C or make Task-C dependent on Task-D).
But which way is best? Well, the way to find out is to try them both.
DP George Integrated Cost and Schedule Control in Project Management
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Resource Leveling Using AIB's Tutorial
Here is what happens if we make Task-C dependent on Task-D to solve the over allocated Open
Server Engineer problem.
Here the Server Engineer first does Task D during weeks 3 through the beginning of Week-5 and
then does Task-C during weeks 5 - 9. This has the effect of lengthening the project from 7
weeks (as originally schedule) to 9 weeks. Let's try it the other way around, Task C THEN Task
D.
This solution is worse! We go from 7 weeks to 10 weeks. So the first option is the best solution
given our constraints. It cost us a two-week delay on the project effort.
DP George Integrated Cost and Schedule Control in Project Management
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Resource Leveling Using AIB's Tutorial
In this case, the schedule took a hit but not the budget. The budget remained the same
because the hours worked remained the same. In the original schedule the Open Server
Engineer was working 4 weeks on Task C and 2 weeks on task D. In the revised schedule the
hours are the same (and therefore the cost), but instead of working 8 hours a day on Task C and
at the same time working 8 hours a day on Task D (an unrealistic 16 hour day), those days no
longer overlap, increasing timeline but not budget.
Problem # 2
The Training Department at EasyMoney Investment Inc. has been asked to develop a
course on "laddering" insured taxable municipal bonds. The department only has the
resources available for the project shown in the table below. However, additional
personnel can be hired from an agency at a 75% cost premium if needed.
We need to identify any resource conflicts in the project. Document the tasks involved,
the time frame of the conflict(s), the personnel in conflict, and the number of people
involved.
Let's say that operations can be split if required. We need to find the least-costly method
of resolving the conflict(s), assuming the project duration must not be extended; we
need to determine what additional cost, if any, will be incurred.
Remember people, here are our primary options:
1) Increase resources (staff or equipment). This usually impacts on the budget.
2) Serialize the conflicted tasks. That is instead of doing two tasks at the same time with
the same resources, do one after the other. This usually impacts on the schedule.
3) Split the conflicted task(s) up into multiple pieces to eliminate the conflict. Frequently
this is the lowest cost solution in terms of both budget and schedule (if allowed).
Our approach should be to:
•
•
•
Build a fully populated AIB diagram from the data given
Determine if and where there are resource conflicts
Determine a resolution honoring the restrictions given. In this case, we can split tasks,
we can't extend the schedule, but we can add resources as required but at a hit to the
budget (a 75% premium!)
DP George Integrated Cost and Schedule Control in Project Management
4
Resource Leveling Using AIB's Tutorial
Task
A
B
C
D
E
F
Duration
4 Weeks
7 Weeks
5 Weeks
3 Weeks
4 Weeks
3 Weeks
Predecessors
--A
C
A
D and E
Resources
(1) Graphic Specialists / $260 day
(3) Course Developers / $200 day each
(3) Course Developers / $200 day each
(2) Tech Writers / $230 day each
(1) Graphic Specialists / $260 day
(3) Course Reviewers / $300 day
The first thing we need to do is create an AIB and find the CP(s).
Again, it is not hard to find the only possible resource conflict, since the only resources used
multiple times are the Course Developers. We can quickly see we have an issue with Tasks B
and C. Task B starts on Week-0 and runs until the start of Week-7 using all 3 course developers.
Unfortunately, Task C also uses all 3 course developers and runs from Week4 until the start of
Week -9. So we have a resource conflict on weeks 4, 5, and 6. Now, what do we do?! Think
about it. We could just add three more course developers for the overlapped period (at a 75%
premium over the current cost for a total of 175% of the hourly rate). However, is there
another less costly way? Remember our third primary option for resolving resource conflicts?
DP George Integrated Cost and Schedule Control in Project Management
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Resource Leveling Using AIB's Tutorial
How about we split Task B (since it's not part of Critical Path) and avoid the conflict all together!
There is no standard way to show a split task in an AIB so I just divided Task B into B1 and B2.
Now we have no resource conflicts at all. The first part of Task B starts on Week 0 and we stop
at the start of Week-4. Task C starts on Week-4 and is complete by the start of Week 9. Our
newly created Task B part 2 begins again on Week-9 and is complete by the start of Week 12.
