Final answer:
The Earned Value (EV) is $145,000, the Estimate at Completion (EAC) is $360,097.86, and the Estimate to Complete (ETC) is $215,097.86 for the half-completed $290K budgeted project with $180K spent so far.
Step-by-step explanation:
A student is half-way through a $290K budgeted project and has spent $180K so far. To address the student’s questions, we need to use the principles of Earned Value Management (EVM):
a. What is the Earned Value (EV)?
The Earned Value (EV) is the value of the work actually performed. Since 50% of the project is complete, EV is 50% of the total budget:
EV = Total Budget x % of work completed
EV = $290,000 x 0.50 = $145,000.
b. What is the Estimate at Completion (EAC)?
The Estimate at Completion (EAC) is the forecasted total cost of the project at completion. If we assume that the current variance will continue, EAC is calculated by taking the original budget and dividing it by the Cost Performance Index (CPI). CPI is the EV divided by actual costs. Here, the original budget (Budget at Completion - BAC) is $290,000, and the actual cost (AC) so far is $180,000.
CPI = EV / AC
CPI = $145,000 / $180,000 = 0.8056
EAC = BAC / CPI
EAC = $290,000 / 0.8056 = $360,097.86.
c. What is the Estimate to Complete (ETC)?
The Estimate to Complete (ETC) is the estimated remaining cost to finish the project. It is calculated by subtracting the EV from the EAC.
ETC = EAC - EV
ETC = $360,097.86 - $145,000 = $215,097.86.