## Earn Value Sample Question

Problem Definition

Your team has been assigned to construct a road of 5.5 km including a bridge of 500m in 35 days.

The total cost for the project is Rs. 35,000,000/- and the cost for constructing the bridge is Rs. 10,000,000/- .

You expect to complete the bridge in 10 days and the remaining road in 25 days .

You are monitoring daily progress and the data for the first 20 days shows the following progress : Day 1-12 – Bridge completed ,

Daily road work progress from day 13 to 20 – 240 m , 300m , 200m, 160m. 220m, 250m , 290m, 140m. The cost spent till date is as follows : Bridge Rs. 12,500,000/- , daily cost from day 13 to 20 days is Rs. 1,100,000/- per day .

What is the schedule and cost variance on Day 20 ?

a) SV = + Rs. 1,000,000/- CV = + Rs1,300,000/-

b) SV = – Rs. 1,000,000/- CV = – Rs1,300,000/-

c) SV = – Rs. 1,000,000/- CV = – Rs 2,300,000/-

d) SV = – Rs. 2,000.000/- CV = – Rs. 1,30,000/ Figure 1 – Scheduled and Actual Project

Bridge day 12

500m in 10 days budget of 10 Million, BAC Bridge = 10 Million

Scheduled Daily rate Bridge = BAC Bridge / scheduled duration = 10Million / 10 days = 1Million /days

Scheduled Productivity Rate Bridge= BAC Bridge / scheduled duration= 500m/10 days = 50m/days

BCWS Bridge = Daily rate Bridge x scheduled days = 1Million /days x 10 days = 10 Million,

BCWP Bridge = BAC Bridge = 10Million,

ACWP Bridge = 12.5 Million.

Bridge done in day 12th. Consuming 12 working days behind schedule by 2 days.

5 Km = 5000m in 25 days

Road Budget = Total Budget – Bridge Budget = 35Million – 10 Million = 25 Million

Scheduled Daily Rate Road = BAC Road / scheduled duration = 25 Million / 25 days = 1 Million / days

Scheduled Productivity Rate Road = BAC Road / scheduled duration = 5000m / 25 days = 200m/days

BCWS Road scheduled to be started in day 11 to day 20 which means 10 days duration

BCWS = Daily rate Road x scheduled days = 1Million /days x 10 days = 10 Million.

Or BCWS worth for 10 days x Scheduled Productivity Rate Road = 10 days x 200m/days = 2000m

BCWP Road is cumulative work progress from day 13 to 20 – 240 m , 300m , 200m, 160m. 220m, 250m , 290m, 140m. Cumulative of 1800m.

Day 13 to day 20 in 8 days duration scheduled to accomplished = 8 days x Scheduled Productivity Rate Road = 8 days x 200m/days = 1600m

It means in 8 days accomplished 1800m, 1800m -1600m= 200m more than scheduled, ahead of schedule by 200 m or equal as one day more, equal to 9 days work (9 day x 200m / day = 1800m)

Scheduled 1600 m equal to 8 days worth value of = 8 days x Daily Rate Road = 8 days x 1 Million / days = 8 Million.

200m variance worth of 1 days work which worth for 1 days x  Daily Rate Road = 1 days x 1 Million /days = 1 Million.

So BCWP value is 1800m = 1600m + 200m = 8 Million + 1 Million = 9 Million

ACWP Road  = Variable Cost x Actual Duration = 1.1 Million / days x 8 days = 8.8 Million

SV = (10M + 9M) – (10M + 10M) = 19M – 20M = -1M behind schedule by value worth of 1 M

CV = (10 M + 9M) – (12.5 + 8.8M) = 19M – 21.3M = -2.3M

References:

1. Rao, Alakananda (2013). I want to be a PMP® linkedin group . Questions from PMBok Fifth edition – Cost. Retrieved September 17, 2013 from http://www.linkedin.com/groupAnswers?viewQuestionAndAnswers=&discussionID=273704434&gid=2356441&commentID=164805938&goback=%2Enpv_94027909_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_nav*4responsive*4tab*4profile_*1&trk=NUS_DISC_Q-subject#commentID_164805938
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### 1 Response to Earn Value Sample Question

1. drpdg says:

Hi Delano,
While I agree that your calculations were done correctly, you need to be VERY careful when calculating Earned Value (BCWP) and elapsed time. That is the DEFAULT setting in MS Project and is VERY rarely true. Normally, there is no correlation between elapsed time and earned value. The ONLY way to calculate EV (BCWP) is by measuring PHYSICAL % complete.

Bottom line- this question is NOT a well written question and explains why people who hold only their PMP are generally not really expert in using Earned Value Management.

BR,
Dr. PDG, Jakarta