PM FPX 5334 Assessment 2 Bausch + Lomb Project

Name

Capella University

PM-FPX 5334 Project Risk Assessment and Control

Prof. Name

Date

PM FPX 5334 Assessment 2 Bausch + Lomb Project

Introduction

Earned Value Analysis (EVA) helps project managers determine whether a project is progressing according to its schedule and budget by comparing planned work, completed work, and actual expenditures. For NearlyFree.com, the New Employee Orientation (NEO) training system project is experiencing significant schedule delays and cost overruns. Based on the available figures, the project has an Earned Value of $12,373.95, a Schedule Performance Index (SPI) of approximately 0.60, and a Cost Performance Index (CPI) of approximately 0.76. These results indicate that the project is behind schedule and spending more than planned for the work completed.

NearlyFree.com initially established a project budget of $22,300 and a planned duration of 92 days. However, the project has exceeded its original budget expectations and is approximately 43% complete. The organization has requested project management assistance to assess its financial performance, identify weaknesses in its existing plan, and develop a practical recovery strategy.

PM FPX 5334 Assessment 2 Bausch + Lomb Project

The project’s primary objective is to develop and launch an automated, web-based training system for new employees. Automating New Employee Orientation is expected to reduce the workload associated with onboarding, improve training consistency, and minimize the personnel resources needed to deliver orientation activities.

This report evaluates the project’s Earned Value Management (EVM) performance, calculates essential cost and schedule indicators, estimates the final project cost, and recommends corrective actions to improve project control. The analysis also identifies inconsistencies in the original figures that should be resolved before management approves a revised budget or schedule.

Understanding the Earned Value Management Technique

Earned Value Management is a project control method that integrates scope, schedule, and cost information to measure performance against an approved baseline. It allows project managers to determine how much work should have been completed, how much work has actually been completed, and how much money has been spent.

Unlike a basic budget review, EVM measures spending in relation to the value of completed work. A project may have spent less than expected but still be behind schedule, or it may have completed substantial work while exceeding its budget. Evaluating these factors together provides a clearer picture of project health (Project Management Institute [PMI], 2017).

Key Inputs for Earned Value Analysis

Three primary values are needed to perform an earned value analysis.

Earned Value (EV) represents the budgeted value of the work completed by the reporting date. It is calculated by multiplying the approved budget for an activity or work package by its actual completion percentage and aggregating the results across the project.

Planned Value (PV) represents the budgeted value of work scheduled to be completed by a specific reporting date. It establishes the baseline against which actual progress is evaluated.

Actual Cost (AC) represents the costs incurred for the work performed by the reporting date. It includes applicable project expenditures recorded during the reporting period.

The original project documentation uses the older terms Budgeted Cost of Work Performed (BCWP), Budgeted Cost of Work Scheduled (BCWS), and Actual Cost of Work Performed (ACWP). These correspond to the modern EVM terms EV, PV, and AC, respectively.

For NearlyFree.com, the reported values are:

Earned value component	Reported amount
Earned Value (EV/BCWP)	$12,373.95
Planned Value (PV/BCWS)	$20,453.95
Actual Cost (AC/ACWP)	$16,373.95
Original Budget at Completion (BAC)	$22,300

These figures provide the basis for evaluating schedule performance, cost efficiency, and the projected final cost.

Earned Value Analysis Calculations

Schedule Variance (SV)

Schedule Variance measures the difference between the budgeted value of completed work and the budgeted value of work scheduled by the reporting date.

The formula is:

[
SV = EV – PV
]

Using NearlyFree.com’s reported figures:

[
SV = $12,373.95 – $20,453.95
]

[
SV = -$8,080.00
]

The negative Schedule Variance of $8,080 indicates that the project has completed less work than planned. In other words, the budgeted value of the work completed is $8,080 below the value of the work scheduled by this point in the project.

Schedule Variance is measured in monetary units rather than days. Therefore, it indicates the financial value of the schedule shortfall, not the exact number of days the project is delayed. A revised schedule is needed to estimate the actual impact on the completion date.

Cost Variance (CV)

Cost Variance measures the difference between the budgeted value of completed work and the actual cost incurred to complete that work.

