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Topics: Earned Value Management
EAC/CPI..per activities of a project of the whole project
Network:161



Dears,
Currently, I review some exercises, and I found 2 different ways for calculation of EAC/ CPI or ETC, when you have a list of activities as part of a whole package or project.
Sometimes, the calculations are made for each activity, sometimes, it is made globally. And the results are not the same...
Example:
Using the situation below, and assuming continued efficiency for work in progress and fixed price contract for task 4, calculate the EAC:

Task 1
Budgeted cost: 5000
PV: 5000
AC:6000
EV: 5000


Task 2
Budgeted cost: 6000
PV: 6000
AC:8000
EV: 4000

Task 3
Budgeted cost: 4000
PV: 2000
AC:1000
EV: 1000

Task 4:
Budgeted cost: 4000
PV: 0
AC:0
EV:0

Thanks for helping !
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Network:70024



Alexandra, your PV should be the same as your budgeted cost.
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1 reply by Alexandra Cossard
Dec 23, 2016 9:08 AM
Alexandra Cossard
...
This is how the exercise is written....I could share a picture of it, it would be easier...but it doesn't seem possible to publish documents on the forum
Network:161



Dec 23, 2016 9:06 AM
Replying to Stéphane Parent
...
Alexandra, your PV should be the same as your budgeted cost.
This is how the exercise is written....I could share a picture of it, it would be easier...but it doesn't seem possible to publish documents on the forum
Network:67284



I agree with Stephane, Planned Value is the same as Budgeted Cost of Work Scheduled (BCWS).

Can you show us here how you did the calculations Alexandra ? Or if there is a link to the solution, please share it.
Network:161



I will write the solution provided by the trainer, and find a way to send it to you, by private message maybe...
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1 reply by Rami Kaibni
Dec 23, 2016 9:36 AM
Rami Kaibni
...
Please do share the full solution whenever you can but for now, can you just confirm if the answer given was around $26,000 ?
Network:67284



Dec 23, 2016 9:30 AM
Replying to Alexandra Cossard
...
I will write the solution provided by the trainer, and find a way to send it to you, by private message maybe...
Please do share the full solution whenever you can but for now, can you just confirm if the answer given was around $26,000 ?
...
1 reply by Alexandra Cossard
Dec 23, 2016 9:38 AM
Alexandra Cossard
...
You are right....but not me :(
Network:161



Dec 23, 2016 9:36 AM
Replying to Rami Kaibni
...
Please do share the full solution whenever you can but for now, can you just confirm if the answer given was around $26,000 ?
You are right....but not me :(
...
1 reply by Rami Kaibni
Dec 23, 2016 9:47 AM
Rami Kaibni
...
Alexandra,

Calculate the CPI = EV/AC for each task and then calculate the EAC=Budgeted Cost/CPI because the situation mentioned that it will be the same working efficiency:

Task 1: CPI = 0.833 & EAC = $6,000
Task 2: CPI = 1 & EAC = $4,000
Task 3: CPI = 0.5 & EAC = $12,000
Tasl 4: EAC = $4,000 (It is a fixed price contract as mentioned so you are going to spend this amount only at the end of the task if there were no scope changes)

Total EAC = $26,000

Does this make sense ?
Network:70024



Please note that there are multiple ways to calculate EAC. Each way presumes on certain conditions.

EAC = AC + ETC = 24,000 (when deviation is expected to be corrected)
EAC = BAC/CPI = 28,500 (when CPI and SPI are expected to remain close to 1)
EAC = AC + (BAC-EV)/(CPI*SPI)) = 40,650 (when project extend to continue its trend)
Network:67284



Dec 23, 2016 9:38 AM
Replying to Alexandra Cossard
...
You are right....but not me :(
Alexandra,

Calculate the CPI = EV/AC for each task and then calculate the EAC=Budgeted Cost/CPI because the situation mentioned that it will be the same working efficiency:

Task 1: CPI = 0.833 & EAC = $6,000
Task 2: CPI = 1 & EAC = $4,000
Task 3: CPI = 0.5 & EAC = $12,000
Tasl 4: EAC = $4,000 (It is a fixed price contract as mentioned so you are going to spend this amount only at the end of the task if there were no scope changes)

Total EAC = $26,000

Does this make sense ?
...
1 reply by Alexandra Cossard
Dec 23, 2016 9:58 AM
Alexandra Cossard
...
You're completely right Rami.
But I wonder how you know that you have to consider each task whether than the all project?
My proposal was, considering all the tasks:
- Total of EV = 14k
- Total of AC= 19k
-CPI for the 4 tasks: 0,7368
-BAC: 19k
-So EAC= 19/0,7368 = 25787, so approximately 26k.

