The Status Report That Looked Fine
A project is in week 12 of 24. The baseline budget at completion is £400,000. Earned value data: planned value £200,000, earned value £160,000, actual cost £190,000. The PM's status report says 'we are 80% through the planned work and on track.' The sponsor reads 'on track' and releases the next funding tranche. Separately, a team lead reports that a key deliverable marked 'complete' last month has been reopened because acceptance testing failed; the PM has not updated the baseline or the earned value figures.
1. Calculate CPI and SPI, and assess the 'on track' claim.
Read the worked answer
CPI = EV / AC = 160,000 / 190,000 ≈ 0.84 - spending more than earned, i.e., cost overrun. SPI = EV / PV = 160,000 / 200,000 = 0.80 - behind schedule. The '80% through planned work' phrasing is misleading: 80% is the SPI, meaning the project has earned only 80% of what it planned to have earned by now, not that it is 80% complete overall. At this rate, EAC ≈ BAC / CPI = 400,000 / 0.84 ≈ £476,000, a significant overrun. The 'on track' claim is not supportable; the PM should report CPI and SPI plainly and forecast the overrun before the sponsor relies on it.
2. What is the effect of the reopened deliverable, and what should the PM do about the baseline?
Read the worked answer
A deliverable marked complete that fails acceptance was never truly earned - the EV figure is overstated and the reported CPI/SPI are optimistic. The PM must reverse the earned value for that deliverable (or reduce it to the actual percent complete), which will lower EV and worsen both indices. The baseline itself (scope, schedule, cost) should not be silently edited; instead the PM records the correction, re-forecasts, and if the change is material, raises a formal baseline change request. The lesson: status reporting is only as good as the acceptance criteria behind 'complete', and the PM should verify completion against defined criteria before claiming earned value.