Fred is the project manager of the NHA project. This project has a BAC of $2,456,900 and is sixty percent complete. Fred has crashed the project, which has driven the project costs to date to $1,525,140, but his project is five percent more complete than what was planned. What is the cost variance for this project that
Fred needs to report to management?
The cost variance for the project is -$51,000. This can be calculated using the formula: Cost Variance (CV) = Earned Value (EV) - Actual Cost (AC). Earned Value is derived by multiplying the Budget at Completion (BAC) by the percentage completion, which is 60%. Thus, EV = 0.60 * $2,456,900 = $1,474,140. Since the Actual Cost to date is $1,525,140, the formula becomes CV = $1,474,140 - $1,525,140 = -$51,000. This indicates that the project is over budget by $51,000.
cost variance =Earned value minus Actual value (not planned value)
Given information: BAC (Budget at Completion) = $2,456,900 Percent Complete = 65% Costs to Date = $1,525,140 Now, let's recalculate the EV: EV = BAC * Percent Complete = $2,456,900 * 65% = $1,596,385 ACWP remains the same: ACWP = Costs to Date = $1,525,140 CV = EV - ACWP = $1,596,385 - $1,525,140 = $71,245 Therefore, the cost variance (CV) for this project, given the updated percentage complete of 65%, is $71,245.
The project is 60% complete. So, the EV would 0.6*$2,456,900 = $1,474,140. And the CV= EV-AC. Therefore, CV= $1,474,140 - $1,525,140= - $51,000.