The formula is:

[
CV = EV – AC
]

For NearlyFree.com:

[
CV = $12,373.95 – $16,373.95
]

[
CV = -$4,000.00
]

The negative Cost Variance of $4,000 indicates that the project has spent $4,000 more than the budgeted value of the work completed. This means the project is experiencing unfavorable cost performance.

A negative Cost Variance does not necessarily mean the entire project budget has already been exhausted. Instead, it indicates that the cost of the work performed is higher than planned. If this trend continues, the project is likely to exceed its original budget unless corrective action is taken.

Schedule Performance Index (SPI)

The Schedule Performance Index measures schedule efficiency by comparing Earned Value with Planned Value.

The formula is:

[
SPI = \frac{EV}{PV}
]

Using the project figures:

[
SPI = \frac{$12,373.95}{$20,453.95}
]

[
SPI \approx 0.60
]

NearlyFree.com’s SPI of approximately 0.60 indicates that the project is achieving about $0.60 of budgeted work for every $1.00 of work planned by the reporting date.

An SPI below 1 indicates that the project is behind schedule. An SPI of 1 indicates performance consistent with the schedule baseline, while an SPI above 1 indicates that more work has been completed than planned.

The result suggests that the project requires a detailed schedule review. Management should identify delayed activities, investigate resource constraints, and determine whether task sequencing or workload allocation can be improved.

Cost Performance Index (CPI)

The Cost Performance Index measures cost efficiency by comparing the budgeted value of completed work with actual expenditures.

The formula is:

[
CPI = \frac{EV}{AC}
]

For NearlyFree.com:

[
CPI = \frac{$12,373.95}{$16,373.95}
]

[
CPI \approx 0.76
]

The CPI of approximately 0.76 means that NearlyFree.com is generating about $0.76 in budgeted work value for every dollar spent.

A CPI below 1 indicates unfavorable cost performance. In this case, the organization is spending more than expected to complete the work delivered so far. If this pattern continues, the remaining work will likely cost more than originally anticipated.

The project manager should investigate potential causes, including inaccurate initial estimates, rework, inefficient resource allocation, unexpected technical difficulties, and inadequate cost monitoring.

Budget at Completion (BAC)

Budget at Completion represents the total approved budget for all planned project work. It serves as the baseline for comparing actual expenditures and forecasting the final cost.

NearlyFree.com’s original Budget at Completion is:

[
BAC = $22,300
]

This amount represents the initial approved budget for developing and launching the automated NEO training system. Because current performance indicates unfavorable cost efficiency, management should not assume that the original budget will be sufficient to finish the project.

Instead, the project manager should use the current performance data to prepare a realistic forecast and determine whether additional funding or scope adjustments are necessary.

Estimate at Completion (EAC)

Estimate at Completion forecasts the total cost of the project based on actual expenditures and expected costs for the remaining work. One commonly used EVM formula assumes that current cost performance will continue throughout the project.

The formula is:

[
EAC = AC + \frac{BAC-EV}{CPI}
]

Using the reported values:

[
EAC = $16,373.95 +
\frac{$22,300-$12,373.95}{0.76}
]

PM FPX 5334 Assessment 2 Bausch + Lomb Project

The remaining budgeted work is:

[
BAC-EV = $9,926.05
]

Using the unrounded CPI derived from the original figures gives an estimated final cost of approximately:

[
EAC \approx $29,505
]

This result is a forecast, not a confirmed final expenditure. It assumes that the project’s current cost efficiency continues during the remaining work.

The original estimate of $29,434.54 is slightly different because it uses rounded intermediate calculations. Using the exact reported Earned Value and Actual Cost provides a more consistent estimate of approximately $29,505.

The forecast suggests that the project may exceed its original $22,300 budget by approximately $7,205, or about 32.3%, if current cost performance continues.

Project Performance Summary

The following table consolidates the principal EVM results for NearlyFree.com.

