OrbitalLink: Earned Value Meets a Fixed Launch Window
OrbitalLink is a ground terminal program with an approved budget at completion of $8.0M and an 18-month schedule. At the end of month 8, the project manager reports planned value $4.0M, earned value $3.2M, and actual cost $3.9M. The critical path runs through the antenna pointing assembly, whose supplier has announced a 6-week slip due to a bearing shortage. The customer's launch window is fixed and cannot move. The project manager proposes to recover schedule by compressing internal integration and test from 10 weeks to 6 weeks and adding a second shift, estimated at $450k. The systems engineering lead warns that integration and test is where the two previous programs found 60% of their defects. The risk register holds a $300k management reserve, and the contract has a $250k award fee tied to on-time delivery.
1. Calculate and interpret the schedule and cost performance indicators. What does the earned value data tell you, and what does it not tell you?
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SPI = EV/PV = 3.2/4.0 = 0.80, so the program has earned 80% of the value planned for month 8; it is about 20% behind the planned work. CPI = EV/AC = 3.2/3.9 = 0.82, so each earned dollar is costing about $1.22. CV = EV - AC = -$0.7M; SV = EV - PV = -$0.8M. EAC at the current cost efficiency = BAC/CPI = 8.0/0.82 = about $9.76M, implying a variance at completion of roughly -$1.76M. TCPI to finish within BAC = (BAC - EV)/(BAC - AC) = 4.8/4.1 = 1.17, meaning the remaining work must be performed 17% more efficiently than the original plan, which is unlikely without a change.
Interpretation: cost performance is the dominant problem, and the schedule slip is partly supplier-driven. The data does not tell you technical quality, defect backlog, or whether the remaining work is underestimated. EVM measures planned value earned, not whether the earned work is correct. The EAC assumes the current CPI persists; if supplier expediting or test compression adds cost, a bottom-up estimate may be worse.
2. Evaluate the proposed test compression using the cost, schedule, and risk numbers.
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Compressing integration and test from 10 weeks to 6 weeks recovers 4 weeks at $450k, or about $112.5k per week. The supplier has slipped 6 weeks, so even full recovery leaves about 2 weeks of slip against the critical path, and the launch window is fixed. The compression therefore does not by itself solve the schedule problem.
The economics are weak on the award fee alone: spending $450k to protect a $250k fee is net negative unless there is an unstated late-delivery penalty or strategic consequence. More important, the compressed activity is the program's main defect-finding stage. The two prior programs found 60% of defects there, so halving its duration predictably shifts defects into launch and operations, where correction is far more expensive and may be impossible within the window. A second shift can compress duration without cutting scope if staff are available and work can be parallelized safely, but simply running fewer test weeks is scope reduction disguised as schedule recovery.
The management reserve is $300k, less than the proposed compression cost, so the plan is not funded as stated.
3. Recommend a decision and the message to the customer.
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Recommend not cutting integration and test scope. Instead, attack the actual critical path: fund supplier expediting or an alternate bearing source, and add resources to integration and test to compress duration while preserving test coverage. A second shift with a dedicated independent test team is acceptable if test cases, entry and exit criteria, and coverage remain unchanged; fewer test weeks is not.
Fund the recovery from the $300k management reserve plus a scope or fee trade with the customer. Confirm whether a late-delivery penalty exists; if it exceeds the recovery cost, the calculus changes. If no funded path exists, present options rather than silently accepting risk: reduced scope on non-critical deliverables, a phased delivery that protects the launch-critical subset, or a formal schedule relief request.
The customer message should be factual: current SPI 0.80 and CPI 0.82, EAC about $9.76M, supplier slip of 6 weeks, and a recovery plan that protects verification. State explicitly that compressing I&T was considered and rejected because the prior programs found 60% of defects there. Offer the phased-delivery option and ask for a decision on the award fee or scope. Document the residual schedule risk and the management reserve allocation.