Earned Value and a Stalled Rural Water Supply Project
You are Project Director of a rural water supply project 18 months into a 36-month schedule, with a budget at completion (BAC) of Rs 1.2 billion. At the end of month 18, the planned value (PV) is Rs 720 million, earned value (EV) is Rs 660 million, and actual cost (AC) is Rs 780 million. Twelve of 30 village schemes are complete. Land acquisition for four schemes is delayed by nine months because of a dispute over temple land, and residents along one pipeline route are protesting that the route crosses paddy land and a burial ground. The contractor has submitted a claim of Rs 90 million for idle machinery and extended overheads. The donor requires completion by month 36 and will not approve a cost overrun above 10 per cent of BAC without a formal revised financing request. The board wants an evidence-based status report and a recovery plan.
1. Calculate and interpret the project's cost and schedule performance, including EAC and VAC.
Read the worked answer
CV = EV - AC = 660 - 780 = -Rs 120 million, so the project is over budget. SV = EV - PV = 660 - 720 = -Rs 60 million, so it is behind schedule. CPI = EV/AC = 660/780 = 0.846, meaning the project is getting about 85 cents of earned value for every rupee spent. SPI = EV/PV = 660/720 = 0.917, meaning it has achieved about 92 per cent of the planned progress.
EAC = BAC/CPI = 1,200/0.846 = Rs 1,418 million, an overrun of about Rs 218 million, or 18.2 per cent of BAC. VAC = BAC - EAC = -Rs 218 million. The 10 per cent donor threshold is therefore breached: the projected overrun is nearly double the limit. These figures assume the current cost efficiency continues; if the contractor's Rs 90 million claim is added and delay costs continue, the outturn could be worse. The project is both behind schedule and over budget, so accelerating without fixing cost control would worsen the overrun.
2. Recommend a recovery plan, distinguishing actions within your authority from those requiring board or donor approval.
Read the worked answer
Within my authority, I would: freeze non-critical new works; require weekly cost and progress reports; verify the contractor's Rs 90 million claim against records rather than accepting it; re-sequence the 30 village schemes so that schemes with cleared land proceed first; and instruct the supervision consultant to re-measure completed work. I would not simply compress the schedule, because crashing usually adds cost. I would negotiate a revised programme with the contractor that links future payments to verified milestones and withholds payment for unapproved idle time.
Requiring board or donor approval: a revised financing request for the projected overrun, a change in the completion date, and any variation exceeding the delegated threshold. I would prepare a revised baseline showing the cost of delay and the savings from re-sequencing, and ask the donor for approval before committing to the overrun. If the donor refuses, the board must decide whether to reduce scope-for example, defer two of the 30 schemes-rather than allow an unfunded liability.
3. How should the temple land dispute and the pipeline protests be handled?
Read the worked answer
The temple land dispute is not only a land-acquisition problem; it is a cultural and legitimacy problem. I would halt construction near the disputed parcel, request a written statement of the temple's concerns, and ask the Divisional Secretary and the land commissioner to explore an alternative route or a mutually acceptable boundary. For the pipeline protests, I would set up a grievance committee with affected residents, disclose the route and compensation rules, and record every complaint with a response time.
I would not use police to force access while talks are ongoing, because that would escalate conflict and increase delay. The burial ground and paddy land concerns should be assessed by an independent technical team; if avoidance is feasible, rerouting may be cheaper than prolonged delay. Any change should be documented as a variation with cost and time implications, and reported to the donor. The aim is to protect the project's social licence, not just to acquire land.