Performance measure	Result	Interpretation
Earned Value (EV)	$12,373.95	Budgeted value of completed work
Planned Value (PV)	$20,453.95	Budgeted value of scheduled work
Actual Cost (AC)	$16,373.95	Actual expenditure
Schedule Variance (SV)	−$8,080.00	Behind schedule
Cost Variance (CV)	−$4,000.00	Over budget relative to completed work
Schedule Performance Index (SPI)	0.60	Unfavorable schedule performance
Cost Performance Index (CPI)	0.76	Unfavorable cost efficiency
Budget at Completion (BAC)	$22,300	Original approved budget
Estimate at Completion (EAC)	Approximately $29,505	Forecast final project cost

The results indicate that the project is experiencing both schedule delays and cost overruns. The negative Schedule Variance and SPI below 1 show that progress is slower than planned. The negative Cost Variance and CPI below 1 indicate that completed work is costing more than expected.

These findings suggest that the original project estimates, execution strategy, or monitoring practices may need improvement. A detailed review of the Work Breakdown Structure, resource assignments, task dependencies, and cost assumptions will help management determine the most appropriate recovery measures.

Project Budget Turnaround and Recovery Strategy

Earned Value Analysis helps project managers identify performance problems and estimate the resources needed to complete a project. For NearlyFree.com, the current analysis indicates that continuing under the existing approach could result in a final cost substantially above the original budget.

The recommended response is to develop a formal recovery plan that addresses both schedule performance and cost efficiency. Extending the timeline alone will not automatically improve Earned Value or reduce expenses. The organization must also determine why the project is behind schedule and over budget, then implement corrective measures that address those causes.

Reassess the Project Schedule

The project manager should review the original 92-day schedule and compare planned activities with actual progress. This review should identify delayed tasks, dependencies that are holding up subsequent work, and activities that require additional resources.

The revised schedule should include realistic durations, clearly defined milestones, assigned responsibilities, and an updated critical path. If appropriate, activities may be resequenced or performed in parallel, provided that doing so does not create additional risks or compromise the quality of the training system.

Review the Budget and Remaining Work

The projected Estimate at Completion of approximately $29,505 suggests that the original budget may be insufficient. Management should review the remaining work, verify outstanding cost commitments, and determine whether additional funding is justified.

The revised forecast should distinguish between unavoidable costs, avoidable rework, additional resource requirements, and optional enhancements. If more funding is needed, the project manager should prepare a documented business case explaining the cost increase, expected benefits, alternatives, and consequences of not approving the request.

Improve Cost Control and Resource Allocation

The project team should establish regular cost reviews to compare actual expenditures with the budgeted value of completed work. These reviews should identify unfavorable cost trends before they become more difficult to correct.

Management should also evaluate whether staff assignments, technical resources, or work processes are contributing to inefficiencies. Targeted adjustments may improve productivity, but additional staffing or overtime should be considered only after evaluating the associated costs and expected benefits.

Strengthen Project Monitoring

NearlyFree.com should use a consistent reporting process to monitor Earned Value, Planned Value, Actual Cost, schedule variance, cost variance, SPI, and CPI.

Weekly reporting may be appropriate during the recovery phase, particularly if major milestones are at risk. Each report should identify significant variances, explain their causes, assign corrective actions, and document the expected effect on the forecast completion date and total cost.

The project manager should also establish clear escalation thresholds so that major cost or schedule problems receive timely management attention.

Control Scope Changes

New requirements and enhancements can increase project complexity, extend the timeline, and create additional costs. The project manager should ensure that all proposed changes are evaluated for their effects on scope, schedule, cost, and expected benefits before approval.

Nonessential features may be deferred to a future release if doing so is consistent with stakeholder requirements and the project’s core objectives. The immediate priority should be delivering a functional, reliable web-based training system that meets the organization’s essential onboarding needs.

Reconcile Project Completion Data

The original report states that the project is approximately 43% complete, but the reported Earned Value of $12,373.95 represents about 55.5% of the $22,300 budget.

These percentages measure different things unless the 43% completion figure is explicitly defined as the same budget-weighted measure used for Earned Value. If both figures are intended to represent overall project completion, they are inconsistent and should be reconciled.

The project manager should verify how the completion percentage was calculated and confirm that task progress, Earned Value, and the project schedule use consistent measurement rules. This step is necessary before management relies on the forecast to approve additional funding or revise deadlines.