No conflict, no extension of the schedule, or impact on the budget. Now let's have that
discussion about my annual bonus boss! Or not *sigh*
So now it's YOUR TURN. See my optional exercises in Doc Share. Trust me, come quiz and final time you
will thank me…
DP George Integrated Cost and Schedule Control in Project Management
6
Resource Leveling Using AIB's Non-Graded In Class Exercises
In class Non Graded Problem #1
The Training Department at EasyMoney Investment Inc. has been asked to develop an online
web based course covering the settlement process for U.S. based equity trades. The department
only has the resources available for the project shown in the table below and no other resources
are in the budget for this effort.
We need to identify any resource conflicts in the project. Document the tasks involved, the time
frame of the conflict(s), the personnel in conflict, and the number of people involved.
Let's say that operations cannot be split. We need to find the best method of resolving the
conflict(s) that extends the schedule as little as possible.
Task
Duration
Predecessors
Personnel/Cost
A
3 Weeks
--
(1) Systems Analyst / $1300 wk each
B
C
D
E
F
4 Weeks
4 Weeks
5 Weeks
7 Weeks
2 Weeks
-A
C
A
B, D ,E
(3) Course Developers / $1000 wk each
(2) Graphic Specialists / $1300 wk each
(2) Tech Writers / $1300 wk each
(2) Graphic Specialists / $1300 wk each
(3) Course Reviewers / $1500 wk each
DP George Integrated Cost and Schedule Control in Project Management
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Resource Leveling Using AIB's Non-Graded In Class Exercises
In class Non-Graded Problem #2
The Training Department at EasyMoney Investment Inc. has been asked to develop an online
web-based course covering the accounting process for Credit Default Swaps. The department
only has the resources available for the project shown in the table below. However, additional
personnel can be hired from an agency at an 80% cost premium if needed. We are firmly
committed to the schedule duration and it may not be lengthened.
We need to identify any resource conflicts in the project. Document the tasks involved, the time
frame of the conflict(s), the personnel in conflict, and the number of people involved.
Let's say that operations can be split. We need to find the best method of resolving the
conflict(s) that increases the budget as little as possible.
Activity
A
B
C
D
E
F
Duration
5 Weeks
16 Weeks
2 Weeks
18 Weeks
9 Weeks
10 Weeks
Predecessors
--A
C,E
A
B, E
Personnel / Cost
(1) Systems Analyst / $1300 wk each
(4) Course Developers / $1000 wk each
(2) Course Developers / $1000 wk each
(2) Tech Writers / $1300 wk each
(2) Graphic Specialists / $1300 wk each
(3) Course Reviewers / $1500 wk each
*There is a total of 4 Course Developers available
DP George Integrated Cost and Schedule Control in Project Management
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DeVry University
Keller Graduate School of Management
[name of your project]
Earned Value Analysis Essays
Submitted in Partial Fulfillment of the Course Requirements
for
PROJ592
Professor D.P. George
By: [place name here]
Date: [place date here]
Earned Value Analysis Advantages and Challenges Essay
[add your 4+ page essay on the challenges of EVA here]
2
References
[add your reference list here - two or more]
3
Earned Value Analysis of Your Project Essay
[add your 3 + page essay on EVA forecasting statistics and your project results here]
4
References
[add your reference list here]
5
Earned Value Forecasting
Click on the Slide Show menu item at the top the screen and then on the From
Beginning Icon To start slide show
THEN - just press the space bar to advance to the next slide or animation
DP George
Page 1
Earned Value Forecasting
So I’m attending the next monthly Senor Manager’s roundtable meeting and the Executive VP
of our division asks my collogue Henry “What is the forecast going forward for the American
Amalgamated Plant Project Henry?”
Henry looks like a deer caught in headlights. He knows better than to say “Oh the costs and
schedule should come out okay” or some other vague statement (especially knowing the state of the
project now (which is not good) AND remembering my inquisition from our last meeting) , So he just admits it…
I did the new EVA process so I can tell you where we are (SPI is .79 and CPI is .72), but I’m
not sure how to take those numbers and predict future progress! Everybody expects the boss
to explode - but she seems vaguely pleased…
Thank you Henry says she, I appreciate your honesty. I know that this process is new here
and it will take a bit of practice to get it to down to a routine. Don you have been advocating
EVA adoption for a while, why don’t you help Henry and the rest of us out and show us how
EVA is used for forecasting.
