Question

A project to build a new bridge seems to be going very well since the project is well ahead of schedule and costs seem to be running very low. A major milestone has been reached where the first two activities have been totally completed and the third activity is 63% complete. The planners were only expecting to be 52% through the third activity at this time. The first activity involves prepping the site for the bridge. It was expected that this would cost $1,422,000 and it was done for only $1,302,000. The second activity was the pouring of concrete for the bridge. This was expected to cost $10,502,000 but was actually done for $9,002,000. The third and final activity is the actual construction of the bridge superstructure. This was expected to cost a total of $8,502,000. To date they have spent $5,002,000 on the superstructure.Calculate the schedule variance, schedule performance index, and cost performance index for the project to date. (Round your "performance index" values to 3 decimal places.) Schedule variance $ Schedule performance index Cost performance index

Answer 1

Answer:

(1) $935,220

(2) 1.057

(3) 1.129

Explanation:

(1)

Planned value:

= Sum of expected cost of three activities

= $1,422,000 + $10,502,000 + $8,502,000 × 52%

= $1,422,000 + $10,502,000 + $4,421,040

= $16,345,040

Earned value:

= Sum of expected cost of three activities

= $1,422,000 + $10,502,000 + $8,502,000 × 63%

= $1,422,000 + $10,502,000 + $5,356,260

= $17,280,260

Schedule variance = Earned value - Planned value

                               = $17,280,260 - $16,345,040

                               = $935,220

(2)

Schedule performance index(SPI):

$=\frac{Earned\ value}{Planned\ value}$

$=\frac{17,280,260}{16,345,040}$

= 1.057

(3)

Actual cost = Sum of actual cost of three activities

                   = $1,302,000 + $9,002,000 + $5,002,000

                   = $15,306,000

$Cost\ performance\ index=\frac{Earned\ value}{Actual\ cost}$

$Cost\ performance\ index=\frac{17,280,260}{15,306,000}$

= 1.129