International University – HCMC

Project management

Vietnam National University – HCMC 

International University 
SCHOOL OF BUSINESS ADMINISTRATION 

Project Management_S1_2022-23_G01
Dr Truong Quang Duoc
 
Group 3: 

Seq.  Full name  Student ID  Contribution

1  Trương Phúc An  BABAIU20526  100%

2  Trần Thanh Ngọc Thiệp BABAWE20070 100%

3  Trần Phạm Minh Trang BABAIU19343 100%

4 Phan Ngọc Nhã Uyên BABAWE19344 100%

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HOMEWORK 11 _ CHAPTER 11

2. Calculate the critical ratios for the following activities and indicate which
activities are probably on target and which need to be investigated. Comment on
each activity.

Answer:

Activity Actual Progress Scheduled Progress Budgeted Cost Actual Cost Critical Ratio
A 4 days 4 days $ 60 $ 40 1.5
B 3 days 2 days $ 50 $ 50 1.5
C 2 days 3 days $ 30 $ 20 1
D 1 day 1 day $ 20 $ 30 0.667
E 2 days 4 days $ 25 $ 25 0.5
Table 1

We have the critical ratio calculated by the formula below:

Actual Progress Budgeted Cost

Critical Ratio= ×
Scheduled Progress Actual Cost

If the critical ratio is larger than 1, the activity has good performance in both cost and
schedule. In other words, the activity can be under the budget cost/within the budget
and on schedule/ahead of the schedule or can be both under the budget cost and ahead
of schedule. If the critical is lower than 1, the activity has bad performance in cost and
schedule. The activity might overrun the cost or be behind the schedule or both. While
critical ratio equal to 1 indicates that the activity is within the budget and is on
schedule. From table 1, we can see that activities A and B have a critical ratio of 1.5
which is greater than 1. This indicates that activities A and B are on target or perform
better than expected. The project manager may need to investigate how activities A

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and B perform well to improve the future activities. The critical ratio of activity C is 1
which is on target. Therefore, we do not need to investigate activities C. However,
activities D and E are below 1, which means that both of the activities
underperformed. Thus, the investigation is needed for activities D and E. Project
manager needs to identify and solve the problem that cause the low performance in
activities D and E.

3. Given the following information about a showroom renovation, which

activities are on time, which are early, and which are behind schedule?

Answer:

Actual Progress/Scheduled
Activity Budgeted Cost Actual Cost Critical Ratio
Progress
A $ 60 $ 40 1.00 0.67
B $ 50 $ 50 0.50 0.50
C $ 30 $ 20 1.50 1.00
D $ 20 $ 30 1.50 2.25
E $ 25 $ 25 0.67 0.67

From the critical ratio formula, we can find the value of the ratio of the actual progress
divided by the scheduled progress.

Actual Progress Budgeted Cost

Critical Ratio= ×
Scheduled Progress Actual Cost

Actual Progress Actual Cost

→ =Critical Ratio×
Scheduled Progress Budgeted Cost

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If the value of actual progress divided by the scheduled progress is below 1, the
activity is ahead of schedule. If the value of actual progress divided by the scheduled
progress is higher than 1, the activity is behind the schedule. The activity is on
schedule when the value of actual progress divided by the scheduled progress equals
1. Activity A, B, and E all have the value of the actual progress divided by the
scheduled progress below 1. Thus, activities A, B, and E are ahead of schedule (early).
Activity C has the value of the actual progress divided by the scheduled progress is 1,
so activity C is on schedule (on time). However, the value of actual progress divided
by the scheduled progress of activity D is 2.25 much higher than 1. It shows that
activity D is very behind the schedule. The project manager needs to investigate the
reason why activity D is behind schedule and develop a solution for the problem.
Furthermore, it is helpful for the manager to learn about why activities A, B, and E are
ahead of schedule to improve the future activities.

6. Industrial Building, Inc., has two project teams installing virtually identical, 4-
story commercial buildings for a customer in two separate cities. Both projects
have a planned daily cost of 100 and a planned daily earned value of 100. The
first six days for each team have progressed as follows:

Compare the two projects in terms of general progress and according to critical
ratios.

Answer:

1. In terms of general progress:

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Team A
Planned daily
Day Earned value Planned value Actual cost CV SV
earned value
1 90 100 100 95 -5 -10
2 92 100 100 98 -6 -8
3 94 100 100 101 -7 -6
4 98 100 100 106 -8 -2
5 104 100 100 116 -12 4
6 112 100 100 126 -14 12
Total -52 -10
Table 2: General Progress of team A

Team B
Planned daily
Day Earned value Planned value Actual cost CV SV
earned value
1 90 100 100 95 -5 -10
2 88 100 100 94 -6 -12
3 95 100 100 102 -7 -5
4 101 100 100 109 -8 1
5 89 100 100 99 -10 -11
6 105 100 100 118 -13 5
Total -49 -32
Table 3: General Progress of team B

In general progress, we will use the earned value analysis to compare teams A and B.
We will calculate the cost variance (CV) and the scheduled variance (SV) of each
activity in each team. From the exercise, we are given the planned daily cost and
planned daily earned value.