WHAT! How did I get into this mess! My mind is spinning. I’m thinking simultaneously about
George’s 5th law of project management (“No good deed goes unpunished”) and that I can’t afford to
blow this if I want to see EVA more widely adopted here…
So, I turn to Henry and ask him for his current EVA report – I need those numbers to proceed.
Then I step up to the white board in the front of the conference room and copy down the
following numbers…
DP George
Page 2
Earned Value Forecasting
1.0
1.1
1.2
1.3
1.4
1.5
Summary Task
American Amalgamated Proj
Design
Foundation
Secondary parking structure
Exterior Construction
Interior Buildout + Equip
Bgt Amt at
% of Bgt
Est. %
Completion
Time
PV
AC
complete
$5,134,000
$2,194,250 $2,409,000
$680,000
100%
$680,000
$725,000
100%
$525,000
60%
$315,000
$389,000
50%
$1,599,000
75% $1,199,250 $1,295,000
50%
$1,330,000
0%
$0
$0
0%
$1,000,000
0%
$0
$0
0%
Bgt Amt at
Completion
PV
AC
EV
SV
CV
SPI
$5,134,000 $2,194,250 $2,409,000 $1,742,000 ($452,250) ($667,000)
EV
$1,742,000
$680,000
$262,500
$799,500
$0
$0
CPI
0.79
0.72
With that chore out of the way, I tell the group that the first thing we need to understand is BAC
(Budget at Completion). What another acronym! Mike opines from the back of the room. (You
can always count on Mike I think to myself). Out loud I say. Yep! Sorry about that people, there are a
few more of these we need to get through, but it is worth it trust me.
BAC is just your total budget for the effort I tell the group. “In this case that is $5,134,000.
What we need however is an updated EAC (Estimate at Completion) which is our calculation
of what this thing is actually going to cost given where we are NOW and what lies ahead. It’s
our best analysis of the actual project costs numbers at completion.” I hear a groan from where Mike is,
but a single look from the boss stopped that in its tracks.
However, there are lots of ways to calculate EAC depending on our assessment of the effort to
date and our view of the future. I look over at Mike, but as soon as I do he looks down guiltily I don’t think I will
be hearing from him again soon!
DP George
Page 3
Earned Value Forecasting
1.0
1.1
1.2
1.3
1.4
1.5
Summary Task
American Amalgamated Proj
Design
Foundation
Secondary parking structure
Exterior Construction
Interior Buildout + Equip
Bgt Amt at
% of Bgt
Est. %
Completion
Time
PV
AC
complete
$5,134,000
$2,194,250 $2,409,000
$680,000
100%
$680,000
$725,000
100%
$525,000
60%
$315,000
$389,000
50%
$1,599,000
75% $1,199,250 $1,295,000
50%
$1,330,000
0%
$0
$0
0%
$1,000,000
0%
$0
$0
0%
Bgt Amt at
Completion
PV
AC
EV
SV
CV
SPI
$5,134,000 $2,194,250 $2,409,000 $1,742,000 ($452,250) ($667,000)
EV
$1,742,000
$680,000
$262,500
$799,500
$0
$0
CPI
0.79
0.72
If we think that the performance we have experienced so far in the project through all the
design work, foundation activities, and the work on the secondary parking structure
construction is an accurate indicator of the way forward budget wise and we are okay with the
current schedule performance then we can calculate our estimate at completion (EAC) as:
EAC = BAC / CPI
EAC = $5,134,000 / .72
EAC = $7,130,555.55
So the boss says (not looking at me but at the group assembled) “What we are saying with this approach is we
anticipate the same cost efficiency going forward as we have seen to date, so that efficiency (.72)
applied to our base budget get’s us to a new estimated cost of $7.1Million. Since we have already
spent 2.4 Million that leaves around 4.7 million of additional commitment.
