PM FPX 5334 Assessment 2 Bausch + Lomb Project PM-FPX5334 Project Risk Assessment and Control Introduction

NearlyFree.com is currently managing a project that has exceeded its initial budget of $25,000. With the project at 43% completion, the company has recognized the issues and sought assistance for project management services. A thorough review of the financial statements reveals a discrepancy concerning the earned value, which has been under-budgeted. The objective of NearlyFree.com’s project is to develop and implement an automated web-based training system for new employees, aimed at reducing the workload and minimizing the resources required for the New Employee Orientation (NEO) process.

The project’s current scope outlines a 92-day timeline and an approved budget of $22,300. This report includes an evaluation of the earned value technique, an assessment of project success, and earned value calculations to support the project’s effective turnaround.

Earned Value Technique

The Earned Value technique is a project management approach that tracks the project plan, actual work performed, and the value of the work completed to determine if the project is progressing as planned. This technique provides insight into the time and budget expenditure that should have been incurred based on the work completed. Project control is conducted relative to the cost baseline using the Earned Value technique. It involves calculating key variables based on actual progress and further calculations to report project progress.

Inputs:

Earned Value (EV): Represents the actual progress of the task up to the analysis date. Planned Value (PV): Reflects the planned expenditure of funds up to the analysis date, as per the project schedule. Actual Cost (AC): Represents the actual expenditure of funds up to the analysis date.

Calculations:

Cost Variance: Indicates the project’s budget deviation at the analysis point.
[ Cost Variance = Earned Value (EV) – Actual Cost (AC) ]

Cost Performance Index: Reflects the project’s budget deviation relative to the total size.
[ Cost Performance Index = \frac{Earned Value (EV)}{Actual Cost (AC)} ]

Schedule Variance: Indicates the project’s schedule deviation at the analysis point.
[ Schedule Variance = Earned Value (EV) – Planned Value (PV) ]

Schedule Performance Index: Reflects the project’s schedule deviation relative to the total size.
[ Schedule Performance Index = \frac{Earned Value (EV)}{Planned Value (PV)} ]

Key Metrics:

Schedule Variance (SV)

Schedule variance assesses whether the project is ahead or behind schedule at the analysis point. The formula is:
[ Schedule Variance = Earned Value (EV) – Planned Value (PV) ]
[ Schedule Variance = $12,373.95 – $20,453.95 ]
[ Schedule Variance = -$8,080.00 ]
A schedule variance of -$8,080 indicates that the project is behind schedule.

Cost Variance (CV)

Cost variance compares the budget set prior to the project’s start with actual spending. The formula is:
[ Cost Variance = Earned Value (EV) – Actual Cost (AC) ]
[ Cost Variance = $12,373.95 – $16,373.95 ]
[ Cost Variance = -$4,000.00 ]
A cost variance of -$4,000 shows that the project is currently under budget; ideally, this variance should be zero or greater.

Schedule Performance Index (SPI)

The Schedule Performance Index measures the project’s progress relative to the schedule. The formula is:
[ Schedule Performance Index = \frac{Earned Value (EV)}{Planned Value (PV)} ]
[ Schedule Performance Index = \frac{$12,373.95}{$20,453.95} ]
[ Schedule Performance Index = 0.60 ]
An SPI of 0.60 suggests that the project is behind schedule. If the SPI is less than 1, the project is delayed.

Cost Performance Index (CPI)

The Cost Performance Index evaluates the project’s financial efficiency, representing how much value is achieved for each dollar spent. The formula is:
[ Cost Performance Index = \frac{Earned Value (EV)}{Actual Cost (AC)} ]
[ Cost Performance Index = \frac{$12,373.95}{$16,373.95} ]
[ Cost Performance Index = 0.76 ]
With a CPI of 0.76, the project is over budget. A CPI lower than 1 indicates that the project may run out of funds before completion.

Budget at Completion (BAC)

The Budget at Completion (BAC) represents the total budgeted amount for the project. For NearlyFree.c