Monthly Archives: September 2014

Quiz Q3: Cost Control (Example B)

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

Ans of Quiz Q2: Calculation of EAC (Example A)

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.