Yes ! (I say seizing the moment.) The ETC (estimate to complete) is just EAC - AC in this case it’s
$7,099,773.82 – $2,409,000 or $4,721,555.55
DP George
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Earned Value Forecasting
Bgt Amt at
Completion
PV
AC
EV
SV
CV
SPI
$5,134,000 $2,194,250 $2,409,000 $1,742,000 ($452,250) ($667,000)
CPI
0.79
0.72
Moving forward while I have their complete attention, I say…If we think that the performance
we have experienced so far in the project through all the design work, foundation activities,
and the work on the secondary parking structure construction is NOT an accurate indicator of
the way forward. If we think that things will quickly return to our original plan budget wise now
that the debacle of the parking structure snafu behind us… We can calculate our EAC as:
EAC = AC + (BAC – EV)
EAC = $2,409,000 + ($5,134,000 – $1,742,000)
EAC = $2,409,000 + $3,392,000
EAC = $5,801,000
The boss tells the group (continuing her role as chief explainer…) “What we are saying with THIS
approach is we first calculate what we have left to spend. We calculate that by taking our
entire budget (the BAC) and subtract from it the budgeted spend for the estimated actual
progress to date (our EV). The reminder being what we have left to spend on this effort from
our original budget. We add that to what we have actually spent to date (our AC) and the total
is our new estimate as completion EAC.
Well said (I thought but did not say…) What I did say (while writing furiously on the white board) was … Yes, and
doing it this way we see an Estimate to Complete (ETC) of EAC - AC
or $5,801,000 - $2,409,000 = $3,392,000. This in comparison to the 4.6 million for our first
calculation. But there are a couple of other scenarios we need to examine…
DP George
Page 5
Earned Value Forecasting
Bgt Amt at
Completion
PV
AC
EV
SV
CV
SPI
$5,134,000 $2,194,250 $2,409,000 $1,742,000 ($452,250) ($667,000)
CPI
0.79
0.72
If we think that the performance we have experienced so far in the project has shown our
original estimates to be grossly out of line with current building costs and code requirements
(we always knew that using the original plant build costs from 12 years ago was a problematic
approach)… We should calculate our EAC as:
EAC = AC + Bottom up estimate to completion
“I figured we would get here sooner or later” the boss opined. “What we are saying with THIS
approach is we need to stop and re-estimate all the REMAINING detail tasks, then sum them
up to get a new estimate of future costs and then ADD them to what we have spent so far to
get a brand new EAC.”
Well.. In truth we never really estimated the detailed costs in the first place” I reminded the
group. We mostly took the total from the original build multiplied it by an inflation factor and
ALLOCATED the cost downward…
Probably NOT my best move here. Reminding people “the emperor has no clothes” does NOT make you a popular
In any case, if this is our best assessment of the facts on the ground
at this point, then Henry needs to get with his people and re-estimate, then get back to us
with his new EAC.
guy so I moved rapidly on…
“Wait..” Says Henry – looking a bit pale. “Didn’t you say there was one more approach we
should consider?” Right you are Henry, the boss and I say simultaneously (which got a chuckle
from the group – which was badly needed about then)
DP George
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Earned Value Forecasting
The last one goes like this (I tell the group) If we think both the schedule performance and budget
performance are accurately telling us what is happening, then re-estimation is just going to
confirm that fact and waste more time, money, and effort to add to the problem. If we can’t
move the completion date (and we can all agree that is something we REALLY need to avoid)
then we can use what we know to be case (our current efficiencies) and project them through
until the end). If we do that then our EAC is calculated as:
EAC = AC + {(BAC - EV)/(CPI x SPI)}
“You left out the phases of the moon! Mike spat out from the back of the room. That looks like
alphabet soup! Look I manage a production operation I’m not a statistician!” I knew Mike couldn’t
stay quiet forever, I told him --- Wait Mike, let me explain this formula. You guys can follow this
stuff just fine! We just need to take it one step at a time.
First of all we have AC. That is just our actual costs to date in the project – right? Right!
To that we add our budget adjusted for how much we have used up for the progress we have
made so far. That is just BAC – EV as we have seen in earlier versions of EAC calculations.
Yes?!