CV =EV − AC

SV =EV −PV

If the CV is negative, the activity is over the budget. While the activity is below the
budget when the CV is positive. CV equal to 0 indicates that the activity is on budget.
If SV is negative, the activity is behind the schedule. While the activity is ahead of the
schedule when SV is positive. SV equal to 0 indicates that the activity is on schedule.
In table 2, from day 1 to day 4, team A is both behind schedule and overrun the
budget. While on days 5 and 6, team A is ahead of schedule; however, team A still
goes over the budget on days 5 and day 6. In table 3, Days 1, 2, 3, and 5 are both over
the budget and behind the schedule. Whereas day 4 and 6 is ahead of schedule but still

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overrun the budget. In terms of cost variance, team A performs worse than team B (-
52 < -49). While team A performs better than team B in schedule variance (-10 > -32).
In other words, team A has a higher total cost of 6 days, but it is more on schedule
than team B.

2. In terms of critical ratio:

Team A
Planned daily
Day Earned value Planned daily cost Actual cost Critical Ratio
earned value
1 90 100 100 95 0.947
2 92 100 100 98 0.939
3 94 100 100 101 0.931
4 98 100 100 106 0.925
5 104 100 100 116 0.897
6 112 100 100 126 0.889
Table 4: Critical Ratio of team A

Team B
Planned daily
Day Earned value Planned daily cost Actual cost Critical Ratio
earned value
1 90 100 100 95 0.947
2 88 100 100 94 0.936
3 95 100 100 102 0.931
4 101 100 100 109 0.927
5 89 100 100 99 0.899
6 105 100 100 118 0.890
Table 5: Critical Ratio of team B

From the exercise, we are provided with the planned daily cost of 100 and the planned
daily earned value. The planned daily cost can be assumed as the budgeted cost for
each activity. Planned daily earned value can be assumed as the scheduled progress,
while earned value is the actual progress. Thus, the critical ratio can be calculated by
the formula below.

Earned value Planned daily cost

Critical Ratio= ×
Planned daily earned value Actual cost

If the critical ratio is larger than 1, the activity has good performance in both cost and
schedule. In other words, the activity can be under the budget cost/within the budget
and on schedule/ahead of the schedule or can be both under the budget cost and ahead

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of schedule. If the critical is lower than 1, the activity has bad performance in cost and
schedule. The activity might overrun the cost or be behind the schedule or both. While
critical ratio equal to 1 indicates that the activity is within the budget and is on
schedule. All of the critical ratios of the activities in teams A and B are below 1 which
means that teams A and B are not performed well in all activities in terms of cost and
schedule.

8. The following information (in AOA format) concerns progress at day 40 of an

Internet marketing project. Determine if the project is in control based on time
and cost to date. If not, what is the cost overage or underage?

Answer:

Figure 1: AOA network

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Activity Days Duration Budget Actual Cost % Completed

Contact sites 10 $ 300 $ 250 100
Solicit costs 8 $ 400 $ 450 100
Design ads 12 $ 350 $ 380 100
Evaluate budget 0 $ - $ -  
Shoot ads 18 $ 405 $ 400 70
Place ads 16 $ 450 $ - 0
Total $ 1,455 $ 1,480
Table 6

From figure 1, we can see that the 1-2 is scheduled to complete within 10 days. From
activities 1-2, we have 2 activities: 2-3, and 2-4 with the duration of 8 days and 12
days respectively. However, event 4 has a connection to event 3. Therefore, event 3
will be achieved when event 4 is achieved. To complete events 1 to 3, it takes 22 days.
Event 5 needs 18 days to complete which means the total duration from the beginning
to event 5 is 40 days. However, the activity to complete event 5 is only 70% complete.
While all of the previous activities are 100% completed.

18 ×70 %=12.6 days

Compared to the schedule on day 40, the duration accomplished in event 5 is 12.6
days compared to the 18 days required to complete the activity. From the information,
we can calculate the schedule ratio.

22+12.6
Scheduleratio= =0.865
40

The value of the schedule ratio is 0.865 lower than 1 which means the activity is
behind the schedule. On day 40, we were only able to achieve from event 1 to 4 and
70% of event 5. We can calculate the total planned cost (budget) and the total actual
of 40 days by calculating the sum of the planned cost and the actual cost from events 1
to 5.

The total planned cost=300+400+350+ 0+405=$ 1,455

The total actual cost=250+ 450+380+0+ 400=$ 1,480

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From the total planned cost and the total actual cost, we can compute the cost ratio,
and from the cost ratio and schedule ratio, we can determine the critical ratio of day
40.

