Earned Value Analysis for Project Management Institute Exams

Module 5, Critical Thinking
Option #1: Earned Value Analysis for Project Management Institute Exams
Given a project with the following characteristics, answer the following questions:
* You are the project manager of a project to upgrade the generators at cell phone towers.
* Your project is scheduled to last for 12 months.
* It is the beginning of month 4.
* Your crews are to upgrade 8 cell phone towers per month for 12 months.
* Each generator is planned to cost $40,000 which includes equipment, labor, and fueling costs.
* You have upgraded 30 cell phone towers and your CPI is 0.96.
1 How is the project performing?
* Over budget and ahead of schedule
* Under budget and ahead of schedule
* Over budget and behind schedule
* Under budget and behind schedule
What is your reasoning? A CPI of less than 1 (0.96) indicates that the project performance is poorer than planned or over budget. 30 cell phone towers have already been completed in 3 months. The company had anticipated to complete 24 towers.
_____________________________________________________
2 Right now, what is the actual cost of the project?
* $1,800,000
* $975,000
* $1,250,000
* $2,225,000
What is your reasoning? CPI is equal to earned interest divided by the actual cost. The project’s characteristics indicate that each generator would cost $40,000. Therefore, earned value for the 30 cell phone towers equals $40,000*30, which is equal to 1,200,000. Substituting these values into the CPI equation, 0.96 = 1,200,000/actual cost
Actual cost = 1,200,000/0.96 = $1,250,000
______________________________________________________
3 Assuming that the cost variance is constant, how much more money will it take to complete the project?
* $2,500,000
* $2,750,000
* $2,800,000
* $3,000,000
What is your reasoning? Provided the cost variance remains constant, the CPI remains at 0.96. I plan to install 12*8 = 96 cell phone towers in one year. So 96 less the already installed towers (30) = 66 cell phone towers. Earned cost = 66*40,000 = $2,640,000. Actual value (money to complete the project) = Earned cost/CPI = $2,750,000
_______________________________________________________
4 What is the project’s estimated cost at completion if the variance experienced to this point stopped?
* $2,800,000
* $2,875,000
* $3,890,000
* $3,750,000
What is your reasoning? (30*41,666.67) + (66*40,000) = 1,250,000+2,640,000 = $3,890,000
________________________________________________________
5 Using the project’s budget at completion, what is the project’s TCPI?
* .5
* 1
* 1.5
* 1....