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Your project to obtain charitable donations is now 30 days into a planned 40-day project. The project is divided into 3 activities. The first activity is designed to solicit individual donations. It is scheduled to run the first 25 days of the project and bring in \(25,000. Even though we are 30 days into the project, we still see that we have only 90 percent of this activity completed. The second activity relates to company donations and is scheduled to run for 30 days starting on day 5 and extending through day 35. We estimate that, even though we should have 83 percent (25y30) of this activity complete, it is only 50 percent complete. This part of the project was scheduled to bring in \)150,000 in donations. The final activity is for matching funds. This activity is scheduled to run for the last 10 days of the project and has not started. It is scheduled to bring in an additional \(50,000. So far \)175,000 has been brought in on the project. Calculate the schedule variance, schedule performance index, and cost (actually value in this case) performance index. How is the project going? Hint: Note that this problem is different since revenue rather than cost is the relevant measure. Use care in how the measures are interpreted.

Step by step solution

01

Calculate the planned value and earned value

$$\begin{gathered} Plannedvalue=(25000×100\%)+(150000×83\%)+(500100×0\%) \\ =149500 \\ \text{Earned value=(25000×90\%)+(150000×83\%)+(50000×0\%)} \\ =97500 \end{gathered}$$

02

Calculate other values

Actual cost = 175000

$$\begin{gathered} \text{Scheduled variance=Earned variance-Planned variance} \\ =97500-149500 \\ =-52000 \end{gathered}$$

$$\begin{gathered} \text{Scheduled performance index=}\frac{\text{Earned value}}{\text{Planned value}} \\ =97500/149500 \\ =0.6522 \end{gathered}$$

$$\begin{gathered} \text{Cost variance}=\text{Earned value}-\text{Actual cost} \\ =97500-175000 \\ =-77500 \end{gathered}$$

$$\begin{gathered} \text{Cost performance index}=\frac{\text{Earned value}}{\text{Actual value}} \\ =97500/175000 \\ =0.557 \end{gathered}$$

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