But,what is the right way? In some other exercises, I have seen the way I describe here, ans seeing now, that EAC is calculated for each task, I don't know what is the best?
Thanks for your support !
Network:161



Dec 23, 2016 9:47 AM
Replying to Rami Kaibni
...
Alexandra,

Calculate the CPI = EV/AC for each task and then calculate the EAC=Budgeted Cost/CPI because the situation mentioned that it will be the same working efficiency:

Task 1: CPI = 0.833 & EAC = $6,000
Task 2: CPI = 1 & EAC = $4,000
Task 3: CPI = 0.5 & EAC = $12,000
Tasl 4: EAC = $4,000 (It is a fixed price contract as mentioned so you are going to spend this amount only at the end of the task if there were no scope changes)

Total EAC = $26,000

Does this make sense ?
You're completely right Rami.
But I wonder how you know that you have to consider each task whether than the all project?
My proposal was, considering all the tasks:
- Total of EV = 14k
- Total of AC= 19k
-CPI for the 4 tasks: 0,7368
-BAC: 19k
-So EAC= 19/0,7368 = 25787, so approximately 26k.

But,what is the right way? In some other exercises, I have seen the way I describe here, ans seeing now, that EAC is calculated for each task, I don't know what is the best?
Thanks for your support !
...
2 replies by Rami Kaibni and Stéphane Parent
Dec 23, 2016 10:10 AM
Rami Kaibni
...
You're Welcome Alexandra.

In both cases, the final answer should be the same so it doesn't matter which way to adopt especially that the question asked for the final EAC for the whole project.

What I usually do (Depending on what the questions asks for), I usually take each task alone and do the math then to check my answer, I calculate the same considering all tasks so if both answers are the same then my answer us most probably correct.

You always need to analyize what the question asks for in order to know which way to go.

Hope this helps.
Dec 23, 2016 10:21 AM
Stéphane Parent
...
I got different results than you did, Alexandra.

PV AC EV CV SV CPI SPI
Task 1 5,000 6,000 5,000 -1,000 - 0.83 1.00
Task 2 6,000 8,000 4,000 -2,000 2,000 0.50 0.67
Task 3 4,000 1,000 1,000 3,000 3,000 1.00 0.25
Task 4 4,000 - - 4,000 4,000 - -
Total 19,000 15,000 10,000 4,000 9,000 0.67 0.53
Network:67284



Dec 23, 2016 9:58 AM
Replying to Alexandra Cossard
...
You're completely right Rami.
But I wonder how you know that you have to consider each task whether than the all project?
My proposal was, considering all the tasks:
- Total of EV = 14k
- Total of AC= 19k
-CPI for the 4 tasks: 0,7368
-BAC: 19k
-So EAC= 19/0,7368 = 25787, so approximately 26k.

But,what is the right way? In some other exercises, I have seen the way I describe here, ans seeing now, that EAC is calculated for each task, I don't know what is the best?
Thanks for your support !
You're Welcome Alexandra.

In both cases, the final answer should be the same so it doesn't matter which way to adopt especially that the question asked for the final EAC for the whole project.

What I usually do (Depending on what the questions asks for), I usually take each task alone and do the math then to check my answer, I calculate the same considering all tasks so if both answers are the same then my answer us most probably correct.

You always need to analyize what the question asks for in order to know which way to go.

Hope this helps.
...
1 reply by Alexandra Cossard
Dec 23, 2016 10:14 AM
Alexandra Cossard
...
But, in that case, considering what the question ask, you would prefer do it per activity?
Thanks a lot...And best wishes for 2017
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