CPI and SPI

Submitted by Jp2786 on Thu, 04/24/2014 - 00:31
Your assistant project manager does the monthly earned value management (EVM ) Analysis. But falls ill before completing it. She has provided you with the following information. Cost Performance Index (CPI) =1.10 , actual cost (AC) =US$800 million. Planned value =US$890 Million. How is the project going?
 
a) The schedule is behind by 10 days
b) Both the schedule and the budget are better than planned
c) There is enough money to support an offsite team outing
d) You have no real concerns about either schedule or budget
 
Your views?
 
Cheers
Jp
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philstinnet

Thu, 04/24/2014 - 01:17

This is truly a pathetic question. 

Who makes these kind of questions ?

1) The schedule is behind by 1 day max (it is more like half-day behind than 1 day).

2) Choice A is automatically wrong.

3) Choice D is wrong as i (Project Manager) am concerned why the project is behind in schedule.

However, my concern should depend on my Quality Metrics too. Up to what % of variation in schedule is acceptable ? No information is provided on this Quality Metric or on the Control Threshold on schedule baseline. Currently, i am behind 1.12% in my schedule. The percent number is for the current month and not the cumulative. I have no information on the cumulative variation as not enough information is provided. 

4) Choice B is wrong as i am running behind the schedule. 

5) Choice C is the  'less-evil' choice among 'more-evil' choices as i have 80 miilions saved by having a better performance from the team. I can use that saved money as a 'reward' for my team for working with better efficiency. 

 

Please share the correct answer....

 

Thanks

philstinnet

Thu, 04/24/2014 - 01:33

I apologize for using the word 'pathetic'. No question is pathetic. Each and every question has merit in it. This question also tremendous merit as it covers three knowledge areas - Cost, Quality and Humar Resources. 

It is indeed a beautiful question...

Now, I am really eager to know the answer...

Thanks for this interesting question..

 

kevinkkyip

Thu, 04/24/2014 - 02:33

a), b) & c) are definitely wrong:

a) We cannot deduce from the figures tha actual number of days delayed

b) Schedule is not better than planned, as SPI < 1

c) No information is given in the question to determine what amount is enough. By all means, saving cannot be confirmed till the end of the project; and saving may not necessarily be able to use for team activity unless it is budgeted in

For d), whether a PM has any REAL concern can be a little subjective.  If the SPI is substantially less than 1, there may be some major issues behind the project.  As it's now, it's just less than 2% behind, so the problem may just arise and you likely have sufficient time to tackle it.

 

Jp2786

Thu, 04/24/2014 - 02:43

Guys I dont have the answer.

I too went with option D.

Even I had eliminated A,B,C for the sames reasons given bykevinkkyip 

philstinnet

Thu, 04/24/2014 - 03:18

Beautiful answer Kevin.

I learned something from this question. It is indeed a very good question.

In real life, Actual Costs and Planned Costs are rarely equal to Earned Values. Even the best types of estimates (called Definitive Estimates) give the range of accuracy from -5% to 10%.

The schedule is behind the planned value; yet, it falls within the Definitive Estimate range.

Savings definitely can not be claimed till the end of the project. It is a very true statement. And 'Rewards and Recognitions' are built in the cost baseline.

Beautiful question and beautiful analysis by Kevin.

Thanks

 

 

 

sunku65

Fri, 04/25/2014 - 07:46

This is monthly basis EVMs,  neighter mention only this month nor cummulative.

Any way this is not the end of month of the project.  The SPI is 0.0988 and the CPI > 1.

In next month PM can consider Fastracking/Compressing. So, answer is D.

 

sunku65

Fri, 04/25/2014 - 07:52

sorry, ...the SPI is 0.988..