Scenario 1:

You and your spouse have purchased a foreclosure you hope to flip for a profit. The two bathrooms had been recently remodeled by the previous owners. The three bedrooms need only cosmetic work – something you decide to undertake yourself. The majority of your budget will be used for remodeling the kitchen, the dining room, and the family room.

Since this is your first flip, you’ve hired an experienced home inspector to help you scope the project. You want to track costs carefully to stay as close to budget as possible and to give you an accurate baseline for similar work in future flips. Rather than doing a hierarchical decomposition of the project into various products/outcomes and then adding work package descriptors for each lowest-level product/outcome, you chose to list the components that needed work and then describe the work that must be completed for each of these components. NOTE: You’ve described the work that must be completed for each of the components using action-oriented phrases. For the purposes of this question, assume these are work package descriptors and that these work package descriptors are NOT decomposed into lower level elements.

You’ve mentally segregated the work into two broad categories: (1) higher priority work and (2) lower priority work. The higher priority work includes modifications to the electrical, HVAC, and plumbing systems, removal of two walls to provide an open concept arrangement, and common flooring throughout the kitchen, family room, and dining room areas. The remaining work you consider to be of lower priority. The scope and/or quality of finishes in the kitchen, dining room, and/or family room may have to be reduced if the cost of the higher priority work becomes an issue. You’ve also decided to add several control accounts within the two broad categories of work so that you can monitor and manage costs more effectively. These control accounts include:

• Utilities and Services (Electrical, HVAC, and Plumbing)
• Wall Removals
• Kitchen
• Dining Room (DR)
• Family Room (FR)

You decide to work backwards from your current list of work (shown below) to develop a WBS. You start by adding an element that represents the entire project and numbering it zero. To complete the WBS, you have to: (1) add the elements representing your two broad categories of work and the five control accounts; and (2) add a numbering system.

Question 1 : Modify the WBS to add the two broad categories of work and the five control accounts listed above. DO NOT make any other changes to any WBS elements.

Question 2: Complete numbering the work breakdown structure in a hierarchical manner once these new elements are added. You want your scheduling software to roll up work package costs to these control accounts and the two broad categories of work.

NOTE: Your WBS must not violate any WBS core characteristics except as noted above with respect to work package descriptors.

Question:  Your organization has two overhead cost pools: (1) Overhead and (2) General and Administrative (G&A). The cost base for the Overhead cost pool is direct labor; the cost base for the G&A cost pool is direct labor plus overhead costs. If the Overhead rate is 90% and the G&A rate is 25%, what is the burdened hourly rate for an individual whose hourly direct labor rate is $100.

Scenario 2: 

You’ve volunteered to make bird houses, at your own expense and on your own time, to be offered for sale at your daughter’s high school fair to raise money for new sports equipment. You have three different designs in mind. You estimate the first design will require about $5 in material cost and about two hours of work. The second design is a little more elaborate and will require about $10 in material cost and three hours of work. The last design, more elaborate yet, will require about $15 in material cost and four and a half hours of work.

There are about 5 weeks remaining until the school fair. You figure you can safely work an average of between 35 and 40 hours per week (week day nights and weekends) and you only have $600 available to complete the project. After doing some expected value calculations, you conclude the best product mix is 25 birdhouses using the first design, 20 birdhouses using the second design, and 15 birdhouses using the third design. You develop a construction plan as follows:

Question: Calculate the planned budget for each week of the project and for the total project.

At the end of week 2, you look at your actual progress and find the following:

Question: Calculate Earned Value (EV) for each of the first two weeks of the project and the project to-date.

Question: Is the project ahead of schedule, on schedule, or behind schedule? What EVM analyses are you using to make this assessment and why?

Question: Is the project over budget, under budget, or on budget? What EVM analyses are you using to make this assessment and why?

Question: Assuming you continue working as you are without making any changes to your processes or materials (i.e., future performance will be the same as past performance), what is the forecast of total project cost? Will you exceed your total available funds?

Question: Assuming you continue working as you are without making any changes to your processes or materials, how much should the total project cost exceed the budget?

Question: At the end of week 3 you discover you that SV is negative but SPI is 1.06. What does this mean?

Question: A positive result from a Cost Variance (CV) calculation means which of the following:

• AC is higher than EV.
• CPI = 1.
• EV is higher than AC.
• EV is higher than PV.

Question: Your project has an activity with a budget of $1,000 and a percent complete with gates earned value (EV) accrual rule. The activity has 5 equally valued gates (milestones). One of these gates is complete and the activity owner estimates 50% of the second gate is complete as of your EVM analysis date. What is EV as of the analysis date?

Question:  You’ve calculated a range of possible EACs for your project using (1) the “Cumulative CPI X SPI” Estimate at Completion (EAC) formula; (2) “Mathematical” or “Overrun to Date” EAC formula; and (3) the “Cumulative CPI” EAC formula. You expected the result of the “Cumulative CPI X SPI” Estimate at Completion calculation to be at the high end of the range. However, the “Mathematical” or “Overrun to Date” EAC formula provided the highest value. You double-check and find no data or calculation errors. Under what conditions would this happen?