You are the Project Manager for doing Glass Façade work for a multi storey tower. The BAC is 200,000 USD. At certain point of time the PV is 100,000 USD, the EV is 90,000 USD and AC is 120,000 USD. The cost escalation happened due to penalty imposed by govt. appointed safety inspector for not wearing PPE (Personal Protective Equipment) and the team has been trained now to ensure that they always use PPE when they are on site. What is the EAC for the project?
a) 266,667 USD
b) 230,000 USD
c) 282,963 USD
d) 200,000 USD
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CPI=1100/1300 = 0.846
SPI=1100/1000 = 1.1
In the problem statement, it is given that the customer is concerned about the schedule. It is also given that the same rate of productivity will continue in future also.
So many people may be tempted to use the formula EAC=AC + (BAC-EV) / (CPI*SPI). However the SPI is more than 1 and project is ahead of schedule. So the correct formula will be EAC=AC+ (BAC-EV)/CPI giving the result 2364.
A project has a BAC of 2000 and customer is concerned about schedule also. At a certain point in time (i.e. data date), the PV = 1000, AC = 1300 and EV = 1100. The cost escalation happened due to less productivity and the same is likely to continue in future also.
What is the EAC?
SF as per PMBOK5 SF as per Lalit
As per PMBOK5 the definition of Start to Finish Relationship is: A logical relationship in which a successor activity cannot finish until a predecessor activity has started.
The same has been shown in the link “SF as per PMBOK5” above.
However a better interpretation of this relationship will be as follows: A logical relationship in which the predecessor (although it may be happening later in time) DECIDES or DICTATES the finishing of the successor activity.
The same as been shown in link “SF as per Lalit” above.
In layman’s language, predecessor means some thing which happens earlier. But in project management terminology, predecessor means the primary activity and successor means the dependent activity. Therefore the event A “Boss Going to Office” is the predecessor and event B “Driver making the car ready” is successor event.
As the process of making the car ready must be over by the time the boss starts for office with a buffer of 15 minutes, the best relationship to link them will be SF (Start to Finish relationship) with a lead of 15 minutes.
Thomas Edison invented light bulb. As some people say, he experimented with 700 materials before coming to the right combination of material. Can you categorize this initiative as a project?
Activity A is, “Boss Going to office typically at 9 AM every morning”. Activity B is “Driver making the car ready 15 minutes BEFORE departure of boss”. Which is the predecessor activity here. Out of FS, SS, FF and SF, which is the best relationship to link these 2 activities?
a) This technique is based on “Student Syndrome”, which means, start any avtivity as late as possible.
b) While creating estimates, allow only that much time for an activity that there is a 50% probability of completion.
c) Don’t criticize your team members if they are not able to complete the activity in the agreed time frame.
d) Find out the critical path. The chain of activities on critical path will be known as critical chain.
e) Add 50% time buffer in all non critical chains (also known as feeding chains) and 50% time buffer in the critical chain, which will be known as project buffer.
f) If any activity in the feeding chain gets delayed, it will consume the buffer of that particular feeding chain. When the feeding chain buffer is exhausted, it will consume the project buffer.
e) Monitor the feeding chain / project buffer and the activities pending at any time.
Has this technique become popular in industry?
If There are three projects A, B, C with opportunity costs of 30000, 20000, 10000 USD respectively. What is the opportunity cost of choosing project B?