5)Pennsylvania Coal Mine

The team at Penn Coal mines was tasked with sinking a 2000m deep ventilation shaft and excavating space for a station at the bottom. The plan was to sink the shaft within 20 months at a cost of $65,000 per meter of shaft depth. For the station at the bottom, 30,000 m³ of rock would have to be excavated within 3 months at a cost of $700 per cubic meter. The plan assumed a straight-line earned value over time.

After the work had begun, the scope of the project was changed to include excavation for a new station halfway down the shaft (Figure 11.23) with a volume of 20,000 m³. It was agreed that the additional work had to be done at the same excavation rate as the bottom station, but since removal of rock required hoisting only 1,000 meters (as opposed to the 2,000 meters for the bottom station), the team agreed on the cost of $500 per cubic meter for the new station. Since working space and other resources available would limit the amount of work that could be done simultaneously, everyone agreed that the new station would delay the sinking of the shaft. After 13 months, the shaft had reached a depth of 1,400 meters below surface and excavation for the halfway station was completed. The actual cost at this time was $90 million, which was more than budgeted for the period. This aggravated a cash flow problem at that stage. The executive management requested an earned value report. Information on the relative amounts of time spent on excavating the new station and sinking the shaft was not available.

1. What would the initial plan and budget (without the added scope) for the work including the excavation for the station at the shaft bottom look like using a graph and excel? Indicate the earned value and the actual cost after 13 months. For this plan show the periodic expenditures as well as the cumulative.
2. Write a new budget assuming the scope changes have been incorporated and a new budget updated. Use a graph to illustrate the changed plan and budget with the new shaft added including the excavation for the station at the shaft bottom. Indicate the earned value and actual cost after 13 weeks. For this new budget and plan show the periodic expenditures as well as the cumulative. Calculate the CV, SV, TV, CPI, and SPI for both the revised budget.