# Building a New Fence

Buildinga New Fence

InstitutionAffiliation:

Buildinga new fence

Problem

The project to build a new fence has proposed that the each of theside of the fence will use one day to complete. In addition, theproject has budgeted \$1,000 for each side. The project has thefollowing features, which means that it has a finish-startrelationship.

Calculations andexplanations

PV: This is theprojected value of the work intended to be completed. In this case,the project has budgeted for \$1,000 for each side, and since thevalues reveal the progress as at end of day 3, the value is \$3,000i.e. 1000 + 1000 + 1000 = \$ 3000 for three sides thus, one shouldhave completed \$3000 value of work.

EV: The earnedvalue is the projected worth of the work attained. EV will be theprojected amount for the complete work i.e. for side 1, 2, and thehalf-done side 3 i.e. 1000 + 1000 + 500 = \$ 2500. This means that onehas really accomplished \$2,500 value of work

AC: The actualcost incurred for one to complete the work i.e. 1,000 + 1,2000 + 600= \$2,800, which means that the project has spent \$2,800

BAC: This is theamount of money budgeted for the entire project. The project hasbudgeted \$1,000 for each side and there are 4 sides thus, BAC is\$4,000 i.e. the project’s budget

CV (CostVariance): This is the value of EV less that of AC i.e. positive whenless than budget and negative when more than budget i.e. 2,500 –2,800 = -300 thus, the project is \$300 over the budget

CPI: This is thevalue of EV divided by that of AC i.e. getting Y \$ work, out of everyone dollar spent. CPI = 2,500 / 2,800 = 0.893, which means that theproject is getting only 89 cents out of every dollar spent.

SV (ScheduleVariance): This is the value of EV less that of PV. Lipke, Zwikael,Henderson &amp Anbari (2009) assert that variances are thedissimilarities between netted value and two other costs since theactual project varies from plans. SV = 2,500 – 3,000 = -500, whichmeans that the project is behind schedule.

SPI: Lipke et. al(2009) assert that this is the value of EV divided by that of PV i.e.advancing at Y % of rate initially projected. SPI = 2,500 / 3000 =0.833, which means that the project is progressing at 83% of theprojected rate.

EAC: This is thecurrent expectation of the entire project cost i.e. BAC/CPI. EAC =4,000 / 0.893 = 4,479, which means that the current estimates showthat the project will cost 4,479.

ETC: The extraamount expected for the project to finish i.e. EAC/AC. ETC = 4,479 –2,800 = 1,679, which means that the project need to spend \$1,679 moreto complete the project.

VAC: Cioffi(2006) asserts that this is the amount over or below the budget oneexpects to be at end of budget. VAC = 4,000 – 4,479 = -479, whichmeans that current estimates show that the project will be \$479 overbudget when complete.

The calculationsreveal that the project is behind schedule and will need more moneythan the amount budgeted. In fact, the project has a weak cumulativeperformance than the projected performance.

References

Cioffi, D. F. (2006). Designing project management: A scientificnotation and an improved formalism for earned value calculations.International Journal of Project Management, 24(2),136-144.

Lipke, W., Zwikael, O., Henderson, K., &amp Anbari, F. (2009).Prediction of project outcome: The application of statistical methodsto earned value management and earned schedule performance indexes.International journal of project management, 27(4),400-407.