But if we JUST did that we would NOT have adjusted from our original budget assumptions to
what we are finding on the ground in terms of budget expense and schedule progress. To do
THAT we need to adjust the (BAC – EV) by how efficient we our with our budget AND our
schedule which is the product of CPI and SPI.
“So it goes like this…”
DP George
Page 7
Earned Value Forecasting
Bgt Amt at
Completion
PV
AC
EV
SV
CV
SPI
$5,134,000 $2,194,250 $2,409,000 $1,742,000 ($452,250) ($667,000)
CPI
0.79
0.72
EAC = AC + {(BAC - EV)/(CPI x SPI)}
EAC = $2,409,000 + {($5,134,000 - $1,742,000) / (CPI x SPI)}
EAC = $2,409,000 + {($5,134,000 - $1,742,000) / (.72 x .79)}
EAC = $2,409,000 + ($3,392,000 / .57)
At this point $2,409,000 is how much we have actually spent so far. Our AC.
$3,392,000 is how much of our budget we have left to use BAC - EV
.57 is our combined schedule and budget efficiency. It is the rate we have been progressing
in the schedule and using up the budget CPI x SPI
When we apply that combined efficiency rate (by dividing the rate into the remainder of our budget) we get a
projected budget of $5,908,570.87 If we then add THAT to our cost so far we get…
EAC = $8,317,570.87 or around $8,318,000
EAC = $2,409,000 + $5,908,570.87
“So in this last version” the boss summarized. “We have a total cost of 8.3 Million gives us an
estimated cost to complete this effort of what?... About 6 Million. Correct?!
YES I reply! (boy am I glad she seems to be on my side!) the number is actually EAC - AC =
$8,317,570.87 - $2,409,000 = $5,908,570.87. To summarize our options I say (turning and
pointing to a list I’ve been maintaining on the side) Here are our choices…
DP George
Page 8
Earned Value Forecasting
Equation
1 EAC = (BAC/CPI)
EAC = $5,134,000 / .72
$7,099,773.82 = $5,134,000 / .72
EAC = $7,099,773.82 or around $7,100,000
ETC = EAC – AC = $4,690,773.82 or around $4,691,000
2 EAC = AC + (BAC – EV)
EAC = $2,409,000 + ($5,134,000 – $1,742,000)
EAC = $2,409,000 + $3,392,000
EAC = $5,801,000
ETC = EAC – AC = $3,392,000.
3 EAC = AC + Bottom up estimate to completion
EAC = $2,409,000 + Bottom up estimate to completion
4 EAC = AC + {(BAC - EV)/(CPI x SPI)}
EAC = $2,409,000 + {($5,134,000 - $1,742,000) / (CPI x SPI)}
EAC = $2,409,000 + {($5,134,000 - $1,742,000) / (.72 x .79)}
EAC = $2,409,000 + ($3,392,000 / .57)
EAC = $2,409,000 + $5,908,570.87
EAC = $8,317,570.87 or around $8,317,600
ETC = EAC – AC = $5,908,570.87. or around $5,909,000
When to use
Cost performance won't change, so we will modify the budget to
accommodate using the CPI as a modifying factor. Applying it to the
remainder of the project assumes we will continue at the same rate of
cost efficiency. (PMBOK Guide 5th Ed, 2013, pg 220)
Our project is experiencing variances and indexes that may not be what
was expected. However, you believe these atypical variances are not
going to continue and that the project performance will likely
improve. future spending will be at the original, planned spending
th
rate. (PMBOK Guide 5 Ed, 2013, pg 220)
Our estimations were fundamentally flawed. Thus, the indexes we
created during project planning are of little use in predicting future costs
for the project. This requires an entire re-estimation of project costs
to completion. (PMBOK Guide 5th Ed, 2013, pg 221)
Cost performance and schedule performance won't change ,and we can't
move the date; we will increase the budget if needed. We think the CPI
th
and SPI are predictive going forward. . (PMBOK Guide 5 Ed, 2013, pg
221
“Choices? Choices! Did you say we have a choice here Don? We don’t get to choose! Only
one of these scenarios most closely matches the facts at hand” the boss said with her
accustomed passion. DARN, I thought I had got through this without being raked over the coals! *sigh*
“Your right of course – bad choice of words as it were.” I said before anyone else could pile
on. So people, which of these scenarios is the most correct do we think?
