Related questions
Orion Tech Solutions has been awarded a 12-month contract to develop a custom software
solution for a major client. The contract is a fixed-price contract valued at $1.5 million.
This is the company’s first project requiring Earned Value (EV) reporting, and as part of
compliance, they have implemented EV metrics to track project performance.
The first EV report is due at the end of Month 3, with monthly reporting thereafter. The
project baseline was established with the following key components:
• Total Planned Value (PV) for the first 3 months: $300,000
• Breakdown of Work Packages and Financial Data (End of Month 3):
Work Package PV (BCWS) EV (BCWP) AC (ACWP) CV SV
A $80,000 $70,000 $85,000 ? ?
B $50,000 $50,000 $48,000 ? ?
C $100,000 $90,000 $110,000 ? ?
D $70,000 $50,000 $55,000 ? ?
Questions
(Basic EV Calculations)
1. Calculate the Cost Variance (CV) and Schedule Variance (SV) for each work
package using the formulas below:
o CV = EV - AC
o SV = EV - PV
2. What do the cost variance values indicate? Explain whether the project is over
budget or under budget.
3. What do the schedule variance values indicate? Explain whether the project is
ahead of schedule or behind schedule.
4. Calculate the overall CV and SV for the entire project. What does this tell you
about Orion Tech Solutions' performance?
(Applying EV Interpretation)
5. Calculate the Cost Performance Index (CPI) and Schedule Performance Index
(SPI) for each work package and the overall project.
CPI = EV / AC
SPI = EV / PV
6. Based on the CPI and SPI values, discuss what actions the project manager
should take to improve project performance.
7. What additional information should be included in the next earned value report
to provide a clearer picture of project performance?
8. The client is concerned about cost overruns and project delays. Prepare a
response as the project manager of Orion Tech Solutions, justifying the current
project performance and outlining a plan for corrective action.
to generate a solution
a solution
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