Earned Value Under Claim: Extension or Acceleration on a Metro Package
A metro rail corporation reviews Package-3 at the end of month 18 of a 36-month civil contract: 42 km of viaduct and 38 stations, approved budget at completion ₹1,040 crore. Earned value data certified by the independent engineer show planned value ₹520 crore, earned value ₹410 crore and actual cost ₹455 crore. The contractor attributes the slippage to client-side utility diversions at six locations and offers two options: a 10-month extension with ₹95 crore compensation, or ₹62 crore of acceleration money for three-shift working to hold the original completion date. Liquidated damages are 0.5 per cent of contract value per week, capped at 10 per cent. Separately, non-destructive testing has flagged three of 460 pier foundations, and 11 activities in the running bill carry 60 per cent of their cost booked under site overheads with zero earned value.
1. Compute SPI, CPI, cost and schedule variance and the estimate at completion on current efficiency. How much of the 10-month claim do these numbers actually support?
Read the worked answer
- SPI = EV/PV = 410/520 = 0.788
- CPI = EV/AC = 410/455 = 0.901
- SV = EV − PV = −₹110 crore; CV = EV − AC = −₹45 crore
- EAC = BAC/CPI = 1,040/0.901 = ₹1,154 crore, an overrun of about ₹114 crore (11 per cent)
- Duration forecast = 36/0.788 = 45.7 months, roughly 9.7 months late if current efficiency persists
The 9.7 months happens to match the 10-month claim, and that coincidence is not evidence. At 44 per cent of planned progress, SPI is a crude, unstable predictor and it cannot separate client-caused from contractor-caused slippage. The only defensible basis for the claim is a time-impact or window analysis that maps each of the six utility diversions to its actual effect on the critical path, supported by notices, site records and the as-planned versus as-built schedule. Note also that the CPI is distorted by the 11 zero-EV activities, so the EAC is indicative only.
2. Using the liquidated damages arithmetic, advise on extension versus acceleration, including the quality dimension.
Read the worked answer
LD exposure: 0.5 per cent of ₹1,040 crore is ₹5.2 crore per week. Ten months is about 43.5 weeks, giving ₹226 crore, which hits the 10 per cent cap at ₹104 crore.
The contractor's own numbers are inconsistent: he claims the delay is client-caused, yet prices acceleration at ₹62 crore to avoid a ₹104 crore exposure. That gap is the negotiating lever. Resolve attribution first. If the six utility diversions were a client obligation and notice was timely, extension is due in principle, but compensation should be proven prolongation cost under the contract formula - idle plant, extended site overheads, escalation - not the lump ₹95 crore claimed. Accelerate only the contractor-caused residue, and only where it yields a measurable critical-path gain.
Quality dimension: do not buy speed on the three flagged piers. Three of 460 is 0.65 per cent, which suggests a local cause such as groundwater, soil variability or a single pour, not a systemic defect; establish it by coring and re-test, and remediate before superstructure load. Paying acceleration on work that may be reworked is paying twice. Compare against the hospital-and-ridership value of ten months of lost service before treating the LD cap as the ceiling of what delay costs.
3. What governance response does the finding of 'zero earned value with 60 per cent cost booked' demand?
Read the worked answer
It points to unearned billing or to a broken earned-value structure, and both must be closed before any claim figure is accepted.
- Withhold the disputed portion of the running bill and record the reasons in the measurement book.
- Audit each cost line against a schedule activity: site overheads, plant idle time and mobilisation must map to identifiable work packages. Costs parked without progress both distort the CPI and pad the prolongation claim.
- Re-baseline with a resource-loaded, time-phased schedule and milestone-based or 0-100 earned-value rules for short-duration activities, approved by the independent engineer.
- Re-certify progress, and confirm that the three suspect piers are not sitting inside certified earned value.
- Independent cost audit of the claim, with the utility's own rate analysis rather than the contractor's build-up.
Without this, both the ₹95 crore and the ₹62 crore are unverifiable numbers. The governance failure is not the delay; it is certifying progress on a system that allows cost and value to diverge without a flag.