Project Management Lessons Learned

The NearlyFree.com project illustrates why realistic planning and continuous monitoring are essential to successful project delivery. An initial budget and schedule provide a baseline, but their usefulness depends on accurate estimates, clear scope definitions, appropriate resource allocation, and timely performance reviews.

The negative schedule and cost indicators suggest that problems were not adequately addressed before they became significant. Regular EVM reporting could have helped the project manager identify unfavorable trends earlier and recommend corrective actions before the projected cost increased substantially.

Another important lesson is that project recovery requires more than increasing the budget or extending the deadline. Management must identify the causes of poor performance and determine whether changes to the schedule, staffing, scope, technical approach, or cost assumptions are needed.

Finally, forecasts should be based on verified data and clearly stated assumptions. Reconciling the reported completion percentage with the Earned Value figures will improve the reliability of future reports and support more informed management decisions.

Frequently Asked Questions

What is Earned Value Analysis in project management?

Earned Value Analysis is a method for evaluating project performance by comparing the budgeted value of completed work with the value of scheduled work and actual expenditures. It helps project managers identify schedule delays, cost overruns, and potential problems with the final project forecast.

Is the NearlyFree.com NEO project on schedule?

No. The project has a Schedule Variance of −$8,080 and a Schedule Performance Index of approximately 0.60. These results indicate that the budgeted value of completed work is below the planned value at the reporting date.

Is the NearlyFree.com project over budget?

The project has unfavorable cost performance. Its Cost Variance is −$4,000, meaning the actual cost of completed work exceeds the budgeted value of that work by $4,000. The forecast final cost is approximately $29,505 if current cost efficiency continues, compared with the original $22,300 budget.

What does a CPI of 0.76 mean?

A Cost Performance Index of 0.76 means that the project is producing approximately $0.76 in budgeted work value for every dollar spent. Because the CPI is below 1, the project is experiencing unfavorable cost efficiency.

What does an SPI of 0.60 mean?

A Schedule Performance Index of 0.60 indicates that the project has completed about 60% of the budgeted work value that was scheduled by the reporting date. It signals a substantial schedule performance problem, although it does not directly indicate the number of days of delay.

How is Estimate at Completion calculated?

When current cost performance is expected to continue, Estimate at Completion can be calculated using the formula (EAC = AC + (BAC-EV)/CPI). For NearlyFree.com, the calculation produces an estimated final cost of approximately $29,505 using the unrounded CPI.

How can NearlyFree.com reduce project cost overruns?

The organization can improve cost control by reviewing the remaining work, investigating inefficient processes, improving resource allocation, monitoring EVM indicators regularly, and evaluating scope changes before approval. Management should also update the budget forecast and obtain formal authorization for any required increase.

Why should the project timeline be reviewed?

A schedule review helps identify delayed tasks, dependencies, resource constraints, and unrealistic estimates. A revised timeline should reflect actual performance and remaining work rather than simply extending the deadline without addressing the causes of the delay.

What is the difference between Earned Value and Actual Cost?

Earned Value measures the budgeted value of the work completed, while Actual Cost measures the money spent to complete that work. Comparing these values reveals whether the project is spending more or less than planned for its completed work.

References

Haughey, D. (2020, July 26). What is earned value? Project Smart. https://www.projectsmart.co.uk/what-is-earned-value.php

Peng, B. (2018, April 10). The earned value method. Project Engineer. https://www.projectengineer.net/the-earned-value-method/

Project Management Institute. (2017). A guide to the project management body of knowledge (PMBOK® guide) (6th ed.). Project Management Institute. https://www.pmi.org/pmbok-guide-standards/foundational/pmbok

Usmani, F. (2020, August 18). Planned value (PV), earned value (EV) and actual cost (AC) in project cost management. PM Study Circle. https://pmstudycircle.com/2012/05/planned-value-pv-earned-valueev-actual-cost-ac-analysis-in-project-cost-management-2/

Cullen, S. (2016, August 2). Earned value analysis. Whole Building Design Guide. https://www.wbdg.org/resources/earned-value-analysis