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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. AC is $2700. 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$125The 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.
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