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Homework answers / question archive / A project to build a new bridge seems to be going very well since the project is well ahead of schedule, and costs seem to be running very low
A project to build a new bridge seems to be going very well since the project is well ahead of schedule, and costs seem to be running very low. A major milestone has been reached where the first two activities have been totally completed and the third activity is 55% complete. The planners were only expecting to be 46% through the third activity at this time. The first activity involves prepping the site for the bridge. It was expected to cost $1,330,000 and it was done for only $1,295,000. The second activity was the pouring of the concrete. This was expected to cost $11,000,000 but was actually done for $11,200,000. The third and final activity is the actual construction of the bridge superstructure. This was expected to cost a total of $8,550,000. To date they have spent $6,900,000 on the superstructure. Calculate the cost and schedule variance and the schedule and cost performance indexes for the project.
There are total of three activities namely Activity 1, Activity 2 and Activity 3.
The budgeted cost of each activity is as follows:
Activity 1 = $1330000
Activity 2 = $11000000
Activity 3 = $393300 i.e., 46% of $8550000
Therefore, the budgeted cost of the scheduled work (BSW) will be:
BSW=$(1330000+11000000+393300)=$12723300BSW=$(1330000+11000000+393300)=$12723300
Also, the budgeted cost the performed work is as follows:
Activity 1 = $1330000
Activity 2 = $11000000
Activity 3 = $4702500 i.e., 55% of $8550000
Therefore the budgeted cost of the performed work (BPW) is as follows:
BPW=$(1330000+11000000+4702500)=$17032500BPW=$(1330000+11000000+4702500)=$17032500
On the other hand the actual cost paid (ACP) for the performed work is as follows:
ACP=(1295000+11200000+6900000)=$19395000ACP=(1295000+11200000+6900000)=$19395000
Schedule Variance (SV) is calculated as:
SV=BPW−BSW=$(17032500−12723300)=$4309200SV=BPW−BSW=$(17032500−12723300)=$4309200
Schedule Performance Index (SPI) is calculated as:
SPI=BPWBSW=1703250012723300=1.33SPI=BPWBSW=1703250012723300=1.33
Cost Performance Index (CPI) is calculated as:
CPI=BPWAC=1703250019395000=0.878