SILENCE man you could hear a pin drop!!
DP George
Page 9
Earned Value Forecasting
Equation
1 EAC = (BAC/CPI)
EAC = $5,134,000 / .72
$7,099,773.82 = $5,134,000 / .72
EAC = $7,099,773.82 or around $7,100,000
ETC = EAC – AC = $4,690,773.82 or around $4,691,000
2 EAC = AC + (BAC – EV)
EAC = $2,409,000 + ($5,134,000 – $1,742,000)
EAC = $2,409,000 + $3,392,000
EAC = $5,801,000
ETC = EAC – AC = $3,392,000.
3 EAC = AC + Bottom up estimate to completion
EAC = $2,409,000 + Bottom up estimate to completion
4 EAC = AC + {(BAC - EV)/(CPI x SPI)}
EAC = $2,409,000 + {($5,134,000 - $1,742,000) / (CPI x SPI)}
EAC = $2,409,000 + {($5,134,000 - $1,742,000) / (.72 x .79)}
EAC = $2,409,000 + ($3,392,000 / .57)
EAC = $2,409,000 + $5,908,570.87
EAC = $8,317,570.87 or around $8,317,600
ETC = EAC – AC = $5,908,570.87. or around $5,909,000
When to use
Cost performance won't change, so we will modify the budget to
accommodate using the CPI as a modifying factor. Applying it to the
remainder of the project assumes we will continue at the same rate of
cost efficiency. (PMBOK Guide 5th Ed, 2013, pg 220)
Our project is experiencing variances and indexes that may not be what
was expected. However, you believe these atypical variances are not
going to continue and that the project performance will likely
improve. future spending will be at the original, planned spending
th
rate. (PMBOK Guide 5 Ed, 2013, pg 220)
Our estimations were fundamentally flawed. Thus, the indexes we
created during project planning are of little use in predicting future costs
for the project. This requires an entire re-estimation of project costs
to completion. (PMBOK Guide 5th Ed, 2013, pg 221)
Cost performance and schedule performance won't change ,and we can't
move the date; we will increase the budget if needed. We think the CPI
th
and SPI are predictive going forward. . (PMBOK Guide 5 Ed, 2013, pg
221
“Okay staff that was probably an unfair question” the boss finally chipped in. “Henry this is
your problem” The boss said staring at the increasingly uncomfortable Senior Manager. “By
the next roundtable meeting I need a formal fact based presentation as to what model you
plan to use and WHY!” “You bet” Henry replied (with more fervor than I think he was really
feeling). He will be okay I’m thinking, he really is a talented guy with a real challenge for a project!
Okay people, our time has run out – see most of you later for the EPIC demo” Here we go again. I’m
out of the kettle and into the fire! *sigh*
DP George
Page 10
Week 6 EVA Forecasting in-class Exercise Problem
We have been using EVA for the Acme project from the beginning. Here is the status of the effort
to date:
Task
Phase 1
Phase 2
Phase 3
Acme Project
% of Schedule
100%
75%
10%
% Complete
100%
60%
5%
Budgeted Amount
$500,000
$1,675,000
$3,100,000
$5,275,000
Cost to Date
$678,950
$1,435,663
$321,120
$2,435,733
As can be seen, these phases overlap. Phase 1 is completed. However, Phase 2 and 3 or in execution.
75% of the scheduled time has passed for Phase 2, but it is an estimated 60% complete. Phase 3 has
just begun with only 10% of its schedule passed and an estimated 5% complete.
QUESTION #1
What are the AC, PV, EV, SV, SPI, and CPI values for the Acme project as of the last reporting period
(meaning now)?
Question #2
What is are the EAC and ETC values IF:
a) We assume performance won't change, so we will modify the budget to accommodate using the
CPI as a modifying factor. Applying it to the remainder of the project assumes we will continue at
the same rate of cost efficiency.
b) We assume our project is experiencing atypical variances that is NOT going to continue and that
the project performance will likely improve. Future spending will be at the original, planned
spending rate.
c) We assume we can't move the date; we will increase the budget if needed. We think the CPI
and SPI are predictive going forward.
D.P. George
1
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