Total planned cost 1,455

Cost ratio= = ≈ 0.983
The total actual cost 1,480

Critical ratio=schedule ratio × cost ratio=0.865 × 0.983≈ 0.85

Since the critical ratio is lower than 1 (0.85 < 1), the project requires more attention
and investigation from the project manager. Furthermore, the critical ratio also tells us
that the project overruns the budget (cost overage). On day 40, the project is cost
overage by $25. Thus, the project manager should pay close attention and come up
with a solution for the project.

Cost overage =The total actual cost−the total planned cost=1,480−1,455=$ 25

10. At week 24 of a project to shoot a television commercial, the project manager

is worried about her budget since costs have risen to $7,500. Is there a cost
overage? If so, how much is it? Is the schedule ahead or behind? Overall, does
the project appear to be in control?

Answer:

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a−d−g=6+12+16=34 weeks

a−d−f =6+12+10=28 weeks

a−c−f =6+6+10=22 weeks

a−c−e−g=6+ 6+14+16=42 weeks

a−d−g=6+12+16=34 weeks

b−f =6+10=16 weeks

b−e−g=6+14+ 16=36 weeks

Since path a-c-e-g has the longest duration, it is the critical path.

To be able to calculate the slack time for each activity, we need to calculate the early
start (ES), early finish (EF), late start (LS), and late finish (LF). The start of the
project will have ES, EF, LS, and LF equal to 0 and the end of the project will have
ES, EF, LS, and LF equal to 42.

We will calculate ES and EF first. ES is equal to the early finish of the previous
activity. In case the activity needs several preceding activities, ES is the maximum EF
among the preceding activity. The EF is calculated by adding the activity time of the
activity to the ES. The process of calculating ES and EF will be calculated from left to
right which is from the start to the end. Below is the calculation for each activity.

ESn =EF n−1

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EF n=ESn + Activity time of n

In case the activity needs several preceding activities:

ESn =Max { EF n−1 , EF n−2 , … }

EF n=ESn + Activity time of n

For LS and LF, we have to calculate right to the left which is from the end to the start.
The LF of an activity is equal to the LS of the later activity. In case, the activity is the
preceding of several activities, and the LF of the activity is equal to the lowest
(minimum) LS of the following activities. From this, we can calculate the LS of the
activity by subtracting the LF from the activity time of the activity. Below is the
calculation for each activity.

LF n=LSn +1

LS n=LFn −Activity time of n

In case, the activity is the preceding of several activities:

LF n=Min( LSn +1 , LS n+2 ,…)

LS n=LFn −Activity time of n

The slack time can be determined in two methods. The first method is the difference
between the late finish (LF) and the early finish (EF). The second method is the
difference between the late start (LS) and the early start (ES).

Slack time of activity n=LF n−EF n =LSn−ES n

Activity Predecessor Duration ES EF LS LF Slack

a - 6 0 6 0 6 0
b - 6 0 6 6 12 6
c a 6 6 12 6 12 0
d a 12 6 18 14 26 8
e b, c 14 12 26 12 26 0
f b, c, d 10 18 28 32 42 14
g d, e 16 26 42 26 42 0

In week 24, we completed activities a, b, c, d, e, and 40% of activity f. The planned

value will be calculated by adding the cost for each week of activities a, b, c, d, e, and
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f. The earned value will also be calculated by adding the value when completing
activity: a, b, c, d, e, and 40% of activity f.

12 6
Planned value ( PV )=900+1,200+1,200+1,800+ ×1,400+ ×1,500=$ 7,200
14 10

Earned value ( EV )=900+1,200+1,200+1,800+1,400+ 40 % × 1,500=$ 7,100

Actual value ( AC )=$ 7,500

EV $ 7,100
CPI= = ≈ 0.947
AC $ 7,500

EV $ 7,100
SPI= = ≈ 0.986
PV $ 7,200

CSI =CPI × SPI =0.947 × 0.986 ≈ 0.934

Where:

 EV is the earned value or the value completed of the project.

 AC is the actual cost of the project.
 PV is the planned cost of the project.
 SPI is the Schedule Performance Index
 CPI is the Cost Performance Index
 CSI is the Cost-Schedule Index

In this case, the CPI of the project is lower than 1 (0.947< 1) which shows that the
project is over the budget. In other words, the budget of the project is spent
inefficiently. SPI tells us whether we are on schedule or not. In this exercise, the SPI
of the project is less than 1 (0.986 < 1). Thus, the project is behind schedule which
means actions need to be taken to make sure that the project can be completed in time.
The CSI which is also the critical ratio is lower than 1 (0.934 < 1). This indicates that
the project is slightly over budget and behind the schedule. The cost overage of the
project in week 24 is:

Cost overage =AC −EV =7,500−7,100=$ 400

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The cost overage of the project is $400 which is not very much. Furthermore, the
project is not too behind the schedule. Thus, the project only needs slight or no
attention/control since it is doing quite well.

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