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A parking lot fencing project was bid at US$11 per foot , and the company is doing all the work. The parking lot has four equal sides of 125 feet and requires installation of a 6 foot diameter culvert on one side. Fencing should be installed at a rate of 100 feet per day. The culvert installation will cost US$500 and take one day to complete. The culvert must be installed before work can begin on that side of the fence. After 3 days of work, one side is complete. Another has 75 feet installed, and the culvert is completely installed. What is the current status of the project?
a) The budget is neutral with a cost variance of $0
b) It is over budget, with a cost variance of US$-1000
c) It is under budget, with a cost variance of +500 due to the completion of the culvert
installation.
d) It is over budget with a cost variance of US$125.The correct answer is A.
EV is the value of the work completed. In this case, one side is done ($11 x 125 = $1,375), 75 feet of the second side is done ($11 x 75 = $825) and the culvert is complete ($500) for a total of $2,700. Since the AC is $2,700, CV = $0. You are budget neutral.
Revise Cost Management Concepts: Project